By Tabby Kinder
Herbert Smith Freehills (HSF) has turned over £870m in its third financial year since becoming a fully-merged firm, a rise of 6.7 per cent from 2014/15.
Profit was up 7.2 per cent to £278m, a 20 per cent jump over two years from £232m in 2013/14.
Average profit per equity partner (PEP) grew to £840,000 last year – a rise of almost 5 per cent on the previous year. This represents a slightly slower growth than in 2014/15 when PEP was up 8 per cent to £801,000.
Joint CEO Sonya Leydecker said the financial results marked “the third consecutive year of significant progress for the firm”.
She added a highlight of the year was the performance of the firm’s global corporate practice, which advised on 100 cross-border deals worth $100bn “despite uncertainty in the world economy”.
Transactions included advising China’s Silk Road Fund on its €1bn acquisition of a stake in a Russian energy project; advising CMOC on its acquisition of a majority interest in Tenke Fungurume for $2.65bn – the largest mining deal of the year so far; and representing Element Financial Corporation on its $6.9bn acquisition of GE Capital.
Strengthening its cross-border mandates has been a major focus for the firm in the years since the merger. Leydecker said HSF’s “top 30 clients” now instruct the firm “across an average of nine offices”.
HSF’s disputes, finance and real estate practices all performed well, Leydecker added. The firm’s disputes team continued its defence of the Royal Bank of Scotland in its £4bn rights issue battle with shareholders last year, and successfully closed the UK’s first deferred prosecution for its client, ICBC Standard Bank.
The firm increased its number of panel appointments by 21 to 161 in the last financial year, now sitting on the legal panels of Weir Group, National Grid, Bank of Queensland and British Land for the first time.
By regional breakdown, joint CEO Mark Rigotti said Paris, Madrid and Germany “had exceptional years”, with London and Belfast also generating significant profits.
“Germany is an ongoing success story and has shown year-on-year growth, reflected by the opening of our third German office in Düsseldorf,” Rigotti added.
HSF opened in Düsseldorf in November – its fourth new base in the last financial year after also opening in Johannesburg and sealing alliances with Nasser Al-Hamdan in Riyadh and Prolegis LLC in Singapore.
The Riyadh alliance saw HSF return to Saudi Arabia after a gap of two years. It hired partners from White & Case and DLA Piper to co-run the office.
Rigotti said: “Confidence and momentum in the business are at an all-time high. We have a new strategy in place and our investments in three new offices, 16 partner hires and our flexible approach to servicing clients are all paying off.”
The bulk of HSF’s lateral hires in the last financial year took place in Germany, where the firm hired a nine-lawyer team from AGS Legal to launch a corporate crime and investigations practice. The mass hire also gifted HSF a major relationship with Ford for the first time.
HSF launched a new strategy for the future of the firm in April, following a “socialist” six-month consultation with partners and business services staff.
The strategy is named “Beyond 2020” and sees the firm “move away from the post-merger integration period” and into “implementation”, said Rigotti.
The new strategy focuses on five points: clients, sectors and products; people, performance and leadership; service delivery; innovation and technology; and platform.
More tangibly, the strategy will see the firm move away from the umbrella practice groups of corporate and litigation towards a structure that prioritises sectors. Rigotti said they wanted to make sure every lawyer at HSF is a “sector specialist”.
The priority sectors are: energy, banks, financial buyers, real estate, TMT, infrastructure and transport, mining, consumer products, pharma and healthcare.
The new strategy also aims to “strengthen the firm’s platform to support clients in key markets including Asia, EMEA and the US”. This could result in a number of new offices as well as growth in jurisdictions including South Africa, Saudi Arabia and Germany.
The strategy will also focus on growing HSF’s legal services centres in Belfast and Perth and roll out twice as many project managers across its global offices. This will be supported by a new focus on technology, innovation and remote working to facilitate more cross-border mandates.
HSF also intends to establish new legal services centres in the coming years, with plans to launch smaller additional centres across Europe and Asia.
(Source: The Lawyer)