Latham elects London partner to succeed Bill Voge as chair

City capital markets partner Richard Trobman takes the reins at US legal giant

 

 

 

 

 

 

 

 

 

 

 

 

Latham & Watkins has announced that London-based capital markets partner Richard Trobman has won a partnership election to be the global legal giant’s next chair and managing partner.

US tech leader Wilson Sonsini to launch in London

Adviser to tech giants such as Google, Twitter and LinkedIn to open Old Street office

 

 

 

 

 

 

 

 

 

 

 

 

US west coast tech leader Wilson Sonsini Goodrich & Rosati is opening an office in London as the firm sets its sights on a push into the UK technology and life sciences markets.

 

Deloitte secures long-awaited ABS licence ahead of UK expansion

Deloitte has received its alternative business structure (ABS) licence, becoming the last of the Big Four to set up a legal arm in the UK.

The Solicitors Regulation Authority (SRA) confirmed that it has granted Deloitte the right to operate as a multi-disciplinary practice. The licence came into effect on the 15 June.

The new move will allow the big four accountancy firm to provide legal services as an ABS in the UK for rights of audience, conduct of litigation, reserved instrument activities, probate activities and administration of oaths.

Deloitte applied for the licence in January.

All three of Deloitte’s rivals applied for ABS status in 2014; PwC Legal gained a licence from the SRA at the start of that year, while KPMG and EY followed suit later in 2014.

The UK was previously a notable absentee from Deloitte Legal’s network, until the branch announced an alliance with US immigration law firm Berry Appleman & Leiden (BAL) at the beginning of the month.

Through the alliance, it will acquire BAL’s non US businesses in the UK, Australia, Brazil, China, Dubai, Mozambique, Singapore and South Africa, as well as a base in London.

Japan

Skadden, STB lead on $1.2 bln IPO of first-ever Japanese unicorn

Skadden, Arps, Slate, Meagher & Flom and Nishimura & Asahi have advised Japanese flea market app operator Mercari on its $1.2 billion IPO, the nation’s biggest such share sale so far this year.

Simpson Thacher & Bartlett and Mori Hamada & Matsumoto advised the lead managers as international and Japanese law counsel, respectively. Mercari, which offers a popular smartphone app that allows people to trade used items online, is the country’s third-largest tech listing in the past five years – behind the $3.2 billion raised by Japan Display in 2014 and the $1.3 billion by Line Corp in 2016 – according to Thomson Reuters data. Founded in 2013, Mercari was Japan’s first unicorn – a startup with a valuation above $1 billion – in a country that boasts numerous successful giant corporations but lacks a vibrant startup culture, said Reuters. It added that according to data provider CB Insights, Mercari and information technology startup Preferred Networks are the only two unicorns in Japan.

India

India Attracts Largest E-Commerce Deal

India’s potential for high growth in retail came to the forefront with the acquisition of its biggest homegrown online retail company. The high economic growth prospects were reaffirmed by the IMF. There will be a new system for monitoring of foreign investment in listed entities. The current policy for external commercial borrowings has been further liberalized.

Walmart Acquires Flipkart – Earlier this month, Walmart Inc. announced that it would pay $16 billion for an initial stake of approximately 77% in homegrown e-commerce company Flipkart. The deal valued Flipkart at about $20.8 billion. “India is one of the most attractive retail markets in the world, given its size and growth rate, and our investment is an opportunity to partner with the company that is leading the transformation of e-commerce in the market,” said Doug McMillon, Walmart’s president and chief executive officer, in a statement. This is Walmart’s biggest acquisition and the biggest e-commerce deal globally. The deal will need to be approved by India’s anti-trust regulator. The deal will redraw the retail landscape in India as Walmart takes its battle in the US with arch-rival Amazon to the world’s fastest growing major economy. It will also give a massive boost to entrepreneurship and the start-up ecosystem in India, which has struggled to provide exits.

International Monetary Fund – In a reaffirmation of India’s growth forecast made by International Monetary Fund (IMF) in last month’s World Economic Outlook, as reported by Asia Law Portal, the Regional Economic Outlook: Asia Pacific report published by same agency this month, states that in India, growth is expected to rebound to 7.4 percent, following temporary disruptions from the November 2016 currency exchange initiative and the July 2017 rollout of the new Goods and Services Tax (GST). The report further stated that growth rebounded strongly to 7.2 percent in the third quarter of FY2017/18, up from 6.1 percent in the first half of the fiscal year. India’s growth, projected at 6.7 percent in FY2017/18, should recover to 7.4 percent in FY2018/19, making India once again one of the region’s fastest-growing economies. The recovery is expected to be underpinned by a rebound from transitory shocks as well as robust private consumption. Medium-term headline CPI inflation is forecast to remain within but closer to the upper bound of the Reserve Bank of India’s inflation-targeting band (4 percent ±2 percent). Medium-term growth prospects remain positive, benefiting from key structural reforms, including the landmark national GST reform. The current account deficit in FY2017/18 is expected to widen somewhat but should remain modest, financed by robust foreign direct investment inflows.

