Shoosmiths has plans to double its headcount in Manchester as the firm prepares to move into its new office in Spinningfields.

Currently, Shoosmiths has 177 members of staff in Manchester but plans to grow the team to 300 within the next three years.

The firm’s Manchester head Vaqas Farooq told The Lawyer that the growth would be made across all five of the office’s key practice groups. These are commercial, corporate, and real estate as well as the firm’s recovery group and private client group.

The expansion plans comes as the Manchester team prepares to move into the Allied London owned XYZ Building in Spinningfields. The firm committed to occupying 32,000 sq ft over two floors of the building and intends to move in by the end of 2016.

Farooq said: “The new office will be open and agile with about a third of our working floor given up to collaboration space. There has been an evolution of law firms from cellular offices to open plan and for me the next step is agile.”

The use of ‘collaboration space’ is designed to encourage lawyers to move around the building and work with members of different teams within the office. The working areas will range from traditional private rooms for meetings with clients to outdoor garden areas.

Last year Shoosmiths’ turnover broke £100m for the first time after increasing 10.4 per cent, from £92.98m to £102.7m. The firm’s profit per equity partner also increased by 44 per cent, from £290,000 to £416,000.

Earlier this week The Lawyer revealed that US firm Shearman & Sterling is consulting on plans to introduce agile working across its London office.

The firm has had an informal system in place for a number of years but is currently reviewing its agile working policy in London after its US associates were granted the ability to work from home two days a month.

While 2015 was the year of the mega-merger, 2016 could well be the year of the never-merger, as the value of abandoned deals reaches its highest since the eve of the financial crisis.

Last week saw the collapse of Pfizer’s $160bn merger with Allergan, after the US Treasury and Internal Revenue Service (IRS) issued proposed regulations to reduce the benefits of corporate tax inversions. And with the transaction set to have been the largest tax inversion deal in history, the actions of the US Treasury could not have been more strategically timed.

“There is a lot to unpack,” says King & Spalding partner John Clay Taylor. “The regulations issued last week really put things into legal formats that were already issued and lawyers have been trying to get their heads round them.”

The US Treasury made no reference to the Pfizer and Allergan deal in its announcement last week, but it is widely suspected to have issued the proposals to stop the pair in their tracks. Sources say the rules “shot that deal down” and “hurt the pride of Pfizer and Allergan”, while market commentators claim Congress only knew about the rules just an hour before they were released.

“No-one expected these rules to be snuck in and it was a bit of a bombshell,” says one corporate partner. “Clients are asking whether they’re going to be caught by this and it’s going to have a big impact on anyone connected to the US.”

Rewriting the rules 

Pfizer’s deal with Allergan was announced last November, but the pair said last week they had been “driven” to terminate the deal as a result of the actions of the US Treasury and IRS. One corporate partner even says the parties “recognised there might be government intervention” by arranging a comparatively low break-up fee of $150m.

The proposed regulations issued by the US Treasury cover various points of contention, importantly excluding foreign acquirers of US businesses in the last three years. The rules aim to stop foreign acquirers from using their enlarged size to avoid inversion thresholds for subsequent US acquisitions, thereby specifically affecting Allergan which had grown through M&A transactions.

Allergan’s size had been one of the main drawing points for Pfizer, as it needed a large enough merger partner with which to combine. Yet despite the rules making organically-grown companies more attractive to US buyers, they may actually limit the amount of multi-billion tie-ups that can take place.

“In future inversions, it will be the organically grown companies that will be attractive merger partners for US companies,” one corporate partner says. “Pfizer is so big that it needed a merger partner that was equally as large, but it’s hard to grow so large organically and there are a smaller number of companies out there.”

Historic inversions

Pfizer’s intended merger partner Allergan was already significantly smaller in terms of revenue size, with Pfizer reporting revenues of $49.6bn compared to Allergan’s turnover of $4.2bn. This contrasts to Pfizer’s preferred merger partner of two years ago, when the pharmaceutical giant famously had its eye on UK rival AstraZeneca, whose revenue reached approximately $24.7bn.

However, that inversion also fell through in 2014, in a move almost mirroring the most recent collapse of Pfizer and Allergan. It came as the Obama administration said it was looking to reduce the benefits of inversions, putting scrutiny on companies that were planning to move their tax domicile to regions such as the Republic of Ireland.

Tax inversions have therefore been a particular bugbear of the US Government in recent years, with the Republic of Ireland’s 12.5 per cent corporation tax rate on trading income continuing to appeal to companies wishing to escape the US rate of nearer 35 per cent.

“There’s such a disparity in rates that it makes the US quite unattractive,” says one Republic of Ireland partner. “The US changes are a knee-jerk reaction and it puts up a trade barrier making it a bit uncompetitive.”

William Fry partner Martin Phelan agrees, saying that the way to stop inversions would be to instead make the US more attractive for US corporates and have the dollar going in at a cheaper tax rate.

“These actions have been taken to gain short-term political praise, but they will actually damage the US economy in the long-term,” he says. “It’s the US tax law that needs to be changed.”

The challenges 

However, the fact that the US Treasury issued such drastic rules at such a pivotal time implies that the administration thought it had no other option.

“The [US] government wants to discourage inversions and will use whatever means necessary,” one corporate partner says. “The rules are pretty draconian and they’re pushing the boundaries of their authority, but it’s the only available avenue for the administration.”

As well as issuing rules to prevent the inversion itself, the US Treasury is also targeting transactions that generate large interest deductions by increasing related-party debt without financing new investment in the US. These rules have been described by King & Spalding tax partner John Clay Taylor as “relatively benign but amazing in impact”, as these are ones that will have the wide-reaching implications.

“This is quite a sea change and shift in major tax rules,” Clay adds. “Up until now, debt deals have been given more favourable treatment than equity deals. But these rules say that if the lender is related to you, then debt will be treated as equity and you won’t get the tax treatment you were hoping for.”

Clay believes the rules concerning the interest deduction could lead to a “huge re-ordering of the system” that will prompt lawyers to rethink about how they conduct existing financings, guarantees and third party lenders.

“The concern for non-US clients is what the impact will be on existing financings and deals in place,” adds King & Spalding European tax partner Daniel Friel. “The rules affect new deals, but there will be questions over refinancing and guarantees.”

European connections 

While some lawyers are focused on what this means for their non-US clients going forward, others see a potential change in strategic direction over in Ireland. Companies may start looking for other ways to structure their business, with spin-outs serving as a viable option for companies that would otherwise have inverted.

“We remain attractive in Ireland and I predict more spin-outs in Ireland as a result,” says another partner in the Republic of Ireland. “If you wish to spin out your group into different sectors, then you may have the possibility of doing that and Irish holdings would be able to come into their own.”

This could be done by identifying the target business to be spun-out, before deciding which holding business to put it under. Sources believe IP-heavy industries would be most likely to be spun-out due to the manner in which profits are relocated, with the method potentially providing companies with an alternative way to structure business under the new rules.

As it stands therefore, all lawyers can do is predict the next stage of the tax inversion saga. Some invisage that there will not be much of an impact on the M&A side until the US Presidential Election is over, while others predict an increase in Asian interest as companies shy away from US deals.

However, the majority agree that the US’ actions were a bold, but potentially, rushed move, claiming “it’s never a good thing when a merger of that size falls through”. As the value of abandoned deals reaches its highest since the eve of the financial crisis, the corporate world will be tentatively hoping the market picks up.

Dentons is mulling an overhaul of its China management structure with the launch of a new China board, as the firm sets a goal of a single Chinese profit pool.

Almost six months into the merger between Dentons and Chinese firm Dacheng, the firm’s global and China leadership teams are understood to be putting stronger emphasis on integration in China.

Sources in the firm told The Lawyer high-level discussions are currently ongoing over plans to create a new China board this year to oversee the operational integration among its 44 financial independent domestic offices.

Currently the firm’s Beijing office acts as the headquarters, drafting firm-wide policies and steering developments in the 43 mainland branch offices.

In another key post-merger integration move, Dentons’ Shanghai-based lawyers are set to move into Dacheng’s new Shanghai office, which is located in the city’s tallest skyscraper, Shanghai Tower, later this month. Legacy Dentons Shanghai partners Mitch Dudek, Alex Wang and Todd Liao are thought to be joining the China practice as global partners, meeting regulatory requirements which prevent them being partners of the Chinese firm.

Consolidation in Beijing is expected to follow soon after, but in Hong Kong the two sides are yet to agree on a plan.

The news emerged following Dentons’ global board meeting this week in Nanjing.

The Chinese firm’s current management line-up is made up of a 17-member partnership council, a five-member supervising committee and an executive committee. The current leadership team, led by founder and chairman Peng Xuefeng, was elected in April 2014 prior to the merger talks with Dentons, which started in July that year.

A senior Chinese source indicated that discussions about the new board have been on going for quite some months, and a draft plan with specific implementation details is expected to come out later this month.

“Under the new structure, Beijing will be one of the 44 China offices that are led by the China board, which will represent the China region in Dentons’ global management. The new structure will be more compatible and better aligned with the global structure,” said the source.

The board members will be elected by the firm’s senior equity partners. As Beijing is the largest office by lawyer headcount and revenue, it will have a greater representation on the board, although its final composition is still being discussed.

To support the new structure and the implementation of a unified management and back-office system across the 44 offices, Dentons’ Chinese verein member is also in the process of appointing five national operational directors to oversee five key functions: IT; HR; risk control and compliance; business development and marketing; and financial management.

“The new appointments are also to ensure China is better connected with Dentons’ global network and ensure consistent approach domestically and globally,” said the source.

He said these integration moves were a precursor to the firm’s ultimate goal of having one profit pool in China.

“The ultimate goal is to have all offices in China share revenues and one profit pool,” he added. “Reforming such a giant firm is not easy. There’s no strict deadline but the global management wants to have it done as soon as possible.”

Integration and specialisation were two top priorities of the firm’s management, as was documented by The Lawyer’s leadership interview with Peng in 2014. The process is said to have been delayed by the Dentons combination last year but is now back on the agenda.

Prior to its merger with Dentons, legacy Dacheng grew exponentially by adding existing firms around the country to its national franchise. Although they share the same brand, almost all of them remain financially independent and have different cost and profit sharing arrangements and remuneration systems.

Key performance metrics also vary hugely from office to office, such as annual turnover, average equity per partner, and average revenue per lawyer.

For example, in 2014 the Shanghai office generated RMB500m (£54.5m), accounting for 22 per cent of the firm’s national revenue of RMB2.25bn. However Shanghai’s average revenue per lawyer was among the highest at RMB1.3m, almost double the firm-wide average of RMB723,000.

No5 Chambers Planning and Environmental Barrister Hashi Mohamed will be speaking at The Annual PEBA National Conference 2016 on Friday 6th May 2016.

This conference will provide a review of the law, policy and practice guidance as it affects planning practitioners and this conference sets out to provide a searching assessment of the planning system’s strengths and weaknesses with recommendations for any further change from the speakers.

A Keynote Address will also be given by former No5 Planning and Environment Silk, Mr Justice Dove.

Hashi Mohamed will be speaking on Appeal Decision Review.

Carey Olsen has advised long-standing client, Blue Water Energy (BWE), on its acquisition of a controlling stake in Px Group, a company that specialises in the energy, engineering and process industries.

Px Group has been growing steadily for a number of years and the deal provides it with access to capital for continued investment. The company provides operations and maintenance, engineering and energy, trading and management services to owners of large-scale energy process and infrastructure assets in the European market.

BWE is a private equity firm investing exclusively in the energy sector with a targeted focus on the middle market energy space. Blue Water Energy Fund 1, LP currently has capital commitments of US$861 million. BWE’s strategy is to partner with management teams and to work alongside them to develop their businesses.

Carey Olsen partner Andrew Boyce and senior associate Ruth Abernethy advised on all Guernsey aspects of the transaction.

Park Square Capital Partners has launched its third subordinated debt fund; securing €1.2 billion of investor commitments with advice from Carey Olsen’s investment fund specialists.

