Brexit clouds surround Ireland’s biggest corporate deals

Ireland’s lawyers are used to turbulence. After all, it is not so long ago that the country was ­navigating the bumpy waters of the financial crisis and a bailout by the EU. So the last year of volatility caused by the UK’s Brexit vote and the US presidential election was something Irish firms were ready for.

Ireland has always relied heavily on work ­emanating from both the UK and US. A slowdown in corporate activity, therefore, in the summer of 2016 was only to be expected – and generally firms were able to compensate for it through good levels of activity in areas such as finance, real estate and technology.

Although only Mason Hayes & Curran provides turnover figures for The Lawyer European 100, indications are that most Irish firms saw revenue growth in the mid single digits last year. This was a slowdown from a couple of boom years previously.

All the major domestic Irish firms have grown quickly to adapt to their changing environment, and have been swift to innovate and happy to invest in technology, career development and internationalisation.

Below we look at key developments at the six largest Irish firms, all of whom were shortlisted for Firm of the Year: Ireland at the European Awards 2017.

A&L Goodbody

While it topped the deals tables for Irish transactions in 2016, A&L Goodbody says the year had been volatile in its core transactions practice due to Brexit. Income from its corporate, real estate and finance teams was stable last year – so the firm invested in specialist areas such as energy, insurance and investment funds to compensate.

Despite slowdowns related to Brexit and the US elections, the firm says its utilisation rates were consistently above 90 per cent throughout the year. It continued to hire, reporting a net gain of 10 full-time equivalent lawyers between 2015 and 2016.

Following the UK referendum, A&L established a dedicated ‘Brexit Programme’ across its Dublin, Belfast and London offices to handle client queries relating to the exit from the EU. The firm also reviewed the potential impact of both Brexit and the ­election of Donald Trump in the US with a view to identifying where the firm should invest.

On the talent front, following the 2015 hire of a head of talent, A&L is launching a School of Business and Law in early 2017. The school will offer an integrated ­learning and development programme for all ­lawyers, and soon other staff in partnership with University College Dublin.
The firm’s ‘Partner Track’ programme is in its fifth year and since its launch in 2012 52 per cent of participants have been ­promoted to partner.

A&L has also formalised its working from home initiative and has 17 lawyers now working from home regularly.

2016 key deals

A&L worked alongside Wachtell Lipton Rosen & Katz for Johnson Controls on its $18.5bn (£14.3bn) merger with Tyco International. The deal was announced in January and completed in September 2016.

The firm advised the Blackstone Group on the purchase of the Blanchardstown Shopping Centre, one of Ireland’s biggest-ever property deals with a value of €945m (£794m). The deal completed in the third quarter of 2016.

A&L acted for insurer XL Group on the Irish legal and regulatory aspects of the re-domestication of its ultimate parent from Ireland to Bermuda, which was effected by way of an Irish High Court-approved scheme of arrangement in July 2016.

Key deals

£14.3bn

Deal value of Wachtell Lipton’s merger with Tyco International, completed September 2016

£794m

Value of Blackstone Group’s purchase of Blanchardstown Shopping Centre, one of Ireland’s biggest property deals


Arthur Cox

Recruitment at Arthur Cox slowed last year after several years of hiring at ­associate level. Overall the firm says its lawyer ­numbers on a full-time equivalent basis were stable across its offices, although the year-end snapshot of Irish practising certificates produced by the Law Society of Ireland shows a drop of 14.

One key appointment during the year was the rare lateral hire of corporate partner Cian McCourt from A&L Goodbody. In April 2017 it emerged that Arthur Cox was hiring Pinsent Masons’ Belfast head Paul McBride in a boost for its Northern Irish office.

Following the re-appointment of managing partner Brian O’Gorman in November 2015, the firm has stuck to its strategy of focusing on high-end international and domestic work. Teams which have been strengthened include financial regulation, antitrust, regulated markets and energy.
While the firm does not disclose how much of its income is derived from each practice group, figures provided for The Lawyer European 100 show that corporate is the largest group in terms of partner numbers, keeping 27 partners occupied last year. Finance had a team of 18 partners and litigation 16 in 2016.

Arthur Cox spent much of 2016 preparing for a long-awaited office move which finally completed in March 2017. The firm’s new 132,000sq ft building was developed for Arthur Cox and is significantly more energy-­efficient than its old, smaller premises.

