Welcome back to the Fides Weekly Update. Read on to see what news stories our researchers have been talking about this week.
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Another Trans-Atlantic tie-up?
Wednesday saw the announcement of another proposed trans-Atlantic tie up, with Berwin Leighton Paisner (BLP) confirming that it has entered into preliminary merger talks with US firm Greenberg Traurig. Both recognised for their global real estate practices, a merger between the two firms would create a practice with 2,500 lawyers – 750 of which would be based in New York and London.
The proposed merger could offer a good potential match for both firms. With 75% of its lawyers based in London, it would not only give BLP a major presence in the US but access to offices in Europe, Israel and Latin America to complement the firm’s existing offering in Asia. For Greenberg Traurig, who recently hit the headlines with the hire of former New York mayor Rudy Giuliani, the merger would bolster the firm’s practice in London which last year reported a 6% loss in profit. As well as reinforcing both of the firms’ real estate practices, which currently accounts for 30% of BLP’s revenue and a 300-lawyer practice at Greenberg, the merger would also provide both firms with the opportunity to strengthen other global practice areas.
However, a proposed merger is not without challenge as a substantial gap in size and profitability exists between the two firms. Already with 1,950 lawyers and 38 offices globally, Greenberg is the third largest firm in the US and ranks as the world’s 20th largest firm by revenues with PEP standing at $1.424m against £661,000 ($1.090m) for the UK firm’s 2014-15 year. Despite a 15% profit rise for BLP over the same period, with turnover at £259.2m and PEP at £465,000, the 850-lawyer firm remains a substantially smaller offering.
BLP has been searching for a suitable merger since last spring, signalled by the election of Lisa Mayhew as managing partner. Having rejected a UK merger with Olswang in late 2015, US firms Morrison & Foerster, Holland & Knight and Covington & Burling have also been mentioned as potential suitors. Greenberg Traurig on the other hand have never merged with another law firm, achieving such phenomenal levels of growth organically. Any merger would be subject to a partner vote from both firms.
Credit Suisse face gloomy outlook
Credit Suisse featured heavily in the news this week, most significantly for the sharp falls in profit they experienced in the fourth quarter of 2015. Their global markets division lost $3.5bn in Q4 and the bank reported their first full year loss since 2008 to be CHF2.44bn, a loss that was 16.7 per cent greater than anticipated.
These bleak results have caused Credit Suisse’s shares to fall by a whopping 13 per cent on Thursday, which saw them at their lowest value since 1991. It has sparked their decision to accelerate plans for a costs savings programme, which will involve cutting 4,000 jobs as well as seeing bonuses in the investment banking division slashed by as much as 36 per cent. The bank will stick to their strategy of shifting the focus onto wealth management and emerging markets, whilst continuing to cut costs in investment banking in an attempt to save CHF3.5bn by 2018.
The figures reported are a consequence of the torrid market conditions global banks have been facing. Swiss rivals UBS have also published their discouraging Q4 earnings and revealed its wealth management business experienced net outflows of CHF3.4bn, whilst Deutsche Bank’s securities unit also slipped into a loss in the fourth quarter. It has been a hard hit for the banking sector and Credit Suisse CEO Tidjane Thiam stated market liquidity, the sharp decline in oil prices and widening credit spreads as some of the destructive qualities to have shaped the market in Q4 and expects these challenging conditions will persist.
The news of Credit Suisse’s hefty loss comes only three days after the SEC and NY attorney general announced the bank is to pay a total of $80.3m for misconduct within their dark pools. The bank’s dark pool CrossFinder, one of the largest dark pools in the industry, has been censured for misleading customers who used them and allege that they welcomed high-frequency traders into their pools at the expense of the bank’s traditional customers. Barclays have also admitted to wrongdoing and will pay a penalty of $70m.
Eric Schneiderman, the New York attorney general, said the fines were a “major victory in the fight to combat fraud in dark pool trading”, an activity regulators have been targeting for a number of years. Dark pools are a closed trading platform and are inaccessible to the public. This form of trading highlights the lack of visibility in the banking system and is an aspect of the obscure shadow banking sector that has gained real influence in recent times. Click here to read director Tom Spence’s blog on shadow banking in European markets.
Movers and Shakers of the week
McDermott Will & Emery appoints new London head
Hugh Nineham will retire as the firm’s head of the London office and will be replaced by private client partner Andrew Vergunst
CMS elect new managing partner
Stephan Millar will replace Duncan Weston to take the role of managing partner at CMS Cameron McKenna
Fieldfisher add to Financial Services Regulatory team
Azad Ali has moved to Fieldfisher as a partner, joining from Shearman & Sterling where he served as counsel in their Financial Institutions Advisory & Financial Regulatory Group
VW hire CC German parter as US legal chief
VW has hired Clifford Chance German partner David Detweiler as their general counsel in the US
Fieldfisher take three from IP boutique
Partners Diana Sternfeld, Nicole Jadeja and Rebecca Baines will join Fieldfisher’s IP and life sciences practices from IP boutique Rouse.
Norton Rose lose regulatory team in Sydney
Clyde & Co have gained 10 lawyers in Sydney, including regulatory partners Michael Tooma and Alena Titterton, as well as four lawyers from Norton Rose Fulbright
Stephenson Harwood gain 7-strong team in Hong Kong
Stephen Harwood have hired a seven lawyer trade finance from Eversheds in Hong Kong, which includes partners King Tak Fung and Ivan Ng
Quinn Emmanuel expand Israel practice
Litigation partner Paul Friedman exits Clyde & Co to join Quinn Emmanuel Urquhart & Sullivan in both their London and Israel offices
White & Case hire Linklaters heavyweight in Hong Kong
Linklaters partner Christopher Kelly will be joining White & Case in Hong Kong as their Asia head of corporate.
Hill Dickinson boost corporate practice
Mark Weston will be joining the firm’ London office from Matthew Arnold & Baldwin
Clyde & Co hire IP partner
IP lawyer Ralph Cox departs from Fasken Martineau as head of the contentious IP group in London to join Clyde & Co in their London office
Eversheds lose corporate partner to DWF
Alasdair Outhwaite will be joining DWF’s national corporate practice from Eversheds
Dechert strengthen competition offering in Paris
Dechert have hired former Norton Rose Fulbright partner Mélanie Thill-Tayara into their antitrust and competition practice Paris.
DLA boost Nordic offering after merging with Finnish firm
DLA piper have merged with Peltonen LMR to give them over 200 lawyers in the region
BLP reveal possible tie-up with US firm
BLP have released a statement confirming merger talks with Greenberg Traurig
Office openings and closings
Jones Day expand in Australia
Jones Day have opened a third Australian office in Brisbane, alongside their Sydney and Perth offices
Orrick announce office opening in Houston
Orrick, Herrington & Sutcliffe are launching a new office in Houston, joined by 13 new partners