NOVEMBER 29 2012 FT US INNOVATIVE LAWYERS 2012www.ft.com/innovative-lawyers-usRESEARCH PARTNER SUPPORTED BY
2 FINANCIAL TIMES THURSDAY NOVEMBER 29 2012 FINANCIAL TIMES THURSDAY NOVEMBER 29 2012 3US INNOVATIVE LAWYERS 2012LEADING AND LAGGINGThis is the third year that the Finan- the report show that some four years moving into the 21st century in howcial Times has produced the US Inno- after the start of the financial crisis, it communicates with clients, thevative Lawyers special report. The lawyers are helping to bring resolu- report suggests that, in terms of proc-report includes our unique rankings tion to some of the bitter disputes ess innovation, US firms lag behindof law firms that are bringing fresh arising from the credit crunch and the those in the UK. While there are thethinking and practices to solving busi- finalising of significant restructurings beginnings of change, relatively fewness problems in America. – though a few battles are still being top firms have tackled seriously their This year we have had a particularly fought. hourly fee models, despite the increas-strong set of submissions to the rank- The increased burden of regulation ingly vociferous demands of clients.ings, from more than 60 law firms and on US business, notably in the anti- But as the in-house corporate counselnearly half that number of in-house trust area and the Dodd-Frank Wall section of the report reveals, lawyerslegal teams across the US. The sub- Street reform act, has kept lawyers at top US companies are changing themissions give an insight into some of busy trying to lighten the load for cli- rules of engagement.the main business, regulatory and eco- ents in an innovative manner. I would like to pay particular thanksnomic issues preoccupying America. And while Asian and South Ameri- to Reena SenGupta, the inspiration Some of the most dynamic areas of can economies present great opportu- for the rankings, whose RSG Consult-the economy are showing themselves nities for US businesses, they can also ing does the research; and to FT col-by the way they are pushing and pose threats – from copycat manufac- leagues who have helped make thechanging the law to keep up with their turers and from alleged theft of intel- report such an annual landmark.innovations. These sectors include lectual property. Lawyers have beentechnology, social media, telecommuni- heavily involved in these controver- Martin Dicksoncations, pharmaceuticals and energy. sies, such as in the smartphone wars. US Managing Editor The litigation and finance sections of But, while the US legal profession is Financial TimesTHIS YEAR... Contributors TRACY ALLOWAY is the FT’s US Financial Correspondent SPECIAL REPORTS EDITOR Michael Skapinker CAROLINE BINHAM EDITOR is the FT’s Legal Correspondent Hugo GreenhalghINTRODUCTION INDIVIDUALS ED CROOKS LEAD EDITOR4 The top legal businesses have plotted 14 The top 10 agents for change is the FT’s US Industry and Energy Rohit Jaggimoves that recognise the increased Editor PRODUCTION EDITORpower – and demands – of clients BUSINESS OF LAW DAVID GELLES George Kyriakos 16 Training and secondment are is the FT’s US M&A Correspondent SUB EDITORCORPORATE helping to keep lawyers off the SARAH MURRAY Diana Hargreaves6 Law firms have skilfully identified rocks of uncertainty is a freelance journalist ART DIRECTORways to make sure that corporate REENA SENGUPTA Derek Westwoodmergers get the regulatory green light IN-HOUSE is chief executive of RSG Consulting PICTURE EDITORdespite opposition 18 Cross-functional groups and cost PAUL SOLMAN Michael Crabtree efficiencies are transforming legal teams is a freelance journalist ILLUSTRATORINTELLECTUAL PROPERTY RICHARD WATERS Martin O’Neill8 Pharmaceutical groups are foremost LITIGATION is the FT’s US West Coast Editor RESEARCHamong those that have needed help from 20 Creative work is reversing a sharp Lulu Rumseylaw firms rise in the scope of joint cases PUBLISHER, EMEA Dominic GoodLAWYERS TO THE INNOVATORS ENERGY HEAD OF STRATEGIC SALES9 Law firms are increasingly helpingclients to shape their businesses in areas 22 Novice global powers and the shale revolution are changing the energy Research methodology Patrick Collins HEAD OF PROJECT DELIVERYsuch as digital strategy and networking landscape Rachel Harris The FT and its research partner RSG HEAD OF B2B & WORLD REPORTSFINANCE Consulting use a bespoke methodology Robert Grange10 From embattled firms to ailing to rank lawyers on innovation. ADVERTISING PRODUCTIONeconomies, lawyers have played a critical For the FT US Innovative Lawyers 2012 Daniel Lesarrole in restructuring report, 320 submissions were received and more than 400 telephone inter- RSG RESEARCH TEAM views with senior lawyers and C-suite Reena SenGupta, Yasmin Lambert, executives conducted to arrive at the Caroline Davies, Dominic Williams, final rankings. The entries were scored Alex Mole, Maria Kyriacou out of 10 points on originality, ration- ale and impact, and benchmarked against each other to arrive at the final rankings. The research was con- ducted by a team of six RSG research- ers between September and November 2012. A more comprehensive version of the tables can be found at www.ft.com/innovative-lawyers-us