2016 key deals

Arthur Cox advised Allergan on the sale of its global generic pharmaceuticals ­business to Teva Pharmaceutical Industries for $40.5bn (£31.2bn). The firm worked alongside Latham & Watkins, Weil Gotshal & Manges and Cleary Gottlieb Steen & Hamilton on the transaction, which was announced in July 2015 and completed in August 2016.

The firm acted for Tyco International on its merger with Johnson Controls, together with Simpson Thacher & Bartlett.

Arthur Cox represented Chartered Land on all aspects of a €2.6bn (£2.2bn) financial and corporate restructuring and the sale of its interests in a material Dublin retail real estate portfolio to Hammerson and Allianz Real Estate. The transaction was completed in July 2016.

Key deals

£31.2bn

Value of the sale of Allergan’s global pharma business to Teva

£2.2bn

Value of corporate restructuring and sale of interests of a Dublin retail portfolio belonging to Chartered Land


McCann FitzGerald

It was a fairly busy year for McCann FitzGerald with a lot of hiring and several strategic initiatives driving what it says was a good financial performance to 30 April 2017.

The firm was more active in the recruitment market than its main rivals last year, with a 7.8 per cent increase in total headcount including a 3.6 per cent rise in lawyer numbers.

Although corporate work was reportedly impacted by the pre-Brexit slowdown, McCann FitzGerald’s ­managing partner Barry Devereux says the firm’s finance and ­litigation teams both had a strong year.

A key development during 2016 was the launch of a data investigations group, which handles high-­volume data processing for the firm in areas such as due ­diligence and discovery. The team launched with 15 staff and now has 55, including a number of law ­graduates and barristers working on a contractual basis.

The firm hired Gráinne Bryan to lead the group. Bryan was previously e-discovery project and data manager at Arthur Cox.

McCann FitzGerald also invested in an artificial intelligence system last year. Additionally the firm rolled out a new ‘Knowledge Hub’ for its clients, providing easier access to information.

A key lateral hire was that of Paddy Power director of tax Alan Heuston as a partner in the corporate and tax teams. Building on the 2015 hire of Arthur Cox partner Gary McSharry, McCann FitzGerald also relaunched a New York office in early 2016. It had previously closed down in the Big Apple some 20 years previously.

2016 key deals

In April 2016 McCann FitzGerald was Irish counsel to BBAM Aircraft Management in connection with a $1.2bn (£924m) aircraft portfolio sale and securitisation, backed by 49 aircraft on lease to 37 airlines in 25 countries and with an average age of 6.5 years.

The firm represented infrastructure investment ­manager I-Squared Capital on its acquisition of Irish power company Viridian and its gas and wind generation portfolio from Bahrain-based private equity house Arcapita in an all-cash transaction valued at €1bn (£788m).

McCann FitzGerald is currently advising the National Paediatric Hospital Development Board on the procurement and construction of the New Children’s Hospital, Dublin. The project is the largest capital investment project ever undertaken in healthcare in Ireland; the estimated development cost being in excess of €750m.

Key deals

£924m

Value of BBAM’s aircraft sale and securitisation deal

£788m

Amount I-Squared Capital paid for gas and wind generator company Viridian from Bahrain-based Arcapita


Mason Hayes & Curran

As the only firm to provide financial data for The Lawyer European 100, Mason Hayes & Curran acts as a bellwether for the rest of the market. For 2016 the firm says turnover rose 6.9 per cent, from €72m to €77m (£62m-£66m), continuing an upwards trend since 2012 when the firm recorded revenue of €53.6m.

Mason Hayes also continued to hire last year with its headcount rising by 7 per cent and lawyer numbers by 5.3 per cent.

It attributes last year’s growth to strong levels of business: notably in litigation, real estate and corporate advisory.

During 2016 Mason Hayes reviewed its strategy and resolved to continue its internationalisation – some 40 per cent of revenue is now derived from international sources and 25 per cent of new instructions came from network relationships in 2015.

At the end of 2016 Mason Hayes opened a ­representative office in San Francisco, relocating ­technology ­lawyer Oisín Tobin to lead the practice. Last year corporate partner Graeme Bell was named as the new head of the firm’s London office, following his hire from Akin Gump Strauss Hauer & Feld, while fellow corporate partner David Mangan became head of New York.
Other internal developments include an upgrade to the firm’s financial management system to support future growth.

The strategic review also led to the hire of senior lawyer Nina Hourigan Smith as director of client service, a non fee-earning position designed to focus on what clients need from the firm. Mason Hayes is also in the process of launching a data privacy consultancy.

