Fides Weekly Update – 14th July 2017

Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.

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This week:

1. London makes a play to attract colossal Aramco listing

With the biggest ever IPO in history preparing to float, the Financial Conduct Authority (FCA) looks to amend regulations for stock market listings in an attempt to lure Saudi Aramco’s listing to London.

On Thursday, the FCA released its proposal to introduce a separate listing category for companies controlled by sovereign countries, which lowers certain requirements necessary to float on the London Stock Exchange (LSE) compared to other premium listings.

Currently, in order to qualify as a premium listing, companies must float a minimum of 25% of its shares on the exchange, and has to gain prior approval from independent shareholders for transactions between the state and the company, i.e. the purchase of other state owned assets, in Aramco’s case. Under the new proposed rules, sovereign-owned companies would forgo these requirements.

FCA chief exec Andrew Bailey has commented that: “Refining the listing regime in this way would make UK markets more accessible whilst ensuring that the protections afforded by our premium listing regime are focused and proportionate.

“Sovereign owners are different from private sector individuals or companies – both in their motivations and in their nature.”

Looser regulation will no doubt make the LSE more attractive for Aramco, but some experts argue that the new rules may cause damage to investor protection.

The changes would reverse some of the advancements made in 2013 on corporate governance and the protection of minority shareholders, where regulations were put in place after various LSE listed, overseas-headquartered companies were engaging in unethical practice. These problems caused investors to lose respect for the exchange as they argued there was an over-liberalisation of the listing regime, with the London Stock Exchange and Financial Services Authority concentrating too heavily on attracting major foreign investors which brought in lower quality companies.

Despite this, the proposed new listing regime offer major benefits for London as it would not only help entice Saudi Aramco to float, but also extend these benefits to other state-controlled companies looking to list, which particularly concerns various Gulf countries who have been considering a flotation for their respective state-owned oil assets.

Saudi Aramco’s IPO is expected to take place in late 2018/early 2019 is valued at approximately $2 trillion.

2. Financials round-up: Analysis of law firm earnings for 2016-17

With the financial results season well underway, we take a look at the results posted so far as law firms reveal their headline figures for 2016-17.

The first round of results to reveal the true extent of last June’s Brexit vote, and slow down of transactional activity, it will be interesting to see the extent to which this has been offset by post-Brexit currency fluctuations.

Firm Name Revenue % +/- PEP % +/-
Clifford Chance £1.54bn 11% (2%)* £1.38m 12% (8.5%)*
Allen & Overy £1.52bn 16% (6%)* £1.51m 26% (14%)*
Linklaters £1.44bn 9.8% (1.7%)* £1.568m 7.8%
Freshfields Bruckhaus Deringer £1.33bn 0.3% £1.547m 5%
Herbert Smith Freehills £920.5m 10.6% £760,000 -2.5%
Ashurst £541m 7% £672,000 11.5%
Eversheds Sutherland (ex-US) £4.386m 8% £742,000 -2%
Pinsent Masons £423.1m 11% £625,000 11%
Simmons & Simmons £316.1m 7% £635,000 9%
Berwin Leighton Paisner £272m 7% £630,000 -8%
Macfarlanes £167.6m 4% £1.38m 8%
Travers Smith £125m 3.8% £970,000 -4.4%
Stewarts Law £78.1m 25% £2m 30%
CMS £805m 10% N/A N/A
RPC £103m 2% N/A N/A

Allen & Overy emerged as one of the strongest performers in this year’s round of results, posting double-digit growth across all metrics with revenue and profit per equity partner figures (PEP) rising to record levels. Revenue rose to £1.52bn, whilst PEP reached £1.51m, a 26% increase on last year’s results.

Managing partner Andrew Ballheimer cited multijurisdictional work behind the firms growth, with 74% of total revenue derived from matters involving two or more countries, with A&O’s alternative delivery models (Peerpoint, aosphere and MarginMatrix) having their strongest performing year yet.

Not to be outdone, Clifford Chance also posted record-breaking financial results, with turnover climbing 11% to £1.54bn and PEP increasing 12% to £1.38m against a consistent equity partner count.

Buoyed by strong performances in London and Asia, the UK brought in £507m in turnover, an increase of 4%, which equated to 33% of total revenue. Local currency gains in Asia also translated to 18% of total sterling revenue. Despite this turnover in the US remained flat, whilst the firm made losses in Europe and the Middle East.

Linklaters on the other hand made more modest gains, posting a 7.8% hike in PEP alongside a revenue rise of almost 10% to £1.44bn.

Of the Magic Circle, Freshfields posted the most disappointing set of results with a flat turnover and shrinking net profit for 2016-17. The firm posted revenue of £1.33bn, a marginal increase of just 0.3% on last year, while net profit fell by just under 1% to £612m.

Outside of the Magic Circle firms experienced mixed results, with Herbert Smith Freehills, Eversheds Sutherland, Travers Smith and Berwin Leighton Paisner all posting revenue increases in the face of falling PEP.

Pinsent Masons performed well reporting double digit PEP and revenue growth, with Macfarlanes, Ashurst and Simmons & Simmons all rebounding after a challenging 2015-16.

Meanwhile, litigation boutique Stewarts Law entered the UK top 50 for the first time, posting a 25% increase in revenue and 30% jump in PEP.

Firms most heavily impacted by political conditions include RPC and CMS, who experienced a dip in net profit and revenue respectively.

Movers & Shakers of the week 

Panel Watch

Santander’s UK legal roster to include Slaughters and Ashurst after Spanish banking giant increases its host of firms
The Spanish banking giant has increased its legal roster which now includes Ashurst and Slaughter and May.


Three new board members for Ashurst after having a mixed year
After a mixed year of increased revenue but the loss of three partners, Ashurst has decided to promote three new board members to stabilise the firm.

Daily Mail’s GC has stepped down
Claire Chapman, the Daily Mail’s general counsel and company secretary has left the company after almost five years.

Leung retires after 26 long years at Slaughter and May
Slaughter and May partner Miranda Leung, has decided to retire from the firm for personal reasons after 26 years.


Baker McKenzie’s London office to be headed by former Linklaters global COO
Baker McKenzie will be introducing a new COO, Simon Thompson who formally worked as Linklaters global COO, as of August.

GC Cordon exits for new role in venture capital
General counsel Christine Cordon has decided to leave her role at Secret Escapes to try her abilities as the new head of legal at venture capital business Arts Alliance Ventures.

Mishcon boosts fledgling cyber security consultancy service
Mike Owen from PwC has joined Mishcon de Reya as it expands their cyber security consultancy service.

Scott Southgate has taken up a new role at the Hampshire Trust Bank after leaving his job as Former Investec private bank general counsel.
After nine years at the bank, Scott Southgate has decided to make a move to the Hampshire Trust Bank.

Cooley hires team from Wilson Sonsini to boost their American Offices
Cooley hopes to boost offices in New York and Washington after hiring team from Wilson Sonsini.

Office Openings & Closings

Matheson decides to open a third office in the US but this time in San Francisco
Irish firm Matheson has decided to expand its international footprint, after launching a third US office but this time in San Francisco.

Peters & Peters lawyers leave to start up their own business crime firm
Former Peters & Peters lawyers Anand Doobay and Christina Russell have opened a business crime firm to be called Boutique Law.

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