KWM China in talks to purchase Dubai, Germany, Italy and Spain offices

King & Wood Mallesons China is in talks to buy out the firm’s Dubai, Germany, Italy and Spain offices, abandoning its Swiss verein structure in those jurisdictions, it is understood.

The China partnership is expected to pick up a significant chunk of partners, associates and support staff at each of those offices.

It is also talking to corporate and M&A partners in London about a possible purchase, which would see the Sino-Australian firm retain a small number of English lawyers in the capital.

It is not yet known what will happen to KWM’s offices in Belgium and Luxembourg, KWM’s Paris team, which was largely depleted following a mass departure to Goodwin Procter earlier this year, is understood to be in talks with another firm.

Goodwin is currently the subject of a lawsuit by KWM over the Paris hires.

KWM’s Munich office lost a number of lawyers to K&L Gates, Covington & Burling and Orrick Herrington & Sutcliffe on Monday (19 December). The China deal is expected to include the majority of the remaining Munich base and KWM’s Frankfurt office.

The firm has also established a new LLP in the last week named KWM Deutschland. It is understood the entity is a move by KWM China to fulfil its regulatory requirements in Europe.

The Lawyer understands a deal between China and the Middle East and continental offices has not yet been signed.

KWM’s Dubai office is headed up by Tim Taylor QC, one of the biggest names at KWM and a legacy SJ Berwin partner. He is understood to be leading the talks with KWM China.

A KWM spokesperson was unavailable for comment regarding the Europe and Dubai deals.

Earlier this autumn the Chinese and Australian partnerships of KWM offered to inject around £14m of capital into the EUME business to meet its financial obligations to lenders, pay its rent and January tax bill. However just one fifth of partners agreed to the terms of the rescue deal, which included signing year-long lock-ins.

It emerged last week KWM China had instructed Addleshaw Goddard in the UK to advise it on a potential purchase in Europe as well as on reputational issues related to the troubled EUME partnership.

KWM EUME has seen a number of group exits in recent days as the firm looks to place as many lawyers as possible at other firms ahead of a possible pre-pack administration.

The firm’s profitable real estate team has split in two with a number including practice head William Naunton heading to DLA Piper, and others moving to Greenberg Traurig. A number of litigation lawyers led by practice head Craig Pollack are in talks to join Covington & Burling, while Reed Smith is expected to pick up a chunk of KWM’s corporate and tax lawyers including tax head Gareth Amdor.

Dentons had originally bid to take over KWM’s entire EUME arm but took its offer off the table following a due diligence process.

Eversheds management expects ‘yes’ from partners in US merger vote

Eversheds management is hoping for a resounding endorsement from partners today (16 December) on the vote to tie up with US firm Sutherland Asbill & Brennan.

The voting process to join the two firms will conclude at 2PM today. In order for the merger to be approved, two-thirds of Eversheds partners and over half of Sutherland partners have to vote in favour.

The combined firm will be called Eversheds Sutherland, and it is understood that it will operate as a company limited by guarantee, as used by the Big Four accountancies and Gowling WLG.

The cohort negotiating the deal included Eversheds chief executive Bryan Hughes, chief executive elect Lee Ranson, chairman Paul Smith, international managing partner Ian Gray and incoming managing partner Keith Froud.

It is understood that the talks between the two firms commenced at the start of 2016, although the merger talks were revealed later this year.

The board lineup for the merged firm is expected to be announced in January 2017, while the company is expected to be operational by February 2017.

The two firms combined will create a transatlantic business with a turnover of £600m. Eversheds would be the dominant firm in the merger after posting revenues of £405m last year. According to data in The Lawyer’s Global 200, Sutherland’s 2015 turnover was £196.9m.

The tie-up will create the 39th largest firm by revenue globally, and push Eversheds into the top 10 law firms in the UK, where it will rank tenth largest.

The merger with Sutherland will add an additional 178 partners to Eversheds’ 358-strong partnership and offices in Atlanta, Austin, Geneva, Houston, New York, Sacramento, and Washington DC.

Sutherland specialises in corporate, energy, financial services, intellectual property, litigation, tax, and real estate work.

Eversheds has been vocal about its plans to pull off a US merger in the last two years. The firm held merger talks with Milwaukee-based Foley & Lardner at the end of 2015. Discussions between the two firms broke down after details of the deal were leaked to the press.

If the latest talks are successful they will mark a successful end to Bryan Hughes’ tenure as Eversheds’ CEO. During his time leading the firm Hughes announced a strategy to turn Eversheds into a global leader by 2020. As part of the strategy the firm appointed Ian Gray as its first international managing partner.

Eversheds managing partner Lee Ranson was recently elected as the firm’s new CEO and will take over from Hughes in May 2017. Corporate partner Keith Froud has been appointed to replace Ranson as managing partner.