Growth Estimates in previous quarterIndia’s economy may have expanded by 7.1-7.5% in the January-March quarter – driven by manufacturing and construction – compared with 7.2% in the third quarter. The Central Statistics Office will put out the growth estimates for the fourth quarter and for 2017-18 in the coming days. It pegged FY18 GDP growth at 6.6%, which would suggest growth of 7.1% in the last quarter. The economy expanded 7.1% in FY17. India’s industrial output expanded 4.3% in FY18, with manufacturing growing 4.5%, according to the Index of Industrial Production (IIP). The IIP is a quantity-based measure while GDP is assessed on value added, which means that manufacturing GDP growth can be higher than that measured by IIP.

Monitoring of Foreign Investment in Listed Entities – The Reserve Bank of India (RBI) has recently mandated a new system for monitoring of foreign investment limit in Indian listed companies. In order to enable listed Indian companies to ensure compliance with the various foreign investment limits, RBI in consultation with Securities and Exchange Board of India (SEBI), has decided to put in place a new system for monitoring foreign investment limits, for which the necessary infrastructure and systems for operationalizing the monitoring mechanism, shall be made available by the depositories. The same has been notified by SEBI. The RBI circular further stated that all listed Indian companies are required to provide the specified data/ information on foreign investment to the depositories. The requisite information was required to be provided before May 15, 2018. The listed Indian companies, in non-compliance with the above instructions will not be able to receive foreign investment and will be non-compliant with Foreign Exchange Management Act, 1999 (FEMA) and regulations made thereunder.

Changes to External Commercial Borrowings Policy – The RBI has recently liberalized the External Commercial Borrowings (ECB) policy. ECBs are commercial loans raised by eligible resident entities from recognised non-resident entities and should conform to parameters such as minimum maturity, permitted and non-permitted end-uses, maximum all-in-cost ceiling, etc. A uniform all-in-cost ceiling of 450 basis points over the benchmark rate. The benchmark rate will be 6 month USD LIBOR (or applicable benchmark for respective currency) for Track I and Track II, while it will be prevailing yield of the Government of India securities of corresponding maturity for Track III (Rupee ECBs) and RDBs. The ECB Liability to Equity Ratio for ECB raised from direct foreign equity holder under the automatic route was increased from 4:1 to 7:1. This ratio will not be applicable if total of all ECBs raised by an entity is up to USD 5 million or equivalent. The eligible borrowers’ list for the purpose of ECB has been expanded. There will be only a negative end-use list for all tracks instead of positive end-use list for Track I and negative end-use list for Track II and III.

handshake deal

Mourant Ozannes hires Farrer & Co’s former senior partner

Offshore firm Mourant Ozannes has hired Farrer & Co’s former senior partner Jim Edmondson as head of its international trusts and private client practice.

Edmondson will join Mourant Ozannes as a consultant in London on 1 May. He will take over as head of the trusts and private client team on 1 September when incumbent Douglas Close steps down after three years in the post.

jim edmondson
Jim Edmondson

Edmondson spent two years as joint senior partner for Farrers (3 May 2011) and also headed the firm’s private client team until he stepped down last May to become a consultant. He joined the firm in 2001 from Nabarro (25 June 2001).

Mourant Ozannes managing partner Jonathan Rigby said the private client team had exceeded its growth targets under Close’s leadership. “It’s testament to that success that we have been able to recruit someone of such international standing as Jim Edmondson,” he added.

Edmondson said in a statement that he was sorry to leave Farrers, but was looking forward to working with another firm which was not in competition with his former practice.

“I’m particularly grateful for the support and cooperation of my colleagues at Farrers in enabling me to take on this exciting new challenge,” he said.

Mourant Ozannes, formed through the 2010 merger between Jersey firm Mourant du Feu & Jeune and Guernsey’s Ozannes (3 February 2010) has a team of private client lawyers advising on British Virgin Island, Cayman, Guernsey and Jersey law.

Is Linklaters’ China alliance a game changer?

The magic circle firm’s Shanghai Free Trade Zone joint operation wasn’t the first, but it might just be the tipping point

Linklaters announced last week that its unusual application for a joint operation office in the Shanghai Free Trade Zone had finally received approval from the local authorities, making it the first magic circle firm that can include Chinese law capability in a one-stop-shop offering.

“Linklaters’ successful joint operations application sends a very positive message to the market,” says Shawn Chen, who leads the China business for London-based SSQ, a legal search firm that helps global firms broker China alliances. “This will give confidence to firms that are preparing an application and those considering applying.”