The fund, Park Square Capital Partners III, will continue the strategy of investing in the debt of high-quality levered companies backed by leading private equity sponsors across Europe and the US. The fund is able to use leverage taking its total investable capital to €1.5 billion. The predecessor fund, Park Square Capital Partners II, which is a 2010 vintage fund, closed at €850m.

Carey Olsen partner Andrew Boyce and senior associate Alex Mauger advised on the Guernsey elements of the final close, including structuring, fund formation, regulation, marketing and launch.

Since the January 2015 merger between Dentons and China’s Dacheng scarcely a week has gone by without the ‘world’s largest law firm’ hitting the headlines. Last year the firm carried out seven mergers in four continents, launched offices in Europe and Africa, and made lateral hires on a regular basis worldwide. For a while, it seemed the growth would never stop.

But this expansion was met with bemusement by many in the market. Rivals queried whether it was sustainable and departing partners claimed there was little integration and not enough cross-selling between Dentons’ six Verein members.

At The Lawyer’s Global Collaboration Summit last month Dentons chair Joe Andrew won over many in a sceptical audience with an assured and open presentation in which he claimed Dentons was “the largest referral network in the world”. The stats he presented were impressive: he said Dentons had referred work to 920 other firms last year, and picked up 500 inbound referrals. Crucially, Andrew said the firm’s global scope was also producing internal referrals.

So we decided to put Dentons to the test (see cover story on page 20). Choosing real estate, as one of the practices shared by all the legacy firms, we asked the firm for data on its clients, lateral hires and transactional work in this sector. It provided the bulk of this data, although some had to be sifted: for example, taking out the legacy McKenna Long & Aldridge partners who had been included in the laterals list. But the figures show the real estate practice has indeed grown since the merger, with 26 lateral hires.

However, the cross-selling argument is less persuasive. Of a list of key real estate clients that Dentons provided, only 15 were cross-regional compared with 36 single-region clients. Meanwhile, although it monitors referrals on a daily basis, the firm keeps those figures confidential. Andrew’s contention that inter-office instructions have “surpassed expectations” remains, for the moment, just a contention.

The verdict of clients and competitors is mixed, with one general counsel telling us he “can’t really remember” the last time he used Dentons, despite the firm being on his panel. Undoubtedly, Dentons’ integration is still a work in progress. As we reported on Friday, the firm plans to streamline its Chinese management structure and, though a number of ex-partners claim lack of cross-selling was one reason they quit, those remaining sing the praises of its multijurisdictional capabilities.

The firm’s ‘Pac-Man’ strategy has brought it fame, or perhaps infamy. The question now is – will the ghosts in the machine be its downfall?

Commercial implications of prioritising the UK economy in Continental Shelf strategy, how new energy rules affect business, and bees, trees and pesticides – The Lawyer’s most popular briefings.

Shepherd & Wedderburn: Maximising economic recovery from the UK continental shelf: an update

By Gordon Downie and Tom Swan

In July last year the new UK Energy Bill started its passage through Parliament, beginning in the House of Lords. The Bill represents the second stage of the implementation of the Wood Review recommendations that a new strategy for maximising economic recovery from the UK Continental Shelf be developed and a new regulator be created with additional powers to facilitate the execution of that strategy.

The first stage of that implementation was the establishment of the Oil and Gas Authority (OGA) as an executive agency of DECC and the passing of the Infrastructure Act 2015.

Once passed, the Bill will, together with the amendments to the Petroleum Act 1998 which were made by the Infrastructure Act, provide the framework for the OGA’s operation and the transfer to it of DECC’s oil and gas regulatory functions, and the additional powers that the Wood Review recommended it should have.

The changes to the regulatory landscape in the UK Continental Shelf as a result of the Bill will
be significant for industry participants. In particular, the establishment of the OGA as a more active regulator, with a new mandate to maximise economic recovery from the UK Continental Shelf as a whole, is likely to mean that industry participants will wish to consider how they ­interact with it more closely than was previously the case. 

MER UK

A key theme of the Wood Review recommendations is that the pursuit of individual commercial interests by UK Continental Shelf licence holders, operators and infrastructure owners is likely to result in a failure to maximise economic recovery from the UK Continental Shelf for the benefit of the UK.

The objective to maximise recovery from the UK Continental Shelf as a whole (MER UK) has therefore been placed at the heart of the new regulatory framework. It is referred to in the Petroleum Act and the Bill as the “principal objective”. It is required to be achieved in particular through:

development, construction, deployment and use of equipment in the petroleum industry; and

collaboration among holders and operators of petroleum licences, owners of upstream infrastructure and persons planning and carrying out the commissioning of upstream infrastructure (UKCS stakeholders).

A more detailed strategy for enabling MER UK to be achieved is required to be put in place by April 2016. DECC is responsible for producing and consulting on the initial MER strategy and the OGA will be required to review and (if necessary) update it every four years.

Shoosmiths: Act now to avoid energy regulation fines

By Hannah Price

With the new energy saving regulations, businesses are at risk of financial penalties for non-compliance.

ESOS is a new piece of EU legislation which requires large enterprises to introduce a mandatory programme of energy audits. ESOS applies to your business if:

• the business employs 250 or more people, or
• has an annual turnover in excess of €50m (£38,937,777), and
• an annual balance sheet total in excess of €43m (£33,486,489).

It also applies to overseas companies with a UK registered establishment which has 250 or more UK employees (paying income tax in the UK).

Responses to the legislation by affected businesses have been alarmingly low with only 1 per cent so far declaring that they are compliant (at the time of publication). Non-compliance could amount to the EA taking enforcement action, including a financial penalty.

Top tips for business

Here are our top tips to help you through the process:

1. Appoint a strong project lead able to focus all if not much of the role’s attention on ensuring compliance by the deadline. The lead should be supported by a project team representing key stakeholders across the organisation that will assist with the compliance tasks.
2. Define and monitor progress against key milestones, factoring in extra time needed.
3. Ensure key departments are sufficiently briefed and involved to ensure various tasks are achieved – data gathering, verification, audits etc – for example, estates management, finance, HR, logistics.
4. With the support of a senior sponsor, escalate matters that need speedy resolution if delays occur.
5. Ensure senior management and the board are made aware of their role and any approvals that will be required.
6. There is detailed guidance available but do use the ESOS help desk to clarify any queries you might have.
7. Use the regulations to see how ESOS can reinforce your approach to energy efficiency and carbon reduction and cost reduction.
8. Determine priorities for improvement based on the audit findings and costings.
9. Communicate your approach across the organisation to highlight the important role teams and individuals also play in delivering the regulation’s aims.
10. For each part of the project think about what information you will store in your evidence pack in the event of any subsequent audit by the enforcement agency.
11. Think about new business as usual activities so that ESOS can help achieve ongoing organisational improvement opportunities rather than when future obligation duties fall due.

Ones to watch

AB & David Africa

Can Ghana go from power crisis to being a power hub?

Power shortages have hit South Africa, Ghana and Zambia to name just a few. The paradox is that Africa possesses most of the key ­natural resources to produce abundant energy, yet it has
the highest energy deficit.

GRATA Law

Financing ­renewable energy projects in ­Kyrgyzstan and Tajikistan

This briefing includes state support initiative, regulations for small and medium hydropower stations, bankability issues, plus an overview of the Tajikistan energy market.

Loyens & Loeff

Go-ahead for Dutch offshore wind energy plans

The Dutch Senate has passed an emergency bill amending the Electricity Act 1998. The formal name of the bill refers to the government objective to ensure timely realisation of goals set in the National Energy Agreement.

Anjarwalla

Africa: Kenya has the potential to fuel its own ­development

Energy provision is critical to resolving Africa’s development issues and investors are willing, but a good legal guide is essential to smooth the bureaucratic path.

Shepherd and Wedderburn

Solving the ‘energy trilemma’ with capacity market insurance

With a legacy of underinvestment in energy, and faced with a number of power stations scheduled to close by 2020 the Government has sought to stimulate investment in energy through the introduction of the Energy Act 2013.

In the last three years Dentons has undergone a major metamorphosis – going from a 275-fee-earner outfit after the 2010 SNR merger to being the largest law firm in the world.

The firm has invested a huge amount of resources in its expansion strategy already, with seven mergers in 2015 including high-profile moves into China with Dacheng and the US with McKenna Long & Aldridge.

At The Lawyer’s Global Collaboration Summit earlier this year, Dentons chairman Joe Andrew addressed a room full of sceptical independent law firm managing partners from around the world. He joked that in order to gain equivalent market share to the Big Four accountants, ­Dentons would have to build a 45 million-strong lawyer proposition. This, he said, would be unwieldy.

“We will continue to grow in major markets around the world,” Andrew said. “We believe that we can be significantly bigger than we are today. No matter how big we are, how broad we are, we will never have every single person that we need for our clients. This is a way to bring a level of transparency and candour on that.”

But Andrew also claimed that Dentons is the biggest referral firm in the world – not just within its own walls but also to independent firms across the world. Contrary to market perception, he said that Dentons referred work to 920 other firms in 2015, and received over 500 inbound referrals, gaining grudging admiration from the Chinese, African and European managing partners in the room.

Dentons, he said, has moved from a mode in which it seemed to be gaining a new jurisdiction every month to one in which it understands that clients do not need it to be everywhere in the world.

Has Dentons deviated from what some describe as a “Pac-Man strategy”? At what point does the frenzied acquisition trail become a sober exercise in integration?

Europe: the lure of the polycentric

Since the 2013 merger with Salans, a number of partners have left Dentons in Continental Europe, for a variety of reasons and to a variety of destinations. The vast majority were legacy Salans, as SNR Denton had only a limited presence in Europe – a small Paris office, plus Moscow and Kazakhstan.

Salans arguably always struggled to establish a clear identity. To some it was an Anglo-French firm; to others, following its groundbreaking 1998 transatlantic merger with small New York outfit Christy & Viener, it was a Franco-US player. Salans itself always tried to brand itself as ‘European’ – it was, in fact, the architect of Dentons’ infamous ‘polycentric’ strategy.

For a time, Salans was in a referral relationship with Pinsent Masons, but Pinsents eventually called time on the alliance in favour of pursuing its own European growth.

Salans, everyone agrees, was a “true partnership”, but several ex-partners say that the firm was not able to be tough enough on under-performers.

“It was a loose association of people largely doing their own thing,” says one source. “There was a lot of individual shoe leather that went into looking after partners.”

Partners also had a significant amount of local autonomy, but that meant, according to some, that there was not enough joined-up thinking between the offices. France and Poland were a similar size in terms of headcount, but Warsaw reportedly brought in significantly more profit than Paris.

Salans was hit hard by the financial crisis. Turnover slumped from €229m in 2008 to €193m the following year. Although in the following three years revenue did climb, by 2012 – the last full year pre-merger – at €220m it was still below 2008 levels with a lower profit margin.

Sources say the firm had lost market position, particularly in Paris, and claim that despite Salans’ polycentric model, it was the “cash machine” in Poland that was running the show.

Accordingly a merger was the firm’s best option, and Salans’ broad European footprint and strength in areas like real estate clearly attracted the SNR Denton management. Many ex-Salans partners agree that the influence of the firm’s polycentric model should not be underestimated and speak warmly of Salans’ last managing partner, Dariusz Oleszczuk, and his successor as Dentons’ Europe CEO, Tomasz Dabrowski.

“He’s a fair guy and a shrewd businessman. He doesn’t lose time; meetings are short, he gets to the point but he knows how to take tough but fair decisions,” says one former partner of Dabrowski.

Dentons’ European expansion also wins plaudits, particularly last year’s Italian launch. But those who have left the firm since the merger complain that for them, there was not enough cross-selling between practices and offices.

“The way it was organised didn’t really entice people to cross-sell,” says one former partner, now at a rival international firm.

“One of the big problems it had when I left was that the cross-selling part was, compared to other firms, relatively low,” adds another. “What’s the point of being global if you don’t refer global business to each other?” The partner claims that the firms which have joined the merger are not homogenous enough to produce the cross-selling results or boost the quality of Dentons’ European clients.

Most agree that Dentons has not lost reputational ground in Europe since the merger – but neither has it gained ground. That work is yet to be done.

“I admire that to some extent they believe that just by dreaming big enough this will happen,” concludes a former partner.