Sutherland opened a small office in the UK in 2014 when it merged with London commodities boutique Arbis. The deal also gave Sutherland its first office in Geneva. The London office focuses on oil and metals trading.

Greenberg Traurig to take on six-strong KWM team

Greenberg Traurig has confirmed that it plans to take on a six partner team from King & Wood Mallesons (KWM), after dismissing rumours of a takeover of KWM’s EUME business last month.

The hires, which are subject to “final arrangements”, will include private equity fund partners Steven Cowins and Marc Snell, corporate partners Michael Goldberg and David Fitzgerald, real estate transactional partner Matthew Priday and tax partner Clive Jones. All focus on the real estate sector.

A Greenberg Traurig spokesperson said: “Under Paul Maher’s leadership, we have built a first class office in London, with strong M&A, corporate, tax, capital markets and other areas, including real estate.

“This move will add resources in major firmwide strategic areas of real estate, private equity, M&A and tax.”

These hires come after The Lawyer revealed that Greenberg Traurig joined Dentons in talks to potentially take on chunks of the KWM EUME business in a package deal. The negotiations between KWM and Dentons fell through soon after.

On Monday (12 December) KWM told lawyers and staff they will be paid in January but salaries cannot be guaranteed beyond then.

It is understood news about the February wage slip was communicated to lawyers in the event a successful takeover does not take place.

Last week Barclays took out a second debenture over KWM’s assets that is understood to be more “all encompassing” than the debenture it secured over the summer. The extra layer of security came as it became increasingly likely KWM would enter into a pre-pack administration.

KWM admitted it would need to find a buyer for its EUME arm in November as it emerged its £14m China rescue deal had failed. Only one fifth of the remaining 130 EUME partners agreed to the terms of the deal, which included signing 12-month lock-ins.

The cash injection was needed for the firm to pay its rental liabilities, meet its financial obligations to lenders and pay its January tax bill.

KWM first agreed to improve security around its borrowings from Barclays in the summer, signing a debenture with the lender on 27 July.

The debenture created a series of fixed and floating charges over the firm’s assets, including its revenue stream and real estate.

It also stated the bank can appoint an administrator if KWM fails to meet its financial responsibilities.

In July the firm first voted through a recapitalisation plan, with 98 per cent of partners agreeing to commit in excess of £14m to the business. KWM also asked salaried partners to contribute capital for the first time.

The capital call failed following the shock resignations of four big-hitter partners including head of investment funds Michael Halford and former managing partner Rob Day.

A number of partners have followed in their wake, including former EUME head William Boss, who is moving to Addleshaw Goddard, and head of litigation Craig Pollack, who is understood to be moving to Covington & Burling.

Global managing partner Stuart Fuller also stepped down from his role in recent weeks, returning to fee-earning in Australia. The process to find his successor is ongoing and is due to complete before the end of the year.

KWM is being advised on its restructuring plans by AlixPartners and CMS Cameron McKenna partner Rita Lowe.

Clifford Chance and Linklaters advise on £13.8bn National Grid purchase

Clifford Chance, CMS Cameron McKenna and Linklaters have won key roles on the £13.8bn acquisition of a major stake in National Grid’s gas business by a consortium led by CIC Capital and Macquarie.

National Grid instructed long-standing advisor Linklaters on the multibillion-pound transaction. The firm’s team was led by London corporate partners Roger Barron and Jessamy Gallagher. Barron has been the relationship partner for National Grid since the early 2000s.

The team worked closely with National Grid’s in-house team led by deputy group general counsel Mark Noble.

“This is a significant deal for the market and a good outcome for National Grid and its stakeholders,” said Barron.”The deal also shows the confidence that investors, from around the world, have in UK infrastructure.  Despite increased political risk, institutional international investors still view UK assets as attractive and this is likely to continue.”

The consortium, which will acquire a 61 per cent state in NG Gas Distribution, is called Quad Gas Group. The group is made up of CIC Capital, a subsidiary of China’s sovereign wealth fund, the Qatar Investment Authority, Australian investment bank Macquarie, Allianz Capital Partners, Hermes Investment Management, Amber Infrastructure and Dalmore Capital.

The consortium was advised by CMS and Clifford Chance. CMS’s team was led by head of corporate Charles Currier and Clifford Chance fielded London corporate partner Brendan Moylan.

National Grid started a formal auction for the sale in June 2016. Li Kai-shing’s CKI and Chinese conglomerate Fosun Group were reportedly among several other bidders for the gas distribution business. It is understood that Freshfields Bruckhaus Deringer and Herbert Smith Freehills represented two separate unsuccessful bidders.

The transition is expected to close in March 2017 subject to clearance from the European Commission. It will then lead to the return of £4bn to shareholders through the combination of a special dividend and share buybacks.

