Is Germany turning its back on international firms?

Published in Chambers Magazine, Spring 2011

The managing partner of a leading German independent law firm said of this article, “I have never read a better researched piece on the legal market in Germany from an outside perspective.”

Note: the large picture of me at the top of the article on the Chambers Magazine website was not my idea.

Ten years ago the German legal market was transformed as its largest firms one by one merged with UK firms. But in the last few years a new generation of German independent firms has sprung up – and some old names have reappeared. Is Germany going full circle?

In February 2000, M&A partner Hans Rolf Koerfer left his office at the German law firm Oppenhoff & Radler, in Cologne, for the last time. Along with several senior colleagues he had spent the previous few months in negotiations with senior partners from London’s Linklaters & Paine to merge the two firms. But Koerfer had developed deep concerns about the deal and had urged his partners to reject it. Now, as the merger negotiations accelerated, Koerfer was getting out: he had secured a position with the American firm Shearman & Sterling.

Oppenhoff and Linklaters merged the following January. Over the ensuing years, Koerfer watched as Linklaters absorbed and reshaped his old firm. Then in November 2007, Koerfer received word from his colleagues in his old office that they, too, were leaving. Linklaters was closing the office in Cologne where Oppenhoff & Radler had been born. Eleven of Koerfer’s former colleagues were starting a new firm. Its name? Oppenhoff & Partner.

Now, Koerfer has come full circle. Having left Shearman for Allen & Overy in 2008, he rejoined Oppenhoff in September 2009. “I realised that the time was right to go back to the old business model,” he says.

And Oppenhoff is not alone. The last few years have seen a host of new independent firms spin off from the largest international firms in Germany. Ten years after the great British invasion of Germany, are the Germans fighting back?

Read more…

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Motive goes digital with Spanish deal

Published in the Daily Express, September 2010

Around 18 months ago TV production investment outfit Motive Television was forced to close or sell most of its business.

Now, after a major change of strategy, it is using a £4.75million fundraising on Aim to transform itself into a global player in digital television.

Motive was founded in 2005 by Mick Pilsworth and floated on Aim in 2006. It went on to make a string of five acquisitions – including a major stake in Brown Eyed Boy – until the credit crunch derailed its investment plans.

Pilsworth said: “The timing was wrong. We didn’t have enough cash and then we hit the recession.” Last year Motive decided to start afresh, selling Brown Eyed Boy and closing three other companies.

The decision to move into digital followed a chance meeting between Pilsworth and American TV strategist Len Fertig.

He was fresh from a meeting with Spanish firm Adecq Digital, whose software allows broadcasters to provide video on demand over a normal terrestrial aerial. Adecq had deals in Spain and Italy, but was looking for backers with TV industry connections.

After being signed up as chief executive, Fertig inked a global distribution deal with Adecq. Now Motive is using its Aim funds to buy 67.7 per cent of the company, which has launched its services in Hungary and the Czech Republic.

Motive, which has been advised by Merchant Securities, has also bought Scottish firm NXVision, whose software allows users to watch TV on their mobile phones.

Songbird Estates gains value

Published in the Daily Express, September 2010

Songbird Estates, the majority owner of Canary Wharf, announced solid half-year results yesterday in the wake of rising demand for commercial property in London.

The past two years have been turbulent for the property business, which counts Qatari and Chinese investors among its biggest shareholders.

Its portfolio lost more than a quarter of its value in 2008 as the financial crisis struck but began to rise in late 2009 as activity in the financial sector picked up. Songbird said its portfolio had increased in value by 4.3 per cent in the first half of 2010 to £4.8billion.

Profits before tax fell to £13.1million for the half-year, against £89.7million previously. After taking into account the rising property valuation the group made a bottom line profit of £14.2million against losses of £110.9million for the same period last year.

Songbird also announced a £140million fundraising to repay a loan taken last year to buy an increased share of Canary Wharf Group. This follows an emergency £620million fundraising last year to help the company repay a £880million loan.

Shares fell 11dp to 146dp.

A brief contribution to the Guardian’s ‘Smarter Cities’ supplement

A smart city should use technology to help people move around, reduce energy waste and tackle crime by constantly collecting and analysing information about how people use the city. Up-to-the-minute information on traffic and bus and tube services should be available online, on mobiles and via a 24-hour digital radio station.

Read more at the Guardian

The Trials of Clifford Chance

Published in Chambers Magazine, Summer 2010

David Childs spent seven years quietly striving to modernise Clifford Chance and raise its profitability. Then Lehman Brothers collapsed.

David Childs recalls the moment Lehman Brothers collapsed like it was yesterday. “It was horrific seeing a house like Lehman go under. But then to realise that Morgan Stanley or Goldmans could be next – that’s when life got very scary.”

