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  • September 25, 2008 |

    Shearman's German practice comes under scrutiny after fresh walk-outs

    Shearman & Sterling's German practice was dealt a fresh blow last week as half of the law firm's Munich partners left to launch Allen & Overy's (A&O's) fifth German office. The departures of Shearman's Munich office head Gottfried Breuninger (also German tax head and global co-head of tax) and M&A partner Astrid Krueger to A&O came after the US-based law firm lost global co-head of M&A Hans Rolf Koerfer, and M&A partner Birgit Reese to the magic circle law firm's Duesseldorf arm in January and March respectively.The losses come on top of Shearman's nine-partner Mannheim office walking away from the firm earlier this year.

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  • September 24, 2008 |

    Dealmaker: Will Meredith

    Camerons finance head Will Meredith on overcoming a fear of cheese, trashing Austin Princesses and getting caught with your hand in the cookie jar

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  • September 24, 2008 |

    Africa: The art of resilience

    The types of work that continue to drive many of South Africa's top law firms have proven remarkably resilient to the US credit crisis, largely because they are attached to internal factors unique to the local market. That has lawyers here more optimistic than their counterparts elsewhere that their deal loads can remain robust in the face of fears about a global recession.South Africa's utility and mining sectors have been driving the deals in the past year, and for good reason.A power shortage peaked in early 2008, crippling South Africa. In response the country's state-owned electricity giant Eskom is pledging R300bn (£20.6bn) to build new power plants in a massive electricity overhaul expected to last 20 years. The mining industry continues to consolidate thanks largely to obligations under the Black Economic Empowerment (BEE) Act of 2003. On top of these deal drivers are a raft of widespread infrastructure projects ahead of South Africa's hosting of the 2010 World Cup. All of this equates to Johannesburg and Cape Town law firms winning plenty of lucrative instructions in uncertain times.

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  • September 24, 2008 |

    Linklaters and A&O head up Lloyds' £12bn HBOS takeover

    Linklaters and Allen & Overy (A&O) have taken lead roles on Lloyds TSB's £12.2bn rescue takeover of the UK's largest mortgage lender HBOS. Linklaters is advising Lloyds on the merger, which was put together in a matter of days last week, following HBOS's share price collapse after Lehman Brothers' shock bankruptcy filing. The magic circle law firm, which is a regular adviser to Lloyds, is fielding a team under relationship partner Jeremy Parr and corporate partner Duncan Barber. Competition partners Michael Cutting and Bill Allan are also involved in the deal, which has attracted some criticism because of the Government's decision to introduce emergency legislation allowing the merger to override competition hurdles.

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  • September 24, 2008 | International Edition

    Commentary: Linklaters finds many silver linings on Wall St's cloud

    With every day last week seemingly heralding news, or at the least rumours, of another shock bank collapse/rescue, there are clearly better times to be a lawyer in the financial services sector. But for Linklaters it seems this particular cloud has a silver lining. Rafts of firms have managed to win substantive roles in the transactions but in the UK, only Linklaters has managed to secure key positions on all three deals to date.The firm has a team of around 20 partners acting for PricewaterhouseCoopers as UK administrator on Lehman Brothers' collapse in addition to a separate team advising Lloyds TSB on its takeover of HBOS. The firm is also advising Merrill Lynch on UK aspects of its takeover by Bank of America.

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  • September 24, 2008 |

    Commentary: Linklaters finds many silver linings on Wall St's cloud

    With every day last week seemingly heralding news, or at the least rumours, of another shock bank collapse/rescue, there are clearly better times to be a lawyer in the financial services sector. But for Linklaters it seems this particular cloud has a silver lining. Rafts of firms have managed to win substantive roles in the transactions but in the UK, only Linklaters has managed to secure key positions on all three deals to date.The firm has a team of around 20 partners acting for PricewaterhouseCoopers as UK administrator on Lehman Brothers' collapse in addition to a separate team advising Lloyds TSB on its takeover of HBOS. The firm is also advising Merrill Lynch on UK aspects of its takeover by Bank of America.

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  • September 24, 2008 |

    Belgian firm Lydian launches in Antwerp

    Belgian independent Lydian has launched in Antwerp, with the hire of former Allen & Overy projects lawyer Axel Craeybeckx. The Brussels-based law firm has also hired former president of the Antwerp-Waasland Chamber of Commerce John Stoop, a specialist in commercial and maritime law, for the launch. Managing partner Alexander Vandenbergen said: "Antwerp is a growth hub. The port is known around the world and there are prospective Belgian and international clients."