2016 key deals

Mason Hayes is acting for real estate group Hines Ireland on the €2.5bn (£2.1bn) development of a 400-acre mixed-use site at Cherrywood, the single largest undeveloped landbank in Dublin. It includes development of an existing 52,000sq m office park and a 400-acre master-planned site.

The firm advised McKesson Corporation on its acquisition of the pharmaceutical distribution business of the Irish FTSE 250 company UDG Healthcare for €408m (£352m) in cash. Following the deal’s completion in April 2016, Mason Hayes is continuing to advise United Drug on Irish commercial contracts issues.

Mason Hayes’ litigation team is currently acting for Facebook Ireland in proceedings commenced by the Irish Data Protection Commissioner in the High Court. Facebook is seeking a reference to the Court of Justice of the European Union (CJEU) for a preliminary ruling on the validity of EU Commission decisions permitting data transfers from the EU to the US on foot of standard contractual clauses.

Key deals

£2.1bn

Value of 400-acre mixed-use development Hines has undertaken in Dublin – the largest ever in Ireland

£352m

Amount McKesson Corp paid to acquire the pharma distribution business from UDG Healthcare


Matheson

Matheson is the most internationally-focused of all the Irish firms and derives between 75 and 80 per cent of its revenue from outbound work for domestic clients or inbound work for foreign clients. The firm says energy and construction work was strong in 2016, as was tax and litigation.

Financial services partner Michael Jackson was elected as managing partner, effective 1 January 2016, to replace Liam Quirke who is now the partnership chair. Quirke also took up a new role as head of Matheson’s Brexit advisory group, splitting his time between London and Dublin.

Strategically Jackson wants to continue recent ­initiatives to improve collaboration between lawyers and departments. Last year it brought in initiatives such as a ‘Smart Week’ to promote technology best practice and innovation.

It is seeking to expand the range of work it does for existing clients, and areas of targeted expansion include fintech and IP/IT – the latter two groups having been brought together in 2016.

The first graduates from Matheson’s senior associates programme, run in partnership with Cambridge Judge Business School, graduated in January 2016. Matheson has now also launched a partner development ­programme, which will be run every two years.

Last year the firm introduced a maternity ­coaching programme in partnership with an Irish business psychology company, to support female lawyers on maternity leave and those who have recently returned from maternity leave.

2016 key deals

Matheson advised Worldview Capital Management on its successful hostile takeover of Petroceltic International – the first successful hostile takeover of an Irish listed plc. The takeover completed in June 2016.

The firm acted for Saint-Gobain Building Distribution (ROI) in relation to the sale of its JP Corry business in the Republic of Ireland to HPC Management Services. Three JP Corry sites, in Gort, Oranmore and Cahir, were ­transferred to HPC as part of the sale, which was announced in March last year.

Matheson advised insurer PartnerRe on its debut €750m (£647m) Eurobond offering, which closed on 15 September 2016.

Key deals

£647m

Value of insurer Partner Re’s debut Eurobond offering


William Fry

William Fry had a record year in 2016, but says its expansion slowed considerably compared to 2015 when the firm experienced high double-digit growth. Recruitment also slowed although did not stop. It made a handful of lateral hires from rivals including Matheson and Mason Hayes & Curran.

Managing partner Bryan Bourke says property work was especially busy in 2016 given a general slowdown in market activity, and that the firm’s technology group was also busy.

In July the firm launched in San Francisco, adding to its existing US presence in New York and Silicon Valley.

William Fry is also continuing to look at technological innovations. It added staff
to its knowledge management team following a review of the system in 2015, and is now trialling the use of artificial intelligence in e-discovery and due diligence.

In talent management, the firm now has an agile working scheme available to all staff, and a family and career integration programme designed to support female lawyers in particular but also their line managers in easing the transition from work to maternity leave and back again.

2016 key deals

William Fry gave Irish advice to BlackRock on its ­acquisition of Bank of America Global Capital Management Group. The target had approximately $87bn (£67bn) in assets under management. The deal was announced in November 2015 and completed in April last year.

The firm advised Innocoll on its redomiciliation from Germany to Ireland. Innocoll’s redomiciliation was accomplished through a European cross-border merger, effective on 16 March 2016 – the first example of a listed company redomiciling into Ireland this way. The transaction was valued at $200m ($154m).

William Fry acted for Dublin-based billing software company Brite:Bill on its $260m (£200m) cash acquisition by Nasdaq-listed software and services provider AmDocs. The deal closed in September 2016.