It’s not over yet

Any hint that Dentons needs time to digest its mergers does not mean it will stop snapping up firms. According to Dentons UKMEA CEO Jeremy Cohen, around 85 per cent of the firm’s clients demand that the firm be in Australia. This alongside Latin America is a key region identified for future growth. So far, the firm is extending into Australia through a planned merger with top-10 local firm Gadens, while it has launched in Latin America through tie-ups with Colombia’s Cárdenas & Cárdenas and Mexico’s López Velarde Heftye & Soria, adding around 55 lawyers in Colombia and 35 in Mexico.

Dentons may be the largest law firm in the world by headcount, but Andrew emphasises that relationships with independent firms are a crucial part of its strategy.

“We’re the biggest referral firm in the world,” Andrew says, “but there are still misconceptions about us in the market.” Dentons has an important brand exercise ahead of it to quash peers’ doubts about the credibility of its strategy.

Dentons’ extraordinary trajectory has made the market sit up and take notice. In fact, it is probably fair to say that pretty much everyone in the legal market has an opinion about Dentons’ strategy – but not many are entirely favourable.

“I’m glad I’m not there,” a former partner says. “When Dentons did the initial merger it diverted a lot of time and attention. Dentons has been good at massaging the press and getting them to present the numbers that they want people to see. It’s nonsense – the firm is under a Swiss Verein structure; it isn’t even properly merged.”

The firm is under “layers and layers of management”, another ex-partner claims. “Unless there are some strong benefits, which I don’t see from Dentons, you’re putting together some mid-tier second-rate firms for no real reason.”

“I have very warm feelings towards the firm and the people in it,” an ex-partner who was part of the firm’s management says. “There was a philosophical difference: to me the goal was to create a firm that had a clear, distinct ‘one firm’ feel. From what I’ve read that’s not possible or necessary.”

An independent consultant says the firm’s message seems to be “smash it all together and hope”.

“Just because nobody else has done it doesn’t mean it’s the right thing to do,” the consultant adds. “Getting people to play nicely together is a nightmare. Getting them to do it when you’re operating a Pac-Man style strategy is even worse.

“I think it’s capable of working,” the consultant claims. “But I think they underestimate the time needed to get people to play well. The risk is that for any new clients, if the service isn’t joined up, it will be off the panel list for another five years.”

Dentons is clearly facing a major challenge to its growth ambition. If it is not capable of changing market perception, future referrals will inevitably be affected. Andrew believes that brand recognition will help with the process.

“We are dramatically improving and increasing awareness of our brand,” Andrew claims. “We have combined with great firms. Simply by having done so many consolidations we are in the media more than any other law firm.”

But is focusing on the brand enough? Operationally, the scale of Dentons’ acquisition strategy brings very specific challenges. The chairman of a US law firm has disclosed that their firm spent $20m on integration following a recent merger. The options for firms that do one merger are limited, says the chairman, because it takes up to five years to complete the process – time that is taken away from fee-earning in a highly competitive environment.

“Dentons has a poor plan and will have poor execution,” the chairman says. “They don’t even pretend they are looking for quality mergers – they aren’t even keeping up the pretence, and that astounds me. This isn’t a strategy for clients because Dentons can’t guarantee quality. Clients don’t want to sign up to be given service by disparate or subpar firms.”

A Dentons partner argues that any market negativity might be borne from other people’s conservatism and fear. “They are thinking, what if they’ve got it right and we’ve got it wrong?” he says.

“Dentons is genuinely very collaborative, within the London office and on a cross-border basis,” he continues. “It’s a firm that celebrates and encourages cross-team, cross-border and cross-office collaboration and co-operation feeding into that.

“I think it’s a sizeable and sophisticated firm, a firm that’s growing not only in terms of size but also in terms of brand and strategy and momentum.”

According to Andrew, the strategy is clear. “We don’t have to exaggerate having more lawyers,” he argues, “quantity is just a tool for quality. We are not that much different to other law firms. We are obviously striving to operate as one firm, to have different training programmes and to have a process to expand across regions.”

In order to validate Dentons’ bet on quantity to get the quality, the firm’s partners must prove that the internal referral strategy works. According to Andrew, Dentons’ investment in partner meetings around the globe as well as the economic incentive to refer are sufficient to ensure collaboration between fee-earners.

However, many argue that the very nature of Dentons’ mergers – fast-paced and with firms of disparate cultures and strategies – means that partners have little confidence in sharing work with their new colleagues. How can Dentons prove its strategy is working?

One of the most illuminating approaches is to examine Dentons through the lens of real estate, which accounts for over 15 per cent of its $2.12bn revenue. Does Dentons’ foundation referral system work in practice here? The Lawyer has examined how much the offering has grown over the past three years, and whether the investment has borne fruit.

Real estate and referrals

Real estate is one of the practices most affected by the firm’s evolution because of its strong ties with legacy Denton Wilde Sapte, Salans, SNR and now Dacheng and McKenna Long & Aldridge.

The multiple mergers have not only bolstered the practice’s headcount, they have transformed the makeup of the firm’s global real estate capabilities as well as the kind of work and clients partners can hope to win.

There is a marked hierarchy within the real estate practice: 10 global leaders, followed by eight regional heads and 31 country heads.

Seven of the total eight real estate global leaders at the firm in 2013 are still in their roles, the exception being Eric Rosedale, who was dropped from the Dentons line-up in 2014. In 2015 the firm added William Timmons, and in 2016 Virginia Glastonbury – former legacy UK Denton Wilde Sapte senior partner – and Pawel Debows.

According to global practice head Evan Lazar, who is based in Prague, real estate is one of the firm’s “core practices” accounting for around 20 per cent of the total capability of the firms that merged with Dentons last year.

For Dacheng, this translates into around $80m (of a total $400m or RNB2.25bn for 2014), and for McKenna Long £61m of the reported total $305.2m revenue for 2014.

That matches Dentons’ data: in the last three years the headcount of real estate practice has more than doubled.

In 2013, the firm had a total of 524 fee-earners in the practice, compared to 1,102 in the practice as of April 2016. According to data provided by Dentons, 14 partners have left the practice since 2013, two of whom took up in-house roles in Europe and two who retired.

Partners who left for other firms are Stephen Webb, who joined King & Wood Mallesons; Dan Kidd, who joined Blake Morgan; and Rosedale, who joined Greenberg Traurig. In North America, Canadian partners Patrick Devine and Jason Park teamed up at boutique Devine Park and US partner Scott Toban left the law.

The largest growth in real estate was in Asia, where there was an increase of over 3,000 per cent from 16 to 509 fee-earners in the last three years alone. This is almost exclusively thanks to the firm’s merger with Dacheng. Big stars in the practice include Dacheng real estate and construction senior partner Charles Wu, based in Shanghai, who acts as client relationship partner to CP Group, IMC Group, China Resources Land, Longfor Properties and COFCO Property, among others.

The firm matched lateral hire investment in real estate in 2014 again the following year, with a total of 13 hires across the network in both periods compared to just one in 2013.

The majority of lateral hires in real estate in the last three years was in Europe, with a total of 15 across France, Germany, Italy, Luxembourg, Romania, Slovakia and Ukraine. The largest group was from DLA Piper, with a team led by Italy managing partner Federico Sutti in 2015.

Of the total hires in real estate, the US had one in 2014 and eight in 2015 following the impact of the McKenna Long merger.

So far this year, the firm has made two real estate lateral hires, in New York and Luxembourg.

China: integration inches forward

Dentons’ Dacheng merger, which took effect in November 2015, has given its global ­network over 3,100 extra lawyers and 44 offices in mainland China.

However, top-tier players in China from both domestic and international firms have raised questions on the extent of collaboration between China and the rest of Dentons’ global network as well as the quality of work Dacheng handles in China.

The core issues lie in the lack of real integration and consistency within the 44 Chinese offices, both financially and operationally. Most of the offices have joined the Beijing-headquartered Dacheng national franchise in recent years by changing their names and remaining financially independent. They have very different approaches and internal procedures to manage areas such as accounting standards, fee rates, cost and profit-sharing arrangements and compensation for lawyers.

Because many of the rebranded offices are based outside of the main economic centres, such as Beijing, Shanghai and Guangzhou, a considerable part of their practices still consist of low-end and “traditional litigation” work, the likes of conveyancing, personal injury claims and divorces. Key performance metrics such as annual turnover, average equity profit per partner, and average revenue per lawyer also vary hugely from office to office.

Although partners of the Chinese firm hail the global combination with Dentons as a positive and significant development, they have expressed concerns over the low level of collaboration and cross-selling within China as well as within each office.

One partner claims it is impossible to refer work because he does not know who the best counterparts in other domestic offices are, mainly due to a lack of firm-wide marketing efforts.

One corporate partner delves into a more fundamental issue hindering internal ­referrals – the ‘eat-what-you-kill’ remuneration systems used by most of the firm’s China offices.

“How much a partner can take home is essentially based on how much revenue the partner and his or her team generate,” says the partner. “There’s no real incentive for them to send work to other partners or teams.”

He adds that some partners would keep the work even if the matters fall outside of their expertise.

This is not a unique situation in Dacheng. As a matter of fact, the majority of the ­Chinese firms operate on this basis, even
in some of the country’s top-tier firms, according to The Lawyer’s China Elite 2015 report.

Almost six months into the merger, Dentons’ global and China leadership teams are understood to be putting a much stronger emphasis on integration in China, an effort let by global vice-chair Xiao Jinquan.

Sources indicate that the global management has outlined a three-year timeframe to implement its specialisation plan, and is mulling the idea of launching a new China board this year to oversee the operational integration among its 44 domestic offices.

Global referrals

Despite the integration challenges within China, there are many referrals from China to the rest of the network, partners claim. One example is a Chinese company introduced to Dentons US in 2015, which has already contributed $15m in billing.

“We are doing large projects across the globe, some of them have a China component to it,” Andrew says. “I think it’s a question of expectations. China has clearly exceeded our expectations.”

However, not all Chinese partners have seen the benefits of being a global network. They claim that there has not been a huge amount of inbound referrals to China. In addition, some complain about a “slow response rate” from foreign counterparts and “higher than market average fee quotes” from partners in Dentons’ overseas offices, making referring work within the network difficult. It is not compulsory to refer work within the network, so many Chinese partners still work with other firms in jurisdictions where ­Dentons has offices because of the reasons spoken about above.

Client wins

According to Dentons’ data, the firm acts for 15 Fortune 500 clients on real estate matters (see table, above), including JP Morgan Chase, Bank of America, Citigroup and Wells Fargo. The firm also represents a number of private equity investors, including Blackstone, TPG and Apollo Global Management.

Dentons argues that cross-border capability is its major advantage when pitching for clients, but in the real estate sector, the firm’s number of global clients has not yet surpassed the number in a single jurisdiction.

The firm’s figures show 36 clients in a single region versus 16 cross-regional clients. Of the cross-border clients, six receive advice in the firm’s four main regions (the US, Canada, UKMEA and Asia). These include Brookfield Properties in China, Australia, Canada, UK and the US; Blackstone in Australia, Europe, UK and Singapore; and Deutsche Bank in Europe, the US and China.

Examples of European cross-border work in the last year for top clients include advising Blackstone on the acquisition of six logistics and distribution parks in Poland and the Czech Republic from Pramerica Real Estate Investors, and advising TPG on its €3bn (£2.3bn) acquisition of European developer TriGranit.

Key client relationship partners in Europe include Lazar, who acts for AIG Global Real Estate, Blackstone, Deutsche Pfandbriefbank, Heitman International, Morgan Stanley and Starwood Capital Group; and Spain’s Jesús Varela, who has acted for RBS, Crédit Agricole, Deutsche Pfandbriefbank, Santander, Caixabank and Natixis.

The 36 single region clients that Dentons’ real estate team advises include AEW Europe, Barclays Bank, Aviva Investors, China Development Bank, Network Rail and Taylor Wimpey. There is clearly room to develop some of these clients internationally, although Network Rail and Taylor Wimpey are unlikely to yield enormous amounts of cross-border work.