For the managing partner of Clifford Chance, the financial crisis that broke in September 2008 was a direct threat. Just over half of Clifford Chance’s business was done for financial institutions. The turmoil on Wall Street meant an immediate reduction in the firm’s business. “We had grown during the boom times, as our clients had grown,” says Childs. “After the demise of Lehmans, it was clear the firm was too big for the marketplace.”

Read more…

Africa: attracting attention

Published in Chambers Client Report, Summer 2010

African law firms got through the global downturn. Now the recovery brings a new challenge: increasing competition from international firms. 

As expected, Africa withstood the global downturn comparatively well. “Perhaps one of the least noticed aspects of the global downturn has been the resilience of the Sub-Saharan African region,” says the IMF’s World Economic Outlook: Sub-Saharan Africa 2010.

Taken as a whole, Africa avoided recession: Africa’s GDP growth slowed from 6.1% in 2007 to 5.4% in 2008 and 2.2% in 2009, but is expected to rebound to around 5.5% in 2010. Africa’s dislocation from global trade, often blamed for its underdevelopment, nevertheless protected it from the shocks of the financial crisis. “One advantage of being a backwater is that you don’t get hit by the problems affecting other countries,” admits David Mpanga, partner at Uganda’s AF Mpanga.

There was much variation around the continent, however. South Africa, the most developed economy in Africa and subsequently the most exposed to the financial crisis, experienced its first recession since the Apartheid era in the wake of the financial crisis. The result was a slowdown, if not a total stop, in transactions for South African law firms. “M&A in South Africa declined in value by around 60% between 2008 and 2009,” says Kevin Cron of Deneys Reitz. “We were fortunate enough to have a couple of large existing deals to keep us busy, but new instructions slowed substantially.”

Read more…

China: US firms on the rise

Published in Chambers Magazine, Summer 2010

The last few years have seen many US firms expand their presence in China. Could they overturn UK firms’ traditional dominance in the world’s fastest-growing legal market?

As the world reeled from the collapse of Lehman Brothers in October 2008, scant attention was paid to the news that a seven partner-team had quit Allen & Overy’s Hong Kong office for Latham & Watkins. But Latham’s bold move was indicative of a wider trend.

For years, US firms have been content to practice US law in China from small offices. But recently, they have gone for growth: establishing local law practices, opening new offices on the mainland, and raiding UK rivals.

The top British firms, who dominated the biggest deals in China for more than 20 years, now face serious competition. “In five or ten years’ time, there’s a very high chance that the majority of the leading international firms in China will be of US origin,” predicts Michael Liu, leader of the team who moved from A&O to Latham.

The American invasion

City firms had a head start in China. Hong Kong’s status as a British colony meant UK lawyers could easily obtain Hong Kong practising certificates. And its close trade ties with the UK made Hong Kong an attractive proposition.

Between 1974 and 1990, most top City firms established an office in Hong Kong. And from there they expanded onto the mainland. By 2002, all the magic circle firms, apart from Slaughter and May, had added Beijing and Shanghai to their networks.

US firms, for the most part, lagged behind. Though Baker & McKenzie and Shearman & Sterling may have entered Hong Kong in the 1970s, Skadden, Arps didn’t arrive until 1989, and Latham & Watkins until 1994.

In recent years, all this has changed. US law firms have poured into China. Forty-four of the top 50 US law firms now have a presence in the country. Seventeen of these opened their first Chinese office in the last five years (see tables, page 18). In 2000, 10 of the top 50 US firms had two offices in China; none had three. Now 12 have two offices and 16 have three.

And US firm offices in China have been growing not just in number, but in size. Since 2005, Skadden has expanded its Chinese presence from 29 lawyers to 55; Simpson Thacher & Bartlett has increased from 16 lawyers to 42, and Latham and Watkins from 16 lawyers to 56.

Some of the newer arrivals, too, have been growing quickly.Weil Gotshal & Manges only opened its first Chinese office, in Shanghai, in 2004. Now it has offices in all three major cities with 30 lawyers between them. “We expect that figure to increase to 50 in the next two years,” says Akiko Mikumo, the firm’s Asia managing partner.

UK strengths targeted

In many cases, particularly in Hong Kong, US firms have achieved their growth by raiding UK firms. Latham & Watkins’ swoop on A&O was the latest in a stream of eye-catching raids by US firms on British rivals in China.

Skadden kicked off the trend in 2005, poaching partners from Linklaters and Simmons & Simmons. The following year, Freshfields China chief Michael Moser quit for O’Melveny & Myers; a year after, his replacement Doug Markel jumped ship for Simpson Thacher.

Then came the Latham move. “It’s totally changed the landscape for our China practice,” says Joe Bevash, a partner in Latham’s Hong Kong office. “It more than doubled our partnership overnight.” The move left A&O with just four corporate partners in their biggest Asian office.

Read more…