Key deals

£67bn

Value of BoA Global Capital Management Group’s assets under management, when it sold to BlackRock

£154m

Transaction value of Innocoll’s redomiciliation from Germany to Ireland

Global outlook

Only a handful of firms headquartered elsewhere have Dublin offices, although rumours constantly swirl around the market that another international firm might move in. In June Pinsent Masons made the move, hiring partners from Byrne Wallace Matheson and Walkers to launch in Dublin.

Of those that are present, Eversheds Sutherland ­arguably competes most closely with the Irish incumbents. Its legacy practice O’Donnell Sweeney was an independent firm until it associated and then merged with Eversheds; since earlier this year it has access to a large US network following the firm’s tie-up with Sutherland Asbill & Brennan.

Managing partner Alan Murphy says the Dublin office has grown by 15 per cent each year for the past four years, and he is forecasting similar growth this year. Unlike some of the independent firms, Murphy says the firm has had no slowdown in activity save perhaps for US companies moving their headquarters to Ireland.

He is enthusiastic about the opportunities arising for Ireland from the Sutherland tie-up.
“We’re very much at this stage getting to know each other, getting to know each others’ clients,” he says, while adding that Ireland has identified areas such as tax as ones where synergies could emerge.

“We can now offer clients a whole tax offering from the US to Ireland, and from Ireland to the US,” he explains.

That said, the majority of Eversheds’ clients in Ireland are indigenous, albeit internationally-facing, and the O’Donnell Sweeney legacy remains strong.

“It doesn’t necessarily follow that if there’s a business migration the legal work follows. There are barriers to entry”
Nicholas Butcher, Maples and Calder

This year, Murphy adds, has started strongly with Eversheds topping M&A league tables by volume for the first quarter of 2017 and featuring highly on the value tables too.

Of the other international firms to have moved into Ireland, the biggest splash was probably made by offshore firm Maples and Calder. It celebrated 10 years in the country last year and, under managing partner Nicholas Butcher, is in rude health.

“The growth generally has been very good and gone from 30 or 40 people to now around 230 in the law firm,” says Butcher. “I was starting to say last year that we’ve come of age in Ireland. We’ve taken the fight to the established firms and done very well.”

Maples, like its offshore rival Walkers, focuses very much on financial services and funds work in Dublin. However Maples has also added some ancillary groups, such as construction litigation, which are looking more at the domestic market.

“We’ve seen the platform broaden out to cover full-service domestic support to Irish clients to sit alongside the international focus of the business,” Butcher says.

But the core business of financial services means that Maples and Walkers both see themselves as being beneficiaries of Brexit and the likelihood for financial institutions to move their EU headquarters to Dublin.

“Until recently it’s been perimeter advice to banks and to investment firms who are exploring their options to migrate their licences from the UK to another EU jurisdiction,” says Walkers Irish managing partner Garry Ferguson. “Almost immediately after the vote we started getting these enquiries. In the last weeks, these enquiries have turned into applications.”

Butcher describes a similar pattern. “We’ve been taking a collaborative approach to Brexit,” he adds. “We don’t see it as a binary choice between the UK and Ireland, or the UK and other jurisdictions.”

“Banks and investment firms are exploring their options to migrate their licences from the UK to another EU jurisdiction”
Garry Ferguson, Walkers

Brexit, says Ferguson, came amid a slowdown in transactional work last year. He describes the middle of 2016 as “the slowest summer” for cross-border finance in five or six years, before things got busy again in October.

“We need to hire – we could easily add 15 to 20 per cent headcount now,” Ferguson adds, echoing the ­positive sentiments of Murphy and Butcher.

Ferguson says the fact that Walkers in Dublin is part of a wider, global network of offices helps when pitching to clients, particularly in the financial sector.

“There’s a general trend towards reducing the number of firms on bank panels and demonstrating that you have a presence across a number of jurisdictions, it’s an easier decision to appoint you,” he argues.

But the chances of more international firms wanting to move into Ireland seem slim, even post-Brexit.

“It doesn’t necessarily follow that if there’s a business migration the legal work follows,” Butcher points out.

“There are barriers to entry for firms ­coming from London or New York, where the potential for referrals from those jurisdictions is automatically cut off if you’re competing with the referrers,” Ferguson adds.

Murphy agrees it would be difficult for new full-service entrants.

“If you want to operate in the Dublin market you need to know that market, you need to be committed in that market and the clients need to know you in that market,” he concludes.