Furthermore, according to TheLawyer Market Intelligence (LMI) on Taylor Wimpey’s national panel, Dentons is competing against six other firms, including the recently merged Gowling WLG, Osborne Clarke and Eversheds. It is expected to be the same situation with Network Rail’s infrastructure panel, with it competing against Addleshaw Goddard and Eversheds.

Despite having the highest number of real estate fee-earners, Dacheng produced only four reported client wins, all in 2014. These are worldwide luxury hotel chain Frasers Hospitality, holding company Cheung Sheng Development, real estate developer Shanghai Pengxin Group, and luxury condo developer 421 Kent Development.

Although the real estate figures released have yet to support the firm’s public claims, Dentons has performed better than expected on internal referrals to and from China, according to Andrew.

The firm won the majority of its new real estate clients in 2014, when it gained advisory roles for 19 known companies. In regional terms, the UK gained the most, with new names like Taylor Wimpey, Royal Mail, Kier Group and Network Rail added to the advisory list.

The UK was also the overall winner in client attraction during the past three years, with 15 new advisory roles added to the slate.

A good example of UK success was the disposal of a £1.2bn portfolio of Holiday Inns and Crowne Plaza hotels in the UK owned by a consortium led by the Lehman Brothers Real Estate (LRG). In March 2015 Cerberus Capital Management paid £225m for part of the portfolio and another part as sold to Kew Green for £70m. A large team in London and Milton Keynes acted on the deal, advising on all of the real estate aspects of the transactions, leading on from the firm’s advice to LRG in 2013. Dentons UK real estate partner Simon Masri led on the real estate aspects of the deal.

According to Dentons, the UK real estate market is important to its global strategy because of the presence of many international companies in the market and the referral opportunities to other parts of the firm.

Despite working on global deals such as the £400m development venture of Canadian pension fund HOOPP in Doncaster, or the £260m Karlin Real Estate UK asset sale last year, the firm’s global brand perception problems persist in the UK.

“We don’t see them much in real estate,” a UK real estate partner from another global firm claims. “I think their international strategy is very ambitious. I know they do good stuff but not in real estate.”

The centrepiece of the firm’s strategy may be to attract more cross-border work, but not all in-house counsel are buying. One, from a company that gave work to Dentons in the last couple of years, cannot seem to recall why he put the firm on the company’s advisory roster in the first place. “I don’t really use them,” he says. “I can’t really remember the last time I used them. They don’t even hit the radar with me any more.

“I meet a lot of firms that will try to sell themselves on the cross-border capability and a lot of the deals that we do are on a cross-border basis, but we normally use the firms that are in different countries and which work together.”

A longstanding real estate cross-border client of Dentons told The Lawyer that it has a “neutral view, not particularly amazing” of the firm. “There’s not much relationship,” the client claims. “Yes we’ve used them on some real estate finances. If we’re going for a multinational deal we’d use them. They do a perfectly capable job, but not to the extent that it differentiates them from the competition.”

However, a Dentons partner who joined the firm last year and has a portfolio of international banking clients, says the firm’s branding allowed the firm to maintain spots on existing panels despite cuts. “We now have a credible story to offer clients to operate on multi-jurisdictional transactions,” he says.

According to Andrew, the firm measures referrals between partners across its entire network on a weekly and even daily basis. The tracker allows the firm to measure whether the amount of work expected is going out. These figures are confidential, but The Lawyer understands that partners are sent headline figures to showcase the amount of referrals as an “incentive”.

Although Andrew says global referrals have “surpassed expectations” so far, data provided for the real estate practice does not quite back his claim. In fact, the key practice has yet to produce tangible evidence of cross-border co-operation between the firms it has merged with.

The Lawyer found no evidence of large numbers of clients wanting to hire a single global firm, suggesting that Dentons is unlikely to generate much work involving many of its jurisdictions and will continue to rely heavily on single jurisdiction work despite its geographical breadth.

While Dentons has expanded its headcount in regions it considers key to its strategy, size does not equate success, and without proof of many more global referrals, the firm has a long way to go before it can silence naysayers.

Dentons is at the start of a long integration process on an unprecedented scale for the legal market. Without its partners’ co-operation it will mean game over.

Additional reporting by Joanne Harris and Yun Kriegler

Ovo Energy general counsel Daphne Yao started her legal career as a self-proclaimed “deals junkie” at a magic circle firm. Since then, her appetite for new challenges has taken her on a varied path through the corporate, music and sports media industries. Now she spends her days navigating the regulatory minefield for a burgeoning energy company.

Yao is just a year into the job running the legal function for this small, challenger energy provider which is one of the most innovative and pioneering in the market, competing with the Big Six for customers and responding rapidly to Government policy and regulatory reform.

“Regulation is the main reason I joined Ovo,” she admits. “People asked why on earth would I move to a utilities business? The reality is that six years ago Ovo started to do something differently and treat customers fairly. It’s prompting a lot of regulatory reform – it’s exciting.”

Yao’s career path is incredibly diverse given her young age. She trained in her native Australia before moving to the UK to work for Freshfields Bruckhaus Deringer, where she stayed for three years. “I always thought I’d stay in private practice,” she says, “I loved that kind of work.”

What changed her mind was a secondment to EMI Records in 2008, which allowed Yao to use her commercial legal skills to “help shape a business”, she says. “I’d never really understood that before. Suddenly I realised there were lots of businesses that value lawyers in that way.”

From EMI Yao moved to Virgin Media as commercial counsel, where she leveraged her experience to help set up its game-changing partnership with Spotify back in 2011, before moving to digital sports media group Perform, fresh from its first listing on the London Stock Exchange. “The general counsel and I created a legal team from scratch,” Yao says. “It was the first time I realised I could manage and lead a team.”

Shaking it up

When Yao joined Ovo in March 2015 the legal team comprised just two people. “They were very reliant on contractors from Lawyers on Demand – that’s completely changed now.”

She restructured the team and brought in two new lawyers from private practice before separating out a compliance function from the legal team and moving it into the business’s risk department. “It’s a very technical part of the operation so I carved it out of the legal team. The separation allows us to do core commercial contracts more easily,” she explains.

But the shake-up wasn’t over yet. “Soon after I joined, our head of policy left so I took on that role too.” As head of policy, Yao has two direct reports who lead Ovo’s conversation with regulators and Government on new legislation and consultations. The small team is engaged heavily in the Competition and Markets Authority (CMA) review into the energy market. “We’re behind the scenes of regulation and share our views with the Government,” she says. It means she is integral to Ovo’s strategy as a regulated entity and also as a commercial business.

Her dual role as “half head of legal, half head of policy” also means that Yao is the mouthpiece for Ovo’s contribution to the mammoth smart-meter rollout initiative, used by one in five of Ovo’s customers, which is “much more advanced than other energy companies,’ according to Yao.

“We don’t see ourselves as separate from the business: we’re very much business operators, just with a particular set of skills”

Staying ahead of regulatory changes keeps the job fresh and exciting, Yao says. But it can also be a major challenge. “Energy regulation is very complex: unless you’ve been in the industry for 20 years you don’t understand every word of it.

“The challenge is trying to influence and shape how reforms are going to happen in the future. We’re in a unique position to share our experience with the regulators, as well as what does and doesn’t work for the customer,” she says.

In terms of the commercial end of the business, Yao also heads up the group risk function, which gives her yet another direct line to Ovo’s board, though she doesn’t sit on it herself.

“One of the great things about Ovo is that we’re not about boxes and lines, the company is very much an open door.” The chief executive is the “only one with an office in the entire building”, she says. “There’s little sense of hierarchy and I’m definitely not just the lawyer who’s wheeled in when they need something.”

Yao also has a major mandate when it comes to controlling costs and ensuring the efficiency of the legal team. “We insource as much as possible”, she says, adding that she believes it is “essential” to keep as much specialist knowledge in-house as possible and let the team “take responsibility for the work we do”.

“We outsource very specialist advice as well as employment and property work as it’s quite ad hoc,” Yao explains. Ovo’s principal corporate adviser is Simmons & Simmons, a legacy relationship from before Yao joined. “When I came on board I wanted to expand their remit and be more strategic about how we work with them,” she says. “I wanted the relationship to be more ‘pan-Ovo’ instead of just calling them up regarding deals”.

Since her appointment as general counsel Yao has also instigated relationships with Bond Dickinson for energy regulation advice, Osborne Clarke for employment work and Ashfords for property advice.

“Our legal spend is typically between £200,000 and £300,000 and it has stayed stable year-on-year so far,” Yao says. “You’d be hard-pressed for a company of our size to operate on less.”

Business operators

Overall, Yao says Ovo’s legal team is a “strategic adviser to the business, first and foremost. We don’t see ourselves as separate from the business: we’re very much business operators, just with a particular set of skills. We’re no different to accountants or software developers.”

This could change as the company grows, however, or if a big piece of litigation came up, which so far has not happened.

Looking to the future, the biggest challenges will be engaging with the results of the CMA review, due out this summer, and responding to Ofgem’s move towards principles-based regulation. The changes could result in Yao implementing some key commercial and operational changes in terms of tariffs and packages for customers.

“My vision for the legal and policy teams is to be thought leaders both in the business and the wider market, and help be the driving set to take Ovo to the next level.”

Investment in innovation, the rapid growth of companies, the rise of cyber security and the uptick in high-value M&A meant the technology sector provided plenty of work for law firms in 2015.

Using data from The Lawyer Market Intelligence (LMI) this report identifies the biggest deals in the sector in 2015 and the law firms that advised on them, pinpoints industry trends and looks at the panel places up for grabs.

A hive of M&A activity

M&A has seen a global resurgence and the technology sector is no exception. The sector has seen a large number of M&A deals and these are becoming increasingly high-value in nature, due in part to the development of new types of technology and the entry of technology companies into new and profitable markets.

According to LMI data most of the highest value technology-related M&A deals in 2015 took place in the US – the market that continues to set the pace. The result was a plethora of work for US firms looking to cash in on a market that has become second only to the pharmaceutical sector in terms of M&A.

The biggest technology-related M&A deal of 2015 – and considered one of the biggest tech deals of all time – was the $67bn (£46bn) acquisition of computer storage seller EMC by Dell in October 2015. Dell and EMC are set to create the world’s largest privately controlled, integrated technology company when the deal closes at the end of 2016.

Simpson Thacher & Bartlett advised Dell on the deal, led by partners Richard Capelouto, Christopher May and Jennifer Hobbs, while Wachtell Lipton Rosen & Katz partners Steven Rosenblum and Gordon Moodie advised Dell owners Michael Dell and MSD Partners.

Skadden Arps Slate Meagher & Flom acted as external advisers to EMC, with a Boston and New York-based corporate team including partners Margaret Brown, Peter Atkins and Laura Knoll.

The Dell deal surpassed the $37bn acquisition of US wireless chip manufacturer Broadcom in May 2015 by Singapore-based maker of semiconductors Avago Technologies. Latham & Watkins advised Avago on the deal, led by Silicon Valley partners Christopher Kaufman, Anthony Richmond, Luke Bergstrom and Chad Rolston. Meanwhile Broadcom turned to Skadden and corporate partner Kenton King.

In February 2015 Skadden won a lead role, this time advising US telephone company Frontier Communications on its acquisition of the wireless operations of US-based broadband and telecoms company Verizon Communications for $10.54bn. Debevoise & Plimpton partners Jeffrey Rosen and Michael Diz advised Verizon.

In the same year Verizon also acquired AOL for $4.4bn. Weil Gotshal & Manges co-chair of transactions Frederick Green advised Verizon, while Wachtell Lipton founding partner Martin Lipton and corporate partner David Shapiro advised AOL.

The end of 2015 saw Weil corporate chairman Michael Aiello advise Intel in its $16.7bn acquisition of chipmaker Altera. US-based Altera turned to Wilson Sonsini Goodrich & Rosati with a team that included corporate partner and head of the firm’s M&A and private equity practice Martin Korman.

“The top tech-related M&A deal of 2015 – and one of the biggest of all time – was the £46bn acquisition of computer storage seller EMC by Dell”

Outside the US Skadden advised Nokia in its €15.6bn (£11.2bn) acquisition of French telecoms company Alcatel-Lucent. The Skadden team was led by Scott Simpson, the firm’s co-head of global transactions, Armand Grumberg, head of the firm’s European M&A practice, and London-based corporate partner Michal Berkner.