In addition to the three main corporate advisers, Eversheds provided pension and business separation advice to National Grid, with London corporate partner James Trevis leading the team.

Addleshaw Goddards, DLA Piper and Irwin Mitchell also played support role to National Grid, working on the property separation aspects of the transaction that involved the transfer of over 15,000 properties. Addleshaw Goddards was led by real estate partners Ian Smith and Cathy Fearnhead, while DLA Piper’s team was headed by

 

Tunisian lawyers take to the streets to protest proposed new taxes

Several thousand Tunisian lawyers demonstrated on Tuesday in front of the prime minister’s office, with some demanding his resignation as they escalated a protest against widely unpopular new taxes that will hit them and other high-end professions.

Under a budget draft approved by parliament’s finance committee on Monday, lawyers will pay tax of between about $8 to $20 on each file they present to court. The levy is part of austerity measures proposed for 2017 by a government under pressure from international lenders to cut the fiscal deficit.

According to a Reuters witness some 3,500 of the country’s 8,500 lawyers joined the protest in Tunis which, coming on top of an open-ended strike that the profession launched on Monday, will test the government’s resolve to implement its reforms.

Applications to Irish roll up 275 per cent as firms prepare for Brexit

The Law Society of Ireland has revealed it has admitted a record 810 English qualified solicitors to the roll by this year as leading UK firms rush to secure a second jurisdiction for their lawyers in the wake of the Brexit vote.

Including local trainees, there will be 1,347 new solicitors in Ireland by the end of the year.

The figure beats the previous record set in 2008 by more than 500 solicitors, and represents an increase of 275 per cent compared to 2015.

It has been dubbed a “tsunami of new solicitors” by Law Society director general Ken Murphy.

It follows UK firms including Freshfields Bruckhaus Deringer, Eversheds and Slaughter and May rushing to admit lawyers amid fears it may be more difficult to practise EU law after Britain leaves the union.

Freshfields has registered 117 solicitors on the Irish roll, while Eversheds has registered 86 lawyers and Slaughter and May 40.

Freshfields told the Law Society its lawyers taking out an additional qualification in Ireland were “primarily anti-trust, competition and trade law practitioners” based in its London and Brussels offices.

“They were doing it to allay any conceivable concerns in the future about the status of their solicitors in dealing with EU institutions including in relation to legal privilege in EU investigations,” a statement by the society said. “They told us, unambiguously, that Freshfields has no plans to open an office in Ireland.”

It has emerged Freshfields senior partner Ed Braham, managing partner Chris Pugh and general counsel Colin Hargreaves met with director general Murphy at the firm’s offices in Fleet Street in mid-July.

“They expressed appreciation for the helpful and efficient way in which the relevant staff of the Law Society of Ireland had facilitated their colleagues with their transfers,” a statement read.

Clifford Chance submitted applications for all 34 of competition lawyers across its London and Brussels offices to be admitted to the Irish bar but so far just 12 have been admitted. Herbert Smith Freehills funded 34 lawyers to be admitted in Ireland this year, of which 25 have been admitted. Meanwhile Hogan Lovells has had 34 lawyers admitted in Ireland; Allen & Overy 24; Linklaters 20; and Bird & Bird 10.

At US firms, Shearman and Sterling has registered 11 lawyers on the Irish roll; Covington & Burling has 10; and Arnold & Porter and Gibson Dunn & Crutcher both have six.

The Irish Law Society said it was receiving 10 to 12 queries a day from England and Wales qualified lawyers amid Brexit uncertainty and following the vote. In the first half of 2016 a record 186 lawyers were admitted.

To join the Irish bar lawyers must pay a one-off charge of €300 (£252) plus an annual cost of around €2,000 to qualify as a practising solicitor. Unlike solicitors from other EU countries, practitioners from England, Wales and Northern Ireland are not required to go through a transfer test.

Dentons Australia union with Gadens to complete this week

Dentons’ tie-up with Australia’s Gadens will formally complete this week, more than a year after partners first approved the deal.

Sydney Skyline Panorama

Gadens operates a federalised model across Australia, with its offices in Brisbane, Melbourne and Adelaide set-up as separate entities from those in Sydney, Perth and Port Moresby, which are integrated.

The integrated offices will join Dentons while those in Brisbane and Adelaide will become associate firms of Dentons Australia.

In October it emerged that Gadens’ Melbourne office would break away from the merger. The firm closed its Singapore office in May this year, when office managing partner Marc Rathbone joined Nabarro.

Dentons global chief executive Elliot Portnoy said: “Our clients, particularly those in China, Singapore, Hong Kong and South Korea, responded enthusiastically to the announcement of our combination.”

“Adding market-leading experience in Australia’s banking and finance, real estate, infrastructure, energy and natural resources sectors to our global teams significantly enhances our offerings to clients in the Pacific Rim.”