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  • September 24, 2008 |

    Facing up to harsh reality

    The heady pay increases assistants have enjoyed in recent years are a thing of the past, Legal Week's 2008 Assistants Survey reveals. Indeed, many lawyers who lack the security of partnership status are more likely to be concerned about holding on to their jobs than complaining about compensation, experts say.Data from the survey, combined with the observations of management consultants and recruiters, paints a less than sunny picture of a profession buffeted by the economic downturn that has affected UK and global markets.While few law firms are actively wielding the axe, many are taking a hard look at their bottom lines and staffing needs. If the situation worsens, redundancies could intensify. The scope for alternative career paths may be reduced. And getting a foot in the door is becoming harder.Furthermore, many firms are being forced to rethink the big picture, according to Nick Jarrett-Kerr, a London-based management consultant with Kerma Partners and former chief executive partner of Bevan Ashford. "If an assistant with five to seven years' experience leaves, that person is likely to be replaced with someone less experienced and cheaper," says Jarrett-Kerr. "When people leave, it is an opportunity to think strategically. Do you want to replace them at all, and do you need to replace them at the same level?" In these circumstances, it is perhaps not surprising that Legal Week's survey shows assistants' salaries are generally rising only modestly - a finding corroborated by the observations of Watkins and other experts interviewed. The survey was conducted in August. Responses were provided by 55 law firms, ranging in size from those with 100 or fewer assistants to Eversheds, with more than a thousand. Respondents included a mixture of City, regional and London offices of US firms. Average pay for 2007-08 started at £62,495 for newly-qualified lawyers (NQs) - up slightly from the 2007 figure of £61,247 - reaching £80,596 for those with three years' post-qualification experience (PQEs) - up from £76,695. According to some recruitment firms, the climate of modest pay rises has allowed several mid-sized firms to play catch-up with the big boys - taking the opportunity to narrow the salary gap by offering above-average percentage raises to their assistants. This trend is borne out in the survey data, with Withers, Stephenson Harwood, Berwin Leighton Paisner and Clyde & Co heading a group of mid-market firms that have made significant salary increases during the last year. At Withers, for example, salaries for NQs shot up 20% from £48,000 to £58,000. Pay for assistants with one year's PQE jumped 13% from £54,000 to £61,000. Those with two or three years' PQE also enjoyed boosts of 10.3% and 7.2% respectively. Pay rises in the regions were fairly small: Burges Salmon's increase of around £2,000 at each PQE level was fairly typical. As a result, the pay gap between the City and the regions remains as wide as ever, with non-London assistant salaries - typically in the £40,000 to £60,000 bracket - dwarfed by standard Square Mile rates.Chargeable hours targets moved up slightly to an average of just over 1,440 hours per year. Cadwalader Wickersham & Taft was the outlier with a formal target of 1,900 hours a year. The lowest target was 1,100 hours. "A lot of firms have been nudging their chargeable hours targets, but the actual numbers achieved have probably been lower because there is less work," comments Tony Williams, the principal of Jomati, a management consultancy, and former managing partner of Clifford Chance. "Assistants are being paid more, and firms want more out of them."Firms are paying more attention to time-capture techniques and culture, Jarrett-Kerr says. "Assistants are not necessarily working more, but they are recording it better. Firms are getting better at matching their capture to their volume." Chargeable hours continue to be a fundamental consideration in the award of bonuses in most firms, the survey shows, along with the firm's financial performance. In 13 firms, those were the only factors taken into account. An additional eight reported bonuses are based solely on financial performance, while one said they are entirely discretionary. The remaining 33 used a combination of financial performance, chargeable hours and other performance measures to determine bonuses. After the big pay increases of 2006 and 2007, firms are trying to put more take-home pay at risk in the form of bonuses, said Philip Hough, senior consultant in the London office of Watson Wyatt, an international consulting firm. This method also avoids the consequences of permanent pay hikes such as higher pension and other benefits costs. Hough favors tying bonuses to performance measures beyond chargeable hours. "The most successful organisations are those that have a combination of base pay and performance pay, and a good performance measurement system standing behind it, because they can explain to their employees what they want in terms of behaviour, delivery and contributions to the firm," he says. Performance measures may include quality of work, mentoring, client interaction, business development, seminars given and other factors.All the respondents in the survey conduct appraisals of their assistants, either once or twice a year. Formal mentoring programmes exist at 38 firms. Jomati's Williams argues appraisal should be a continuing process. For example, there is an opportunity to comment on performance each time an assistant completes a project. Reviews of partners by assistants - so-called 360-degree reviews - are conducted in 35 respondent firms. Jarrett-Kerr notes that 36 degree reviews are easier to do in bigger firms - and assistants are likely to be more honest because there is less chance they can be identified. "The capacity for self-deception of some lawyers is quite high, and to have some empirical survey evidence that they are not regarded as good delegators, for example, can be quite helpful," he adds.Alternative in-firm career paths are offered at 37 firms, and four said they are considering their introduction. Except for Burges Salmon, which pioneered a programme 10 years ago, and SJ Berwin, which has a five-year track record, all firms introduced them within the last two years.Alternative career paths are generally viewed as a way to give people who may never make partnership appropriate recognition and a degree of seniority. They also suit lawyers who don't want the hassles or the risk of partnership, or the capital outlay involved.Legal Week's survey revealed a variety of titles for these positions, including legal director, counsel, senior associate, associate director, special counsel, of counsel, senior lawyer, director and professional support lawyer (PSL).The split among males and females in these positions seemed to depend on firm culture. In many firms, the division was fairly even. In others, the positions were held overwhelmingly by women."All these titles have the purpose of giving people the feeling their career is moving forward and keeping them happy where they are in the waiting area for equity partnership. For some, it will be a long-term car park," Jarrett-Kerr said.He noted these positions can create a problem for firms in how to satisfy client expectations. A less sophisticated client may feel slighted if assigned a lawyer who is not a partner. But Jarrett-Kerr says a sophisticated client, such as the general counsel of a big corporation, may be happy to work with a qualified non-partner who is a highly specialised technical lawyer, not a rainmaker.On the other hand, he wonders whether the current economic climate might discourage some lawyers from pursuing the alternative path. "If you enter a world where things are not so secure, it may be that people will revert back and seek the security of a long-term contract such as partnership," he says.Firms may also question the business model as the economy sours, Williams points out. He notes that these positions are relatively expensive, and says the senior group below partner is likely to be squeezed over the next year or so. "Firms will be looking very hard at the business case if there is less work around. They may push work down to less expensive and younger associates," he cautioned - especially if the margin the firm is making on their work is quite small.One reason for the growth in alternative career positions is that achieving equity partnership is getting much harder, Jarrett-Kerr notes. He said the average time is gradually getting longer and is generally much higher than seven years. Partnership might be hard to achieve, but most firms reported at least a few internal promotions to that coveted status. The 28 associates made up at Allen & Overy was the highest amount of any firm surveyed, followed by the 19 promoted at Hammonds. At the other end of the spectrum, Ince & Co made just two internal partner promotions and Dickinson Dees only one. In terms of external recruitment, Simmons & Simmons leads the pack, with 13 partner level hires of assistants from other firms. Pinsent Masons and Eversheds were just behind them with 11 external hires each. Whatever bloodletting may be about to occur, reported attrition rates this year remained stable within most firms, Legal Week's survey showed. However, 14 firms chose not to respond to this question - up from eight last year. Attrition rates of 12% to 15% are considered healthy. Two firms, Dechert and Cobbetts, reported attrition rates of more than 25%. Unsurprisingly, conveyancing is considered the most endangered branch of the profession. Transactional law is also experiencing difficulties. Corporate law is holding up, but firms can be much more selective. Recruiters predict the market for NQs to be even more difficult next year. The consensus view is that the branches of the profession best suited to riding out the turbulent times ahead are employment law, litigation, taxation an