Sullivan & Cromwell advised Alcatel-Lucent on the deal, led by Rich Morrissey in London and Gauthier Blanluet in Paris, while Latham Paris-based partners Patrick Laporte and Pierre-Louis Cléro advised Alcatel-Lucent’s board of directors.

Mobile M&A

In the UK the rapid increase in the use of smartphones and mobile-related services saw the mobile sector dominate technology-related M&A in 2015, with companies vying to become the market leader.

In January 2016 the Competition & Markets Authority approved BT’s £12.5bn acquisition of EE, a joint venture between Deutsche Telekom and Orange – and the UK’s largest mobile phone network. For BT and EE the deal presents the opportunity to dominate the UK consumer telecoms market and enables BT to supplement its broadband, WiFi and fixed-line platforms.

Advising BT on the biggest acquisition in UK technology history was Freshfields Bruckhaus Deringer co-head of global M&A Ben Spiers, antitrust partner Rod Carlton and corporate partner Natasha Good. Deutsche Telekom turned to Clifford Chance M&A corporate partners Tim Lewis and Joachim Fleury, while Orange turned to Norton Rose Fulbright corporate partners Oliver Stacey and Chris Pearson.

Meanwhile, in January 2015 Spanish telecoms provider Telefónica sold the UK’s second-largest mobile operator O2 to CK Hutchison Holdings (formerly Hutchison Whampoa), the Hong Kong-based investment holding company and owner of Three, the telecoms and internet service provider.

The $15bn deal, which is still subject to European Commission approval, would create the UK’s largest mobile phone operator, surpassing EE and Vodafone. Herbert Smith Freehills corporate partner Gavin Davies advised Telefónica, while CK Hutchison Holdings turned to Linklaters and Freshfields. Baker & McKenzie acted as additional advisers on competition aspects.

Determined not to be left behind, Vodafone has been busy extending its reach across Europe. In October 2015 the mobile operator entered into an agreement with Russian mobile operator Mobile TeleSystems to extend their strategic partnership agreement with the intention of rolling out 3G connectivity and developing a number of services in the Ukrainian market under the Vodafone brand.

Most recently, in February 2016, Slaughter and May together with NautaDutilh advised Vodafone on its joint venture with Liberty Global, the UK-based telecoms and television company, to provide video, broadband and mobile services in the Netherlands.

Leading for Slaughters on the €1bn deal were London-based corporate partners Roland Turnill and Susannah Macknay, while chair of NautaDutilh’s TMT group Piet Sippens-Groenewegen advised Vodafone in Amsterdam. Magic circle duo Allen & Overy (A&O) and Freshfields, led by the latter’s corporate partners David Sonter and Philip Richards and tax partner Peter Clements, advised Liberty Global.

In addition to building up its European portfolio and in order to remain competitive in the UK mobile market Vodafone has also been obtaining access to fibre connectivity. In October 2015 the company awarded a contract to CityFibre Infrastructure Holdings under which the UK builder, designer and operator of ‘pure fibre’ networks will provide fibre connectivity to Vodafone’s UK network.

Cloud chasers

LMI data indicates that transactions involving cloud-based software formed the basis of a number of tech-related deals in 2015. As a result of facilitating collaboration, enhancing security and boosting flexibility cloud computing is becoming increasingly relied upon by organisations of all sizes as a way to enhance productivity.

Accenture shored up its position as the leading enterprise in cloud services in 2015. In September the management consulting, tech services and outsourcing company agreed to acquire Cloud Sherpas, a provider of cloud advisory and technology services to leading brands including Google and Salesforce, as part of a deal estimated to be worth around $350m. Kirkland & Ellis, led by New York-based corporate partner Sarkis Jebejian, advised Accenture, while Cloud Sherpas turned to DLA Piper corporate partner Eric Grossman. Prior to this, in July 2015 Accenture acquired full ownership of Madrid-based cloud consultancy Solium in a bid to strengthen its cloud capabilities in Europe.

Cyber security

According to LMI data one area of technology enjoying growth in terms of importance and investment is cyber security. From Apple to TalkTalk and from financial institutions to governmental departments, high-profile cyber attacks have pushed the issue of cyber security to the top of the agenda for organisations and businesses.

LMI data shows that a large number of transactions involving cyber security have involved organisations strengthening their security practices and frameworks. In March 2015 BT integrated technology from Darktrace, one of the world’s fastest growing cyber threat defence companies, to deliver cyber threat detection and intelligence services in its operations.

LMI data additionally shows that much M&A activity centred on cyber security has involved big players in the market acquiring small and emerging rivals. In May 2015 AVG Technologies, the security software company, as part of a strategy to expand its security portfolio, acquired Privax, the provider of desktop and mobile privacy services. White & Case advised the shareholders of Privax, led by London-based partner Ian Bagshaw.

“Cyber security management is likely to provide a continuing deluge of work for law firms”

In April 2015, US defence contractor Raytheon entered into a joint venture with Vista Equity Partners, the US private equity firm to create a new cyber security company. The joint venture brought together Websense, the US computer security software company and portfolio company of Vista Equity Partners, and Raytheon Cyber Products, a web security-focused business of ­Raytheon.

As part of the joint venture Raytheon acquired Websense for $1.9bn, while Vista Equity invested $335m to take a 19.7 per cent stake in the new company named Forcepoint. Morgan Lewis & Bockius partner Mike Conza together with Steptoe & Johnson partner Steven Barber acted as legal advisers to Raytheon, while Kirkland & Ellis, led by corporate partners Daniel Wolf and Joshua Zachariah, served as legal adviser to Vista Equity.

Following this, in November 2015, Morrison & Foerster advised Global Defence and National Security Systems (GDEF) in its $165.5m acquisition of STG, the cyber security provider to the US government which was advised by US firm Holland & Knight.

In other major cyber security M&A deals Microsoft acquired Adallom, the Israel-based cloud security company, for $320m in September 2015 while in June Cisco, the US technology company, acquired cloud computing security company OpenDNS as part of a $635m deal. Cooley, led by partner Craig Menden, advised Cisco on the transaction, while Fenwick & West corporate partners Greg Roussel and Michael Brown advised OpenDNS.

The issue of cyber security shows no sign of losing momentum and companies will look to exploit this ever-expanding market by adding to their product platforms to gain prominence in a highly competitive field.

Furthermore, with cyber attacks becoming more technically sophisticated in nature, cyber security management is likely to provide a continuing deluge of work for law firms in the tech sector with plenty of litigation disputes, data protection breaches and issues arising from corporate governance.

Divestments

LMI data shows that in addition to increased M&A activity the tech sector is seeing higher levels of divestment. By placing more emphasis on portfolio management and disposing of assets that no longer meet strategic needs tech companies can become more streamlined and focused on markets where they have a dominant position.

Among notable divestments in 2015 Dixons Carphone sold mobile phone retailer The Phone House Portugal to telecoms retailer and wholesaler Digital Place. In the same year Dixons Carphone entered into an agreement with Relevant Holdings, the Dutch operator of mobile retail stores, to dispose of its 83 per cent stake in telecoms company The Phone House Netherlands. LMI data shows that Dixons Carphone has carried out 10 divestments since 2012, primarily in central Europe, as the company looks to shed loss-making operations.

Also undertaking regular reviews of its business portfolio and operations is BAE Systems. In February 2013 the UK-based provider of tech-led defence, aerospace and security solutions sold its 26 per cent stake in joint venture Defence Land Systems India with Mahindra & Mahindra, the Indian carmaker, while in August 2014 Norton Rose Fulbright advised the company in the sale of its South African business to Denel, the South African state-owned weapons maker.

Faced with defence spending cuts by Western governments BAE is undertaking a strategic assessment of some of its US operations, with an option to dispose of or downsize these businesses.

With technology innovation moving at a rapid pace a technology company’s product portfolio and business model is always at risk of being left behind. As a result it has become important for technology companies to plan, and part of this is assessing their portfolios more regularly and considering what impact any future technology will have on profitability.

For law firms it has become increasingly important to demonstrate that they can continually operate at the forefront of the sector. Such firms must maintain an in-depth understanding of technological change and the developing legal issues associated with this change.

Panel reviews

According to LMI data the vast majority of technology companies favour a small number of external advisers. Microsoft, Dixons Carphone and Siemens all turn to 10 or fewer external advisers while Liberty Global, Deutsche Telekom, Dell and Hewlett Packard make do with five or less. LMI data additionally shows that the sector is dominated by magic circle firms together with top-tier US and London-based firms, with A&O, Bakers, Cooley, Covington & Burling, DLA Piper and Osborne Clarke among the most popular firms advising tech companies.

LMI data also shows that some tech companies choose top-tier firms but supplement these with a network of regional and niche firms. BT, which has the biggest roster of external advisers in the sector, turns to Bird & Bird, CMS Cameron McKenna, Freshfields, Reed Smith, Olswang and Trowers & Hamlins together with smaller and more niche firms such as Carter-Ruck, Sheridans, Wiggin and Wright Hassall. Also adopting this approach is BAE which, in addition to A&O, Linklaters, Slaughters and other top-tier firms turns to regional player Blake Morgan. Vodafone, General Electric and Pace adopt a similar blueprint.

One panel review expected in 2016 is tech giant Hewlett Packard (HP) with the provider of products, software, solutions and services expected to rejig its EMEA and global panels this year after reviewing both in 2013 and 2014 respectively. Bakers and Freshfields sit on both panels and are joined by Bird & Bird on the EMEA panel, while Gibson Dunn & Crutcher sits on HP’s global panel.

Outside these panels LMI data shows that HP has turned to A&O and Skadden, which both recently advised HP in the sale of its 51 per cent stake in its China-based data networking business to China’s Tsinghua Holdings as part of a $2.3bn deal. Leading for A&O was Beijing-based corporate partner Victor Ho.

Colt Group, the provider of business-to-business information and communication services, is expected to review its sole and principal legal adviser Bakers in June 2016. The firm secured a one-year extension in June 2015 ahead of a planned review of how the legal team appoints outside counsel. The firm originally won the mandate in 2012 for a three-year period.

However, the review will be carried out without longstanding general counsel Robin Saphra who was replaced in January 2016 by company secretary Caroline Griffin Pain. Saphra joined Colt in 2005 and oversaw a big increase in the size of the in-house team. LMI data shows that other firms used by Colt include DLA Piper, Greenberg Traurig Maher and Slaughters.

Following a review in July 2014 Vodafone is expected to revamp its general panel in 2017. The mobile network has a roster of seven firms including DLA Piper, Eversheds, Linklaters, Norton Rose Fulbright, Olswang, Osborne Clarke and Slaughters. The in-house team is headed by former Mayer Brown lawyer and group general counsel and company secretary Rosemary Martin, who has been at Vodafone since 2010. In that time Martin has headed up two reviews, the first of which was in 2011 and saw the company’s roster cut from 30 to 10 firms. The second review in 2014 saw Eversheds join the telecoms giant’s roster for the first time, while Linklaters maintained its position as main corporate counsel.

Most of Vodafone’s activity stems from M&A and litigation, the former primarily Europe-based in the past year. Within this activity Vodafone demonstrates a willingness to turn to smaller firms – a trait Martin adopted while general counsel and company secretary at news agency Reuters. Outside its general panel LMI data shows that in the past the company has turned to Shakespeare Martineau for corporate matters, while Shepherd & Wedderburn together with Towerhouse, the boutique competition and regulatory firm, have both acted for the company in litigation matters.

In March 2016 Siemens, the largest engineering company in Europe, removed Reed Smith from its legal panel and replaced it with Addleshaw Goddard, which joined Eversheds and Osborne Clarke on the three-strong panel last reviewed in 2013. Although operating a slim panel LMI data shows that the company has also sought advice from Bakers, Berwin Leighton Paisner, Linklaters and Slaughters together with German firms Gleiss Lutz and Hengeler Mueller.