Foreign law firms were for years barred from forming formal associations with Chinese law firms, which have enjoyed the exclusive right to give Chinese legal opinions and appear at local courts. However, a major breakthrough came in 2014 when the Ministry of Justice approved a pilot program that permitted foreign and Chinese firms to form joint operations in the then-brand-new Shanghai Free Trade Zone. In March, the Shanghai government said it plans to expand the pilot program beyond the FTZ—to the entire municipality.

From the Chinese government’s perspective, the purpose of the Shanghai FTZ programme is to create a platform for international law firms to share their experiences and help their Chinese partner firms improve. But the programme also effectively serves as an official endorsement, granting foreign law firms access to their major missing piece—Chinese law capability.

Linklaters was not the first firm to benefit from the FTZ program; four other global firms—Baker McKenzie, Hogan Lovells, Holman Fenwick Willan, and Ashurst—have entered similar joint operation arrangements since 2015.

But the formation of Linklaters’ alliance was unique. Instead of linking up to an established firm, Linklaters opted to send a group of its own lawyers to a lesser-known Shanghai-based boutique called Zhao Sheng Law Firm, making it the first global firm to successfully achieve a modified spin-off structure under the FTZ program.

In contrast, Baker McKenzie, the first global firm to launch a joint office in the FTZ, formed an alliance with the well-established, Beijing-based FenXun Partners. It was followed by Hogan LovellsHolman Fenwick Willan, and Ashurst, all of which also formed tie-ups with existing Chinese firms. Ashurst’s move was particularly notable, as it formalized a longtime best friend relationship with 750-lawyer domestic player Guantao Law Firm.

But Linklaters ostensibly spun off a local firm with which it would form an alliance—an unusual move that many consider significant.

Eric Liu, managing partner of the now 27-lawyer Zhao Sheng and a former Linklaters lawyer, said the alliance with Linklaters provides clients with seamless one-stop-shop service and minimises possible friction arising from working with two sets of counsel.

China’s legal market is not mature enough to separate top-tier firms from the rest of the crowd, Liu said. In Shanghai, alone, there are more than 1,500 domestic firms, and there are many foreign firms on top of that. “The market can’t really tell who’s who,” Liu said. “You are often pitching against firms that have never been your competitors elsewhere, and they offer one-fifth your price.”

If a law firm wants to be competitive, it has to offer good value for its clients’ money, he said. “For us, providing seamless high-quality Chinese and foreign law services is that value.”

Of course, many global firms have long recognised the importance of having access to a Chinese law practice. But the challenge for them has been to find the right Chinese firm to partner with. In 2015, Linklaters tried to form an association with existing Chinese firms, according to Legal Week, The American Lawyer’s London-based sibling publication.

But those talks failed to produce an agreement. The firm’s partnership then decided to pursue a so-called “greenfield” option, under which the firm would send out a group of its own lawyers and launch a separate Chinese law firm with the goal of later entering into an FTZ association. As the rules required the Chinese firm participating in the FTZ scheme to be at least three years old, Linklaters opted for Zhao Sheng, a local firm that was founded in 2010, and eventually launched the joint operations.

Zhao Sheng and Linklaters were aligned in every critical aspect, including firm culture, practice focus, and client service standards, said William Liu, (no relation to Eric Liu), who leads the U.K. firm’s China practice from Hong Kong. “This is the only way to ensure that we can provide a fully seamless service to clients.”

According to official records, Zhao Sheng moved in September of last year into Linklaters’ Shanghai office at the Mirae Asset Tower, in the Lujiazui financial district. William Liu said the two firms also share office systems and would further integrate.

A Shanghai-based partner from another Magic Circle firm agreed it makes sense for international firms to be able to access Chinese law capability in certain practices. “It’s very beneficial, especially for litigation matters,” said the partner, who did not wish to be named as he was not authorized to comment on his firm’s position on the issue.

Both firms stressed that Zhao Sheng would remain independent from Linklaters; Eric Liu said in addition to ex-Linklaters lawyers, Zhao Sheng has made several important external hires over the past year from leading Chinese firms. He hopes that the alliance will help increase Zhao Sheng’s brand profile in the mainland legal market and give both firms a competitive advantage.

But if Eric Liu’s predictions are correct, the Linklaters-Zhao Sheng joint operation won’t enjoy that competitive advantage indefinitely. Eric Liu believes that once the firms’ joint operation proves successful, more firms will consider this model. And when the number of Chinese-foreign joint offices reaches a critical mass, the competitive landscape in the market will change, he said.

Chen, from SSQ, believes that it is noteworthy in and of itself that Linklaters’ unusual business model got the long-sought-after green light from Chinese regulators. And he believes more global firms will now follow suit. More firms will likely file applications for FTZ joint operations in the second half of this year, he said.

“The question that everybody had in mind was whether or not this model was actually feasible; now we know that it is,” he said. “I won’t be surprised if by next year there are 10 firms operating joint offices in the FTZ.”