4 FINANCIAL TIMES THURSDAY NOVEMBER 29 2012 FINANCIAL TIMES THURSDAY NOVEMBER 29 2012 5US INNOVATIVE LAWYERS 2012 US INNOVATIVE LAWYERS 2012INTRODUCTION FIRMS GROW ● FT LAW 25 SMARTER ON Rank 2012 1 Rank 2011 5 Firm Latham & Watkins Legal expertise1 133 Business of law2 41 Total3 174 STRATEGY 2 3 2 7 Skadden, Arps, Slate, Meagher & Flom Paul Hastings 162 104 0 42 162 146 4 1 Davis Polk & Wardwell 98 38 136 The top legal businesses have plotted moves 5 3 Cleary Gottlieb Steen & Hamilton 106 19 125 that recognise the increased power – and 6 22 84 0 84 demands – of clients, says Reena SenGupta Weil, Gotshal & Manges 7 9 Seyfarth Shaw 60 22 82 7 14 White & Case 62 20 82 9 11 Kirkland & Ellis 81 0 81 9 10 Paul, Weiss, Rifkind, Wharton & Garrison 81 0 81 11 22 Jones Day 75 0 75 12 12 Mayer Brown 64 0 64 12 4 Orrick, Herrington & Sutcliffe 40 24 64 14 - Cooley 61 0 61N 14 8 Sullivan & Cromwell 61 0 61 16 - Crowell & Moring 40 20 60 16 - Ropes & Gray 60 0 60 18 - DLA Piper 36 23 59 early all the leaders of changing their behaviours and assuming tres. In terms of changing the value propo- Paul Hastings has put behaviour change of legal work for the lawyers. Work com- changing market conditions and a com-the firms in the 2012 FT Law 25 had the different roles. sition of lawyers, the trends have been at the centre of its Superior Performance ing from the collapse of Lehman Brothers, mitment to innovation that marks themsame observation this year: the market is The submission from Morrison Foerster, subtle but more interesting. and Coaching programme, designed to the US investment bank, from the big out to their clients. 19 6 Cravath, Swaine & Moore 58 0 58flat so the only way to grow is to win a firm that started on the west coast, Brad Malt, chairman of Ropes & Gray, place the competencies most valued by financial institutions and from litigation Another firm that has done significantlybusiness from competitors or to create exemplifies these trends. Its commitment says: “Buggy whip manufacturers went clients at the core of its associate career relating to residential mortgage-backed better in the rankings is Weil, Gotshal & 20 - Debevoise & Plimpton 43 0 43new markets. to the US covered bond market in the out of business as they did not adapt to development. securities still creates situations where Manges – up 16 places – which has Most of the top US law firms have simi- mid-2000s broke new ground to allow insti- the car. We are faced with a buggy whip The firm analysed the behaviours of role lawyers can craft the innovative solutions appointed younger partners to head thelar strategies – to focus on retaining pre- tutions access to additional capital. And moment. Firms can pretend that old mar- model lawyers in the firm before building that dominate the FT rankings. litigation and corporate departments. Exec- 20 18 Dechert 24 19 43mium work and to avoid commoditisation. its ability to marry its technology exper- ket dynamics exist – but they don’t.” For a proprietary framework around them. The nature of the financial crisis has utive partner Barry Wolf says: “Our law-To achieve this, they need continually to tise with its capital markets practice the firms who agree with this, changing Although this is not new in the corporate also driven unexpected opportunity. While yers are adapting to the moving cheese. 20 21 Simpson Thacher & Bartlett 23 20 43prove that they are ideal for handling recently gave birth to FrankNDodd, named the behaviours of their lawyers to align world, the systematic and comprehensive the image of the bankers is tarnished, the We preach the wow factor – the idea thatcomplex, high-value matters. This is not after the Dodd-Frank Wall Street Reform more with clients’ demands is imperative. way that the firm has sought to replicate legal profession retains its reputation for you have to continually impress clients.”easy in the $240bn US legal market, which and Consumer Protection Act. This tool desired lawyer behaviour is unusual for integrity and independence. Several law Most of the top US law firms are well- 23 - Holland & Knight 19 23 42is both broad and deep. In 2010, the vast allows institutions to navigate the regula- the legal profession. firm leaders felt that clients were increas- managed businesses. But managementmajority (78) of the top 100 most-profitable tory tangle of new legislation. Both inno- Crowell & Moring realised that to get ingly looking to their lawyers instead of writer Clayton Christensen, author of Thelaw firms globally were American. vations are ranked in the 2012 FT report. the whole firm to use professional project the bankers for more all-encompassing Innovator’s Dilemma: When New Technolo- 24 19 Morrison & Foerster 22 19 41 The only way these firms can maintain Four years into the downturn with no management techniques required behav- business advice. gies Cause Great Firms to Fail, points outtheir position on the value curve is to sign of a boom means clients have the iour change. “We started with the notion Chris White, chairman of Cadwalader, that even the best-managed businesses 25 16 Cadwalader, Wickersham & Taft 40 0 40prove to clients that they are unique. This upper hand. Nearly all the 200 clients that we, not an outside consultant, had to Wickersham & Taft, says: “There is a void can fall from industry leadership.onus on differentiation may be one reason interviewed to compile the report wanted change behaviour before an online tool as to who the CEO can turn to. They are The question for the US legal professionwhy they have been keener than ever to better fee arrangements and efficiencies would be effective,” says the firm. After relying more on the lawyers and not so is whether the financial crisis is a turning 1) Legal expertise score is the total score for all ranked entries in the Corporate, Finance, Litigation, IP, Energy and Lawyers to theshow the Financial Times their innova- from their law firms. While a few firms ‘We preach the wow putting more than 400 lawyers through much on the bankers. This gives the pro- point similar to that facing Sears, the innovators categories. The maximum possible score is 360.tions. A flat, paralysed market has taken still feel they can sidestep client demands, the training, the firm’s project manage- fession an opportunity to innovate.” department store, in the 1980s when it 2) Business of law score is the total score for all ranked entries in the Business of law category. The maximum possible score is 90.innovation from something that is nice to most have sought to improve their process factor – the idea that ment approach is now becoming a differ- This year’s FT Law 25 shows west coast failed to read the implications of discount 3) Total is the score for all ranked entries in all categories of the report. The