Also undertaking a review in early 2016 was ARM Holdings, the Cambridge-based semiconductor and software design company which, in January, revealed its inaugural legal panel, with DLA Piper, Eversheds and Mayer Brown among the firms to win spots on the 12-firm roster. DLA Piper and Mayer Brown were appointed as principal advisers on worldwide corporate and M&A transactions alongside Bird & Bird, Fenwick & West and Martin Hu & Partners. Eversheds, Fieldfisher and Mills & Reeve also secured places on the panel, the review of which was undertaken by managing counsel Struan Britland supported by general counsel Philip Davis. ARM also retained US firms Wiley Rein and Winston & Strawn for patent litigation matters together with longstanding corporate advisers Davis Polk & Wardwell and Slaughters.

Although dominated by magic circle and top-tier London firms, unlike others sectors technology provides plenty of opportunities for smaller, niche and regional firms. The cost-effectiveness and growing reputations of these smaller firms means they are now seen as an attractive proposition for technology companies in specialist and complex day-to-day legal matters.

Find out more about The Lawyer Market Intelligence go to TheLawyer.com/lmi

I very much doubt that Master Matthews regards himself as a visionary of a dystopian future in the style of George Orwell or John Wyndham, irrespective of some portrayals of his recent judgment in Pyrrho Investments Ltd v MWB Property Ltd.

The issues in Pyrrho were relatively narrow. The court approved the use of predictive coding to sort over three million documents for the purposes of disclosure. The parties had agreed on the use of predictive coding and there is still the opportunity to use other review methods prior to trial if this proves ineffective.

Predictive coding and other forms of tech­nology assisted review (TAR) rely on machine learning techniques that have been around for a long time. The rules enabling litigants to use TAR have been around for at least a decade since the introduction of Practice Direction 31, which was drafted deliberately widely to accommodate the emerging use of clustering technology at the time and to anticipate the evolution of new techniques without the need to subsequently change the rules.

The court, therefore, has always had the power to endorse the use of TAR, but Pyrrho is the first such formal endorsement; it is helpful in confirming that TAR is a valid adjunct to mass human review.

Rise of the machines

The clamour of portentous commentary saying that Pyrrho signals the sudden ‘rise of the machines’ perhaps reflects a thirst for better guidance around this issue in comparison to the relatively large number of decided cases in the US.

In reality, clients have been using TAR for some time, notwithstanding the absence of specific judicial endorsement. This reflects a broader corporate interest in artificial intelligence and software robotics to automate processes previously conducted as mass human exercises (both in legal and in the wider day-to-day commercial operations of the business).

Some corporates suggest that the use of such techniques has been relatively effective in litigation but those techniques need to be applied to other areas of legal activity to reduce significant legal spend. 

For example, we are seeing significant interest in the use of these techniques in contract review and remediation exercises driven by current bank ring-fencing and other regulatory requirements.

For businesses, while litigation is a concern, they are much more concerned about the inexorable rise of regulation and the need to drive down costs in the legal function while delivering greater consistency and quality.

“While litigation is a concern, businesses are more concerned about the rise of regulation and the need to drive down legal costs”

And therein lies a paradox. In litigation, by the time you get to disclosure, the close of pleadings has crystallised the issues so it is easier to apply TAR to a defined set of issues within a reasonable deadline set by the court. There is time for the machine to learn.

In regulatory reviews, production is front loaded, timelines are aggressive and the issues are rarely crystallised. Clients and regulators are in investigation mode. In the race to gain the trust of the regulator, there is no time for the machine to learn.

So the opportunity to use TAR is, in practice, significantly curtailed. In those situations, clients need a different approach to the mass human review requirement, often using outsourced managed document review (MDR) to reduce cost and improve consistency.

The end is not (yet) nigh

What does this mean, not for the lawyers, judges or regulators but for the people who matter most: the clients who pay the bills? In our experience, it means that there is no single silver bullet. TAR does not signal the end of lawyers (yet). 

Many companies are looking to further disaggregate, disintermediate, outsource (and ultimately automate) the provision of some legal services. They need a balanced armoury, from the rapier of artificial intelligence (including TAR) to the bludgeon of MDR. Clients are looking to apply those techniques in combination across the portfolio of their legal risks – not just litigation and regulation – in order to more effectively manage their costs while delivering greater consistency and quality of output to the business and to external stakeholders.

So the answer to the question posed in the title is: no. Robolawyers are already here. But Pyrrho might just create a few more.

When Rachel Reid was named Law Firm Management Individual of the Year at The Lawyer Management Awards (now the Business Leadership Awards) in 2014 it was in well-deserved recognition of her important role in helping to deliver legacy SJ Berwin’s ground-breaking link-up with King & Wood Mallesons back in November 2013.

Despite the magnitude of her achievement the award itself came as a complete surprise to Reid, who had not even been aware that she had been entered for it.

“When I saw the shortlist on the night I was surrounded by established COOs [chief operating officers] who had delivered organisational development, innovation and cost reductions,” says Reid. “I was delighted to be on the list and blown over to win.”

One for the organisers

Reid says the effect that winning the award had on herself and her team was significant.

“My team and my firm knew what I’d delivered so it was great market recognition – not just of the innovation involved in the deal, but also recognition of the transformational change and implementation requirements you have to deliver to make deals happen,” she recalls.

“Often, the market will comment on the merger strategy but not the organisational change the business has to deliver. It was great to have that element recognised.”

Reid recently left KWM in favour of a fresh challenge at Taylor Wessing. Less than two months into her role there as COO she is already busy helping to develop her new firm’s strategy which, in her words, means making it “tangible”.

What does this mean in practice?

“It means enabling all our people to understand our strategy and how they contribute to our firm achieving it,” says Reid.

“We have a vision and as a business we won’t achieve anything without our people and our ­clients understanding their role and its importance in delivering our strategy.”

Reid sees her role at Taylor Wessing as one that supports managing partner Tim Eyles, the board and the firm’s partnership in the development of key strategic goals.

Clearly, that is a broad remit and Reid admits that no day is the same.

Same title, different role

“Like all law firm business services roles, the role of the COO is constantly evolving,” she says. “As a job title it means different things in different businesses. My role at Taylor Wessing is different from that at my previous firm, despite the title being the same. In terms of defining the role, I can’t think of anyone who has their job description pinned on their wall to check they’re doing everything it says and nothing more.

“To that end I don’t think defining roles like COO helps as it’s a job that needs to meet the partnership’s and the business’s needs. Therefore, it depends what cycle your firm is in as to what function the COO will perform.”

In terms of direct reports Reid manages IT, the knowledge information centre, secretarial services, the partnership secretariat, facilities and knowledge management. And, as she points out, the success of the firm will ultimately depend on the business services functions working seamlessly together.

“The other important trend is how firms attract and retain talent,” adds Reid. “The legal market is starting to understand the benefits of talent diversification, whether that’s to do with gender, sexual orientation, education, disability, religion or other factors.

“We have to ensure we attract a range of diverse talent and create an environment where all thrive and want to stay. Our clients are also grappling with these issues and that is where joint thinking and sharing experiences can be powerful.”

How can law firms improve in these areas?

“Work with your clients,’ advises Reid. “I don’t think that as a profession we engage with our ­clients enough. Instead, we do things we think our clients want rather than engaging with them to understand their needs.”

That said, Reid believes it is a great role to have in a profession that is seeing a huge amount of change and development.

“The challenge for any law firm COO is to understand your partnership, client base and overall business so you can identify where you can add most value,” she concludes.

Move of the week

King & Wood Mallesons (KWM) has bolstered its capital markets offering with the hire of partner Greg Stonefield, who joins from the partnership of Mayer Brown. Corporate finance specialist Stonefield has been at Mayer Brown for two years and was previously a partner at White & Case for more than a decade.

UK

London

Claimant firm Hausfeld has appointed John McElroy as a partner in its London office. He joins from Quinn Emanuel Urquhart & Sullivan, where he was a senior associate.

Druces has launched an international wealth and fiduciary practice with the hire of Penningtons Manches partners Robert Macro and Neil Morris.

Squire Patton Boggs has hired rail and transportation lawyer Andrew Herring as a partner in the real estate practice. He joins from the partnership of DWF.

Hill Dickinson has expanded its offering in the private aviation sector, taking on Holman Fenwick Willan senior associate Jonathan Russell.

Ania Farren has joined Berwin Leighton Paisner as a partner in its international arbitration practice. Farren was previously a senior counsel at K&L Gates.

South

Andrew Ash has joined Withy King as a partner in Bath, heading its construction team. Ash joins from Osborne Clarke, where he was an associate director.

Howes Percival has expanded its Milton Keynes office with the recruitment of corporate commercial partner Edward Lee. He joins from Blake Morgan, where he was partner and head of corporate finance for Thames Valley.

North

Sage senior solicitor Jill Dovey has joined Newcastle firm Muckle as an associate in the IP and IT team.

Sheffield firm Graysons has appointed two new partners, Caroline Murray and Helen Donaghy. Clinical negligence lawyer Donaghy joins from Simpson Millar, where she was a solicitor, while property law specialist Murray has been promoted.

Pannone Corporate has expanded its real estate team. James Wynne joins the firm as a partner from Shoosmiths’ Manchester office, while Napthens lawyer Gareth Birch will be a senior solicitor in the real estate team.

Corporate and commercial law solicitor James Pressley has joined Kirwans in Merseyside from Excello Law, where he was a consultant solicitor. Chartered legal executive Katha Lunt has also joined from Blavo & Co, along with Blunts solicitor Laura O’Farrell and legal clerk Hannah Bibby.

Europe

International arbitration partner Patricia Nacimiento is joining Herbert Smith Freehills in Frankfurt. Nacimiento will join from the partnership of Norton Rose Fulbright in May.

Ashurst has recruited regulatory partner Maximilian Uibeleisen to its Frankfurt office. Uibeleisen previously worked at Noerr as an associated partner.

Bryan Cave has expanded in Hamburg with the hire of corporate lawyers Hubertus Schröder and Tonio Sadoni. Schröder joins as counsel from Gibson Dunn & Crutcher in Munich, while associate Sadoni moves from Latham & Watkins in Hamburg.

PLMJ has recruited counsel Pedro Lomba for its healthcare, life sciences and pharmaceuticals team. Lomba previously worked for the firm as a senior associate and returns after taking a variety of roles in government and academia.

Swiss firm Froriep has appointed Julie Wynne as an estate management partner. Wynne was previously a senior associate at Bonnard Lawson.

US

Evelyn Kim has joined Baker & McKenzie’s San Francisco banking, finance and major project practice as a partner. She joins from Morgan Lewis & Bockius, where she was of counsel.

K&L Gates’ New York office has hired two partners from Katten Muchin Rosenman. Peter Shea joins the firm’s investment management, hedge funds and alternative investments practice, while Sheri Chromow will work in the real estate group.

Michael Hacker has joined Covington & Burling as of counsel in the food, drug and device practice group in Washington DC. He joins from Merck & Co, where he was vice-president and assistant general counsel.

Africa

Wacef Bentaibi has joined Gide Loyrette Nouel in Casablanca as a partner, specialising in energy, infrastructure and transport. He was a senior associate at Allen & Overy (A&O).

Asia Pacific

Hogan Lovells has hired four partners in Sydney, its first major expansion since launching in the city last year. Corporate partner Andrew Crook and project and asset finance lawyer Ros O’Mally have joined from Gilbert & Tobin, while restructuring and litigation partner Scott Harris moves to the firm from DLA Piper. Leveraged and acquisition finance partner Richard Hayes joins from King & Wood Mallesons.

A&O has appointed Charlotte Robins as a partner in its regulatory practice in Hong Kong. She joins from Norton Rose Fulbright, where she was a partner for five years.

Offshore

Offshore firm Appleby has appointed three partners to its corporate practice group. Hong Kong-based Fiona Chan joins from Harney Westwood & Riegels, where she was counsel, while Andrew Jowett and Kate Storey have been promoted in BVI and Guernsey respectively.

The Bar

The Institute of Barristers’ Clerks has elected Nick Hill as chairman. Hill is senior clerk at 3 New Square and takes over from Brian Lee, practice development and marketing director at 7KBW Chambers.

Promotions

Pinsent Masons has promoted 18 lawyers to the firm’s partnership, with all but one being made up in the UK. Women account for 44 per cent of the promotions, while the financial services team saw the highest number of promotions.

