Clifford Chance has advised UBS Warburg on a huge exchangeable bonds issue for Russia's second-largest oil company Yukos.
The firm's London, Moscow and New York offices were all involved in the $310m (£218.1m) issue of UBS bonds exchangeable into shares of Yukos.
The deal was led by London capital markets partner Tim Morris, whose relationship with UBS on exchangeable and convertible bonds won the firm the deal.
London-based US partner Chris Walton advised on US securities aspects, while New York partner David Moldenhauer advised on US tax issues. Moscow partner Arthur Illiev advised on Russian law and partner Irina Dmitrieva on the Russian tax aspects.
The deal was the first that most of the partners had done using Clifford Chance's online dealroom, which is called CliffordChanceConnect. It allowed them to post offer documents and transaction documents for the whole team and the client to have access to worldwide advice.
Walton said: “Clifford-ChanceConnect is a state-of-the-art online dealroom facility that enables you to post offer documents, transaction documents, commentary and the like to a transaction team that you designate all over the world. They are then given email alerts when new documents are posted to the dealroom.
“This was one of the first times that many of us who were involved had used the dealroom, and we thought it was pretty successful.”
Yukos did not have a law firm advising it externally. The deal was structured to allow the majority shareholders in Yukos to dispose of part of their controlling shareholding.
Adrian Cartwright, who assisted Morris on the London side of the deal, said: “This deal shows a real shift in sentiment towards Russia after the real problems and defaults there in 1998. What we were hearing in the market was that no one will be doing deals in Russia any more, but what we're showing here is that deals can get done in Russia.”
Most of the deal was done outside London. There was a lot of structuring involved when the deal kicked off in May, so the bulk of the work was completed by mid-July. Moscow had a significant role to play in the due diligence on the Russian entity into which the bonds were being exchanged as well as on the Russian share issue.
The US aspects of the deal were small by comparison.
Cartwright said: “We're seeing quite a lot of interest in Russian companies on the debt and equity link side, and that's positive.”
Walton added: “A lot of the Russian companies like Yukos are trying to take significant steps forward in their corporate governance activities at the moment.”
CMS Cameron McKenna has scored an insurance victory over Clifford Chance in the House of Lords. A ruling this week upheld the 1999 Court of Appeal decision that reinsurance brokers Johnson & Higgins (J&H) were negligent in their dealings with Aneco Reinsurance. The result marks the first successful claim of its type against a reinsurance broker.
Partners Mark Elborne and Andrew Symons led the Camerons team acting for Peter Mitchell, Aneco's liquidator at Pricewaterhouse-Coopers. J&H's defence was conducted by Stephen Lewis, a partner at Clifford Chance.
What makes this case unique is that J&H must bear the cost not only of the reinsurance protection that was lost – about $12m (£8.44m) – but also the losses suffered from the initial reinsurance contract. Its liability has been estimated at $60m (£42.2m).
The origins of the action go back to a reinsurance contract placed with Aneco by J&H. J&H was to investigate the availability of reinsurance to cover Aneco's exposure. It advised that sufficient reinsurance was available in the market, when in fact it was not.
Aneco was then faced with significant losses in the wake of a number of catastrophes. Without sufficient reinsurance in place, Aneco could not meet its liabilities and was placed into liquidation. Elborne said: “Aneco wouldn't have underwritten this risk had they known it was not reinsurable.”
He added that the House of Lords ruling is a triumph for common commercial sense. “It's the first time anyone has succeeded in a claim against a reinsurance broker for damages to compensate their client for the full measure of the losses suffered as a result of their negligence,” he commented.
The case has been run at Camerons by the same team since 1993.
Apparently, th-ere are still some lawyers (admittedly old ones) that haven't heard of DLA. “What does it stand for?” they ask. Well, for any of you too old to have come across the firm, it doesn't stand for anything. DLA is the rebranded version of Dibb Lupton Alsop, which is itself the product of a merger between City firm Alsop Wilkinson and Yorkshire-based Dibb Lupton Broomfield. And very successful the process has been too.
You may have noticed that in the last year DLA has made a number of high-profile lateral hires, not least of which is the recent recruitment of Orrick Herrington & Sutcliffe's London securitisation team. On first impression, DLA seems to be an odd choice for the lawyers. Why would partners Jeanne Bartlett and Conor Downey choose a firm with no discernable presence in the debt capital markets sector? On closer examination, though, it begins to make more sense.
The world is split into two camps when it comes to DLA – those that think that the firm is on its way up, admiring it for its boldness and impressed by its growth, and those that think it is too big for its boots. Clearly, the Orrick team belongs to the former.
Bartlett and Downey were in quite a predicament at Orrick. Most securitisation deals rely on support from other parts of the firm, and without the help of property, transport and telecoms departments, securitisation lawyers are more or less restricted to advising on synthetic transactions. Orrick's London office had just four UK-qualified partners; and with the current US economic climate in decline, it is clear that there are no resources to inject.
Leaving Orrick was obviously the sensible thing to do. But the question remains, where to go?
UK partners who work in US firms often say that the move is irreversible. So perhaps Sidley Austin Brown & Wood? It certainly has a strong presence in the market? Or Weil Gotshal & Manges or White & Case, which are both are very active. Personally, I would have put money on Simmons & Simmons, Lovells or Herbert Smith. But not for a moment would I have earmarked DLA.
Alternatively, if we listen to the current rumours circulating about recruitment freezes then the Orrick team's options may well have been limited. (Although of course this is not to suggest its only offer came from DLA).
But on a positive note, a deeper analysis of DLA makes its attraction compelling. The client fit is ideal. Barclays and the Royal Bank of Scotland are two of the firm's biggest clients and two of the biggest securitisers in Europe. The firm is also on the panels of Dresdner Kleinwort Wasserstein and WestLB, as well as doing bits and bobs for CIBC. Meanwhile, Bartlett will probably bring Commerzbank with her.
So as long as DLA remains realistic and doesn't expect to prise US investment bank work away from the likes of Clifford Chance and Allen & Overy, the option to build a presence in the market is plausible. Another factor in its favour is its D&P alliance, which gives it capability in most major European countries. And with securitisation in full flow in Western Europe, and now beginning to take off in Eastern Europe, this must be an advantage.
DLA has been actively seeking expansion in its capital markets practice and the Orrick recruitments fit in nicely with this strategy. Already the firm has advised on secured loans for a number of football clubs and is relatively active on the warehousing side of securitisation. But the plan now is to convert existing financial institution clients into securitisation clients.
So, for the moment, DLA can relax, happy that it is one step closer to its objective – world domination. But is it really making threatening noises to its capital markets competitors? Not yet maybe, but perhaps we should all give credit where credit is due.