    1 minute read

  • September 24, 2008 |

    It's bonus time

    Since bonuses were introduced by law firms in the late 1990s as a way to limit the long-term effects of salary inflation, amounts paid out - and the hoops that assistants have to jump through in order to get their hands on the cash - have varied wildly between firms. Some firms give tens of thousands of pounds to assistants regardless of individual performance, while others require Olympian levels of all-round commitment in return for sums that could probably be more easily obtained through a few after hours' shifts at the local pub.

    1 minute read

  • September 24, 2008 |

    Rewarded by results

    The recent decisions of several law firms to bring in merit-based pay systems for assistants have led some in the profession to speculate that pay based on post-qualification experience (PQE) might have had its day.We investigate the arguments for and against merit-based pay, look at how firms evaluate performance and speak to assistants to gauge their views on the topic.Merit versus PQENorton Rose recently made the move to implement merit-based pay at all levels from newly-qualified (NQ) upwards, replacing the traditional PQE gradings with a three-tier system that divides assistants into categories known as Associate 1, Associate 2 and Senior Associate. Assistants are paid and charged out according to the new categories.Managing partner Deirdre Walker explains the reasoning behind the firm's decision to adopt the model. "The PQE approach is antiquated and often simply not fair. Why should a really excellent one- or two-year qualified lawyer earn less than someone mediocre who just happens to have more experience than they do?" She adds that recently introduced age discrimination legislation played a part in the decision. "It was a factor, but not the driving one. As I understand it, legal opinion is still very much divided on whether PQE will fall foul of the new laws."David Gray, managing partner of Eversheds, which is in the process of bringing in performance-related pay for its assistants, also downplays the significance of the legislation. However, he believes that it is important to have a remuneration structure that allows flexibility in terms of how mature assistants are paid. "Say you have one three-year PQE who has 15 years' experience in another profession and is very capable with clients, and another who has come straight from university. Clearly it is a good idea to have a pay structure in place that allows you to pay the first guy more."Ashurst is another high-profile merit-based pay convert, while across the Atlantic, Howrey became the first firm in the US to adopt a totally merit-based structure earlier this month.

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