Weightmans has promoted a trio of lawyers to the partnership, all based in the firm’s Liverpool head office. Sarah Conroy has been made up in the commercial disputes team, while Chris Grady and Liam McGuire have been promoted in the real estate and motor teams respectively.

James Sullivan’s career has so far seen him move from private practice to in-house and then business management before finally finding his home as European general counsel at Valad Europe, the European real estate investment manager.

Sullivan started his career at Davenport Lyons (now Gordon Dadds) and, following a brief period at Dechert, decided to make the move in-house when he was recruited as a group lawyer at mobile network operator Orange.

After leaving Orange, Sullivan joined Scandinavian mobile operator TeliaSonera, where he was the company’s first sole UK-based lawyer. Following this, Sullivan took a role outside the legal profession when he became managing director of PILinvests, a private equity fund manager and a subsidiary of Valad Europe.

“It wasn’t planned – it was just a great opportunity, which I recognised doesn’t come along very often,” explains Sullivan.

“I had to think carefully about whether making the move was the right choice and I found that my biggest concern was how easy – or difficult – it would be to get back into a legal role if it didn’t work out,” he adds.

Initially, having worked as a lawyer for many years, Sullivan admits it was definitely a challenge to not think like a lawyer, but the more he got used to the business, the easier it became for him to think in terms of opportunity, rather than risk.

“Ultimately, it gave me a great insight into how a business works from a non-lawyer point of view,” he says.

In 2011, Sullivan gradually transitioned from his role at PILinvests into his present role with Valad. However, before his arrival at Valad, the company had no general counsel or any legal in-house team – a situation which Sullivan admits he had to adjust to.

“When I joined Valad, the biggest challenge was creating and implementing new legal processes and policies in the company because previously firms just charged the headline rates,” he says.

“First and foremost, I had to develop more of a risk-management and compliance mind-set with the company and create a legal support function to the business that has to be flexible to the differing approaches, thinking and local variation of Valad’s cross-border clients.”

Pan-European remit

Sullivan is Valad’s first sole legal counsel for its European platform, which consists of a 400-strong commercial property portfolio located across 13 countries in western Europe, the Nordics and central and eastern Europe.

“As European general counsel, my role can involve working in compliance right through to corporate acquisitions, commercial agreements, fund manager agreements and the restructuring and financing of funds,” adds Sullivan.

“However, my role is not just about documenting deals and structures – it is very much about supporting and helping to drive forward new business opportunities across Europe.”

Since joining Valad, one of the biggest industry challenges Sullivan has witnessed is the increasing amount of regulation in the real estate investment industry and, in particular, the impact brought about by AIFMD (Alternative Investment Fund Managers Directive). The European financial directive was introduced after the global financial crisis and seeks to address regulatory gaps and reduce systemic risk in the sector.

“It has been interesting working in an industry that used to be relatively light on regulation and then taking the business through some significant changes brought about by AIFMD,” says Sullivan.

“One of the biggest effects of the legislation has been the cultural shift for those working in the industry, but the biggest impact of AIFMD on Valad has been on operations.”

Valad has generally regarded the impact of AIFMD as positive. It found that carrying out a gap analysis against its existing operations when the regulation came in was a useful operational exercise, adds Sullivan.

“One of the biggest challenges was setting up new regulatory policies where there was no industry precedent. This meant we had to work really hard to create operational business-focused procedures, rather than just regulatory policies,” he continues.

“For Valad, we have found that adapting to the regulatory change has been made easier by having a flat structure within the company because this leads to direct access to the decision-makers and means that we can design and implement operational changes efficiently.”

Slimline structure

According to Sullivan, it has always been Valad’s intention to keep the in-house team slim. He explains that Valad as a company likes the flexibility of having external advisers.

“The company prefers the expertise of external advisers, rather than employing someone with that expertise in the in-house team because, from a company perspective, it is seen as creating a narrow legal support function,” says Sullivan.

“Having external lawyers allows us to have flexibility when transactions demand it, and flexibility only in those countries were we are busy at that particular time. We find that by using external advisers, we can get the best external advice where and when we need it and scale up or down as we need it,” he says.

“We don’t draw a line where the lawyer role starts and ends. I am expected to have a commercial view – not just a legal one”

Valad has a panel review in every country of operation, which Sullivan reviews every two years. In the UK, Valad currently turns to Nabarro and Trowers & Hamlins for advice, while overseas it turns to Gowling WLG and Franklin in France and Berwin Leighton Paisner in Germany.

“We don’t generally turn to magic circle firms. We turn to the tier just below that because I think we become a more important client,” he says.

Sullivan is the principal decision-maker when undertaking a review, although he says he relies heavily on those people on the ground and, in particular, Valad’s 13 country representatives based across Europe.

“They know the right size firms and the ones that have good reputations in their respective markets,” Sullivan confirms.

“They know their local markets and what the real estate industry is like in the countries they are based in. This makes them better positioned to select the right law firm.”

Integrated function

Sullivan currently sits on Valad’s senior management group, which comprises the company’s executives, heads of functions and heads of countries. He emphasises that the legal team is very much integrated as part of the business.

“Our external lawyers are external, but in­tern­ally the legal functions have to be very much integrated into our fund management platform and within our business development team,” explains Sullivan.

“We don’t draw a line where the lawyer role starts and ends. Instead, we take a holistic view of a project and I am expected to have a commercial view – not just a legal one – and that is when my previous role outside the legal profession comes in particularly handy.”

“There is an open-plan office environment at Valad, which really helps to incorporate the legal and business functions and helps me to get a real feel about what is going on around me.”

At The Lawyer’s recent Global Collaboration Summit, law firms of all sizes expressed the growing strategic importance of referrals within their own firms as well as with other law firms in the region.

Collaboration is especially relevant for European firms, which are experiencing consistent growth in cross-border and referral work.

Constructing valuable relationships in order to preserve a strong pipeline of high-quality work has never been more important. But how firms implement quality checks – whether evaluating each relationship based on their last deal or pre-selecting law firms depending on the nature of the work – can make the difference between success and failure with clients.

In Switzerland, referrals make up a large pipeline of work for firms. As demonstrated in the Thomson Reuters data in this report, the value and volume of outbound cross-border work plummeted in 2013 to 271 total deals worth $10bn (£7bn), and has since remained stable at 338 deals worth a combined $81.3bn in 2014 and 337 deals worth a combined $46.6bn in 2015.

Inbound work increased in 2014 to a total of 153 deals worth $34bn, but last year the number of completed deals dropped to match the 147 deals in 2013. The value of those 147 deals doubled in value collectively last year, worth $12bn compared to $6.8bn in 2013.

The firms shortlisted for Swiss law firm of the year at The Lawyer’s European Awards, which are featured in this report, have invested in their global footprint.

Whether through opening own-offices or collaborating more extensively with both international and European firms, these six firms are taking steps to improve their brand recognition abroad.

Q: How important is collaboration (with other firms) to your firm’s strategy?

Catrina Luchsinger Gaehwiler, managing partner, Froriep: Collaboration with foreign firms is crucial for Froriep. An exceptionally high share of Froriep’s clients are multinational companies with a need for multi-jurisdictional advice. Being an independent firm, Froriep maintains a large informal network of leading firms all over the globe in order to provide its clients with high-quality advice on the full range of their cross-border issues.

Daniel Daeniker, managing partner, Homburger: The firm is a ‘national champion’ in Switzerland and has an office in only one location. Nonetheless, the team advises enterprises and entrepreneurs on transactions, tax matters and disputes in Switzerland and abroad. We also advise foreign clients doing business in Switzerland.

More than half of our large transactional and disputes work is cross-border. This forces us to cooperate with excellent law firms around the globe and also indicates that collaboration with other firms is a high priority item in our strategy.

In practical terms, we apply a ‘best in class’ approach. We are not allied to any best friend firms, Lex Mundi or similar networks, nor do we consider ourselves to be the Swiss satellite of a magic circle firm. When doing business abroad, we are guided first and foremost by the preferences of our clients. If asked for a recommendation, we can select the firm, or firms, best suited to take on a particular matter.

Sometimes this means recommending a magic circle firm, particularly in the case of multi- jurisdictional transactions. Sometimes, we recommend niche firms.

“We rely on the extensive experience of our lawyers and the wide personal networks they have built working with foreign colleagues in their fields”

Q: Benjamin Borsodi, managing partner, Schellenberg Wittmer: The traditional legal industry is undergoing tremendous changes, including waves of successive mergers leading to ever-larger global legal giants. More than ever, independent regional firms need to be recognised by their clients as international, and by their peers abroad as go-to firms as well as good team players.

Collaboration is therefore of paramount importance for such firms. This is even more relevant for countries such as Switzerland, which, because of its size and specific legal nature, is more a receiver than a source of legal work. When an opportunity for reciprocation arises, one must look first and foremost for the best counsel for the client, but also be able to integrate strategic information. To achieve this beyond a certain firm size, a good grip on referral data is necessary to complement each individual lawyer’s contact base, as extensive as it might be.

Having doubled in size from 77 lawyers to 165 between 2000 and 2014, our strategy over the past few years has made a better understanding of our collaborative network one of its priorities. This has led to several initiatives, among which is the set-up of systematic referral recording and an increase in our international visibility as a full service Swiss firm.

Today, the breadth of our network (over the past year, we have worked with over 200 foreign firms from 60 countries on new cases), the speed at which we are able to team up with foreign correspondents in multiple jurisdictions, the quality of the multi-jurisdictional advice rendered, and the fee transparency demonstrate the credibility of our ‘more than Swiss’ nature.

Daniel Eisele, partner, Niederer Kraft & Frey: We are working closely with numerous law firms, inside and outside Switzerland, on specific cases. When choosing a law firm, we try to select the best firm for the particular case and the particular client. Because we are not integrated into an international network, but are a truly independent firm, we are able to collaborate with the best firms in each country, which is clearly beneficial for our clients.

Q: What are the measures that law firms can put in place to ensure quality across their referral system?

Luchsinger Gaehwiler: We rely on the extensive experience our lawyers have gained and the wide personal networks they have built working with foreign colleagues in their fields. In reality, there is no substitute for personal contacts and quality control.

Eisele: Personal contacts and personal work experience on past cases are the best way to ensure that the quality of the work meets our expectations. In smaller jurisdictions and in continents that are further away from Switzerland, where we may not have any established contacts, we often rely on directories.

Daeniker: As a matter of principle, we never make ‘cold’ recommendations. In other words, we only recommend to team up with firms that we have worked with in the past. Given that our large clients have an existing preference for international firms, we normally have a network available with whom we have long-standing working experience.

With that in mind, the quality measuring process is simple: a firm will only get the next referral if they worked well in the last referral.

This does not, however, solve quality issues in an ongoing mandate. Here, the key to success lies in careful monitoring of those firms which are not up to standard in terms of quality or efficiency of service. At times, this may involve a degree of extra work for the firm coordinating activities. But over time, it works.

“It is our responsibility to ensure that the quality of the work provided will match the trust our client has put in us in the first place”

Borsodi: Whenever we refer a colleague to our client, or request assistance from foreign correspondents, it is our responsibility to ensure that the quality of the work provided will match the trust our client has put in us in the first place. But as quality includes not only the technicality of the legal advice provided, but also aspects such as responsiveness, fee transparency or even plain soft factors such as communication, it can get very difficult to measure.

Therefore, in our view, the best proxy for quality is past positive experience. The happier a client is with the work provided by one of our correspondents, the more likely we are to send this person work next time the occasion arises. Seeking and providing feedback is therefore paramount to assess the satisfaction of both parties. In addition, while no set of referral data will ever replace the truly human nature of collaboration, used carefully and in combination with feedback experience it can help to build, grow and strengthen existing relationships.

But quality also matters for inbound work. Waiting for sophisticated matters to ‘knock at our door’ is not enough; it is our job to actively ensure that we keep getting the best possible mandates.

Q: What are the challenges and benefits of creating a network?

Daeniker: The challenges are finding the right people, who are worth performing assignments with, and who you can safely recommend to clients. Again, what matters most is positive experience in the past.