Last month Dentons announced it is set to move into the Central American market through a tie-up with Costa Rica-based firm Munoz Global, a deal that will also see the international firm gain bases in Panama and Nicaragua.

The combination is subject to a vote by partners at both firms.

Dentons is also understood to currently be in discussions to take on King & Wood Mallesons (KWM)’s beleaguered European and Middle East arm.

Dentons rides in to the rescue of beleaguered KWM Europe

Dentons has emerged as a potential merger partner for the beleaguered European arm of King & Wood Mallesons (KWM).

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News of the discussions comes at a critical point for KWM’s Europe and Middle East (EUME) partnership.

At the same time, it is understood that US firm Greenberg Traurig and DLA Piper are interested in some of KWM’s Europe and Middle East (EUME) business, including a number of London partners.

However, Greenberg denied an earlier report today (30 November) that it was looking at acquiring KWM’s entire EUME business. “We have no interest and have not had one conversation relating to the acquisition of KWM’s EUME business, though we wish their lawyers and staff well,” a press spokesperson said, adding: “Greenberg Traurig is an opportunistic firm, and we always look at situations where our objectives of excellence, cultural fit, value and financial discipline can be advanced.”

KWM’s European management has been forced to look at options including a merger after partners last week opted against a recapitalisation of the business, which would have secured a bailout from the Asia-Pacific arms of the verein.

Legal Week reported last week that only 21 of King & Wood Mallesons’ European partners had agreed to commit in full to the troubled firm’s failed recapitalisation plan.

That equates to just over 16% of the 130-strong European partnership – making it impossible to raise the nearly £14m required from European partners to secure the additional bailout from the Asia-Pacific arm of KWM, thought to be worth a similar value.

For the Asia bailout to go ahead, partners would also have had to commit to stay with KWM EUME for 12 months.

In response to questions about discussions with KWM, Dentons global chair Joe Andrew said: “While we would never comment on whether we are in combination conversations or not with any firm, we admire the many European/UK partners of KWM that our partners work with regularly and believe this is a very high quality group of impressive lawyers.”

Sources familiar with the matter said that other firms are also talking to KWM’s European management about a potential deal.

If the EUME management team is unable to secure a merger for the business, one potential alternative would be a pre-pack administration that could see one or several firms purchasing all or parts of the business.

It is also possible that partners within the Asia-Pacific arms of the verein could step in with another rescue offer.

KWM EUME has seen a number of partners leave the firm in recent weeks after the firm was plunged into crisis by the resignation of four high profile London partners, including UK investment funds head Michael Halford, who – it was announced last week – is heading to Goodwin Procter in London alongside four partners.

Yesterday, it emerged that KWM’s global head of litigation Craig Pollack is in talks to join Covington & Burling in London.

Morgan Lewis has previously been tipped as a potential merger partner for KWM globally, however it was reported earlier this month that talks had been called off.

Eversheds moving in on merger with US firm Sutherland

Eversheds is in late stage merger talks with US firm Sutherland Asbill & Brennan.

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Partners at both firms are expected to vote on the merger in the next few weeks.

A merger with the Atlanta-headquartered firm would create a transatlantic business with a turnover of £600m. Eversheds would be the dominant firm in the merger after posting revenues of £405m last year. According to data in The Lawyer’s Global 200, Sutherland’s 2015 turnover was £196.9m.

The tie-up will create the 39th largest firm by revenue globally, and push Eversheds into the top 10 law firms in the UK, where it will rank tenth largest.

The merger with Sutherland will add an additional 178 partners to Eversheds’ 358-strong partnership and offices in Atlanta, Austin, Geneva, Houston, New York, Sacramento, and Washington DC.

Sutherland specialises in corporate, energy, financial services, intellectual property, litigation, tax, and real estate work.

Eversheds has been vocal about its plans to pull off a US merger in the last two years. The firm held merger talks with Milwaukee-based Foley & Lardner at the end of 2015. Discussions between the two firms broke down after details of the deal were leaked to the press.

If the latest talks are successful they will mark a successful end to Bryan Hughes’ tenure as Eversheds’ CEO. During his time leading the firm Hughes announced a strategy to turn Eversheds into a global leader by 2020. As part of the strategy the firm appointed Ian Gray as its first international managing partner.

Eversheds managing partner Lee Ranson was recently elected as the firm’s new CEO and will take over from Hughes in May 2017. Corporate partner Keith Froud has been appointed to replace Ranson as managing partner.

Sutherland opened a small office in the UK in 2014 when it merged with London commodities boutique Arbis. The deal also gave Sutherland its first office in Geneva. The London office focuses on oil and metals trading.

Trump taps Jones Day lawyer for White House counsel role

US President-elect Donald Trump has appointed Jones Day partner Donald McGahn as his White House counsel.

McGahn served as general counsel to Trump’s campaign and has continued in that role for the transition since the election.