The benefits are to find like-minded people who have chosen to work together of their own free will, not because it was imposed on them by some international organisation. Over the past 20 years, in my personal experience, this has helped me to find personal friends in places as far apart as Washington, London, Helsinki and Mumbai.

Borsodi: Being part of a prestigious formal network of independent firms, or a ‘best friends’ alliance with large international firms, can certainly help regional firms to attract mandates that would not have come their way otherwise, boost their network contact base and provide opportunities to share know-how. The notion of responsibility is also diverted to the network, rather than the firm, which could be seen as an advantage.

However, most firms that are part of a network note that the benefits are not automatic (nothing comes at no cost), and that maintaining a sustained flow of mandates requires significant effort and time in any case. Joining a formal alliance might also create a glass ceiling in revenues generated by referrals, as the amount of work received from alternative networks, or even other firms, will likely shrink as a result.

At Schellenberg Wittmer, we have made the choice of remaining truly independent, which has its costs and challenges. But being able to rely on our extensive and flexible network of firms around the world also has immense benefits as it un­leashes the freedom of choice of the ‘best fit’ for our clients and allows us to best deal with possible conflicts of interest in any single jurisdiction.

“We apply a ‘best in class’ approach. We are not allied to any best friend firms, Lex Mundi or similar networks”

Eisele: Having a network of international firms to work with is of key importance for our practice. We have also initiated a foreign associate programme to further strengthen our links to foreign law firms. Under this programme, we will have up to six foreign lawyers a year working with our firm for a limited period of time (up to six months). In addition, we have started to hire purely foreign law qualified lawyers, which proves very helpful for keeping close relationships with leading foreign firms in England, the US, Ireland, Italy, etc.

Q: How are you tackling price pressure from clients?

Luchsinger Gaehwiler: Our firm is well-known for cooperating closely with its clients to find solutions that meet their budgetary restraints. By comparison, our hourly rates are moderate and we are very cautious when charging the contributions of our junior associates. We generally accommodate our clients’ wishes for flat fees and fee caps. We also offer subscription-based services but demand from our clients has been limited so far.

Borsodi: With respect to price pressure, flexibility in the fees’ structure is key. We always engage openly and transparently in discussions with clients when it comes to setting up a solution that is both acceptable for our clients and profitable for our firm. We strive to understand up-front the type of work expected in each assignment, notably whether the advice sought pertains to ‘higher value’ partner’s input (strategic decisions, for example) or more common activity where lower hourly rates must be agreed upon.

“Personal contacts and personal work experience on past cases are the best way to ensure that the quality of the work meets our expectations”

Daeniker: A rigorous quote system, accompanied by constant monitoring of costs, is the key to success here. The most important thing is managing client expectations both in terms of how much service you can deliver at a certain price, and how much service the client is willing to ask for. In this connection, we see no fundamental difference between network firms and others.

Eisele: Price pressure is, of course, an issue. However, if the work is of first-class quality, the clients usually have no problem accepting the fees. We aim to deliver first class quality and work as efficiently as possible for the client’s benefit. Fee discussions with clients are, in our practice, an exception rather than a rule. Our strategy is to be the law firm of choice in the most critical cases, where the fees are of less relevance to the clients.

Irish firm Arthur Cox is making a rare partner hire from its major rival, A&L Goodbody, with the appointment of corporate partner Cian McCourt.

McCourt has been a partner at A&L Goodbody since 2007, and was resident partner in the firm’s New York office between 2011 and 2015.

His work has included advising on a number of major deals involving Irish companies, such as the 2013 acquisition of biotechnology company Elan by US-headquartered Perrigo and the 2014 merger of medical technology giants Medtronic and Covidien.

Arthur Cox managing partner Brian O’Gorman said: “Cian is widely recognised as one of Ireland’s leading M&A lawyers and he has advised on many of the most significant corporate transactions in Ireland. The breadth and depth of Cian’s practice and experience will complement our firm very well.”

A&L Goodbody and Arthur Cox routinely face each other on major corporate deals, including most recently the $20bn (£14bn) merger of industrial company Johnson Controls and security provider Tyco, and the failed tie-up between Pfizer and Allergan.

A&L Goodbody partner Alan Casey relocated to New York last September to take over as resident partner of the office from McCourt.

Last year Arthur Cox’s former New York resident partner, Gary McSharry, moved to McCann FitzGerald and earlier this year launched a New York office for his new firm. However partner departures from Ireland’s big three firms are uncommon.

In early 2014 McCourt hit the global headlines when his wife gave birth on a New York street, although A&L Goodbody did its best to keep the new parents out of the media limelight.

Richard Hough qualified as a pharmacist in 1990 and as a solicitor in 2007. He continues to work as a pharmacist, despite making partner at Brabners in 2015.

Why did you go into pharmacy?

I was at a school where they fast-tracked people and ended up doing my O levels at 14 and A levels at 16. That saw me graduating from Manchester University with a Pharmacy degree at the age of 19, so I got out of the education system quicker than most people. I suppose I was one of the youngest ever pharmacists – they don’t allow you to be admitted until you are 21 so I had to wait until my birthday.

What made you move into law?

When you are in a vocational career like pharmacy you have to stick with it to some extent. I found myself in a profession that I enjoyed but it had its limitations, so I looked for other opportunities. I travelled round the world and qualified as a pharmacist in New South Wales.

I came back to the UK for family reasons, and I was working as a manager in a pharmacy for a proprietor who owned four shops. He had quite a hands-off approach to his business – meaning I was quite hands-on. He eventually sold out to a large national chain and I felt I didn’t fancy being a manager for in that type of business.

My brother owns his own pharmacy and in the early days I suppose I had followed his career. But my father was a lawyer, and when decided I wanted a change of career it kind of came full circle.

I was running a pharmacy and working north of 60 hours a week, so I did a correspondence law degree through the Open University. That was back in 2000. I worked an extra 30 hours a week over three years. Because it was a correspondence course it had no impact on my work life, and I was able to keep my salary and my mortgage payments going out.

At the end of 2003 I graduated with the top marks throughout the Open University which meant I got something called the Cavendish Prize. Off the back of that I got offered a couple of training contracts and took up a place with Cobbetts. I left in 2007 and it went into liquidation shortly afterwards – I’ll let people draw their own conclusions…

Your roles as a pharmacist and a lawyer now intersect – how did that come about?

I had the notion that I would combine my previous experience as a pharmacist with a legal environment. On qualification I went round a number of firms and said, ‘This is what I want to do, here is my business plan, but equally I know it’s unusual and you may not have an interest in investing in it.’

To be fair, it was generally well received, but firms and lawyers are by nature risk averse. A lot said, ‘We like you, but we don’t understand what you’re talking about.’

I went back to being a locum for a year and then joined Brabners in 2008. They said, ‘We can take you on as a commercial and intellectual property NQ but we see what you are trying to do, we are interested and we’ll back you and give you the resources you need in order to grow your practice area.‘

I haven’t looked back since – I’ve been given the backing and the resources, but it’s been my drive and my plan. What was quite a niche service has now grown into a much larger healthcare offering.

And you still work as a pharmacist…

Yes, at the weekend. It’s partly for my own benefit, because I do have a genuine interest in it. But my legal clients find it really useful and interesting that, if they are working in the sector, I can break down the barrier between the white-coated healthcare professional and the sharp-suited business adviser. There is often mistrust or ignorance between the two camps.

Why is that?

If you’re dealing with pharmacy businesses, they will generally be owner-managed and the attitude of the owner will be a siege mentality. Lawyers are unwelcome distractions to their main businesses. Margins are becoming increasingly squeezed, there are long hours as well, when you first start up you take on a large bank loan. You don’t particularly want to employ locums while you engage with the professional services community. I find my job a bit easier because I can say, ‘The problems affecting primary health affect me too.’

Is it a challenge keeping both jobs going?

It is hard work. I’m used to that – I have had significant periods of my life where I was working seven-day weeks, so to me it’s progress that I have a Sunday off. It does put pressure on being a partner in a goodish-sized practice.

The expectation as a partner, naturally, is that you have to work some weekends, and sometimes I do, but generally I tend to do a lot of hours during the week, so on Friday evening I’m on top of my work. Then I put my pharmacist’s head on and I’m not thinking about legal issues – I’m the type of person who can compartmentalise things.

‘A change is as good as a rest,’ is as good a way of summing it up as anything. I do the pharmacy work because I enjoy it. I get a different level of satisfaction in assisting people in that way. In a law firm you’ve got the clock on and are charging people who pay a lot of money for your advice. In the pharmacy setting you can be dealing with vulnerable, needy people. It feels purer in some respects.

I’m lucky in that I’ve managed to keep two careers going. I made partner in May 2015. That felt like I’d reached a certain point where I could take stock and some satisfaction, though I want to push on from where I am now. I’ve got a role at Brabners now tasked with doing something in the tech space similar to what I’ve done in healthcare. The intersection between healthcare and technology is going to be a massive growth area for legal services.

How different are the two jobs? Where’s the overlap in skills required?

I would say in both professions you need to be very responsive the demands of the client.

And attention to detail is absolutely critical. If I make a mistake in a pharmacy and I end up killing someone, that’s catastrophic. If I make a mistake drafting a document and a client loses a lot of money as a result, it will be damaging but not personally catastrophic. I do spend a lot of time looking at the detail. Each job has its own pressures, but in both you need to focus 100 per cent on the task in hand in order to provide the right level of service.

I’d also say that in both professions you are expected to provide an answer and not sit on the fence. A good commercial lawyer will give their clients a steer based on the risks of one or more options. Likewise in pharmacy, almost the worst thing you can do is sit on the fence, you have to take a view.

Any advice on how to juggle two professions?

I’ve realised I can drink a huge amount of caffeine before my body starts to shake…

Joking aside, I was getting by on four hours sleep for about three years. I’d come home, see my wife and daughter, then go and hit the books, then do it all over again. I think you need to have drive, focus, be organised, and it helps if you’ve got support at home. I couldn’t have done it without the support of my wife. She’s taken so much on to help me do what I’ve chosen to do.

I went into law when I was a little bit older and had got it clear in my head what I wanted to do. When I didn’t have the clarity of thought, the maturity or the right experiences to make me appreciate my options, so more general advice would be to get as much experience as you possibly can of different working environments to work out for yourself what suits your personality and ability.

I’ve been fortunate that Brabners has given me the opportunity. That’s important too: you’ve got to ensure you’ve got the right vehicle in which to achieve your goals.

Pinsent Masons has boosted its leadership team after hiring its first chief operating officer (COO) and adding an external member to its global board.

Alastair Mitchell joined as Pinsents’ inaugural COO after spending four years at Holman Fenwick Willan. Prior to this Mitchell had spent 13 years at Linklaters, including five years in which he worked as the magic circle firm’s UK chief COO.

As part of his new role at Pinsents he will sit on the firm’s operations committee.

Pauline Egan has also joined Pinsents’ global board as a non-executive member. While working with the firm Egan will continue her roles as a non-executive at the UK subsidiary of Allied Irish Bank and the governorship of London adult education institution Morley College.

During her career Egan has also worked at the Royal Bank of Canada where she held the roles of head of London and head of strategy and business management for the wealth management division.

Pinsents’ senior partner Richard Foley said: “There’s significant evidence that organisations which have an external viewpoint to test and challenge at board level outperform those that do not, and I welcome Pauline in that capacity.

“Alastair is also a highly impressive individual whose focus will be on the efficient and effective running of our business operations on an international scale.”

The appointments are part of an on-going strategy to modernise Pinsents’ leadership structure. This strategy included appointing Rainer Kreifels and Joanne Ellis to the board in November.

In March Pinsents appointed former Labour MP Douglas Alexander as a strategic adviser to the firm. The former secretary of state for international development who served in Tony Blair and Gordon Brown’s cabinets advises Pinsents on client engagement surrounding Britain’s upcoming referendum on whether to remain in the EU.

The firm recently inched closer to reaching its female diversity target after eight of the 18 partners it promoted were female lawyers. This year’s promotions round increased the proportion of women in the partnership up from 22 per cent to 23 per cent. Pinsents plans to increase this figure to 25 per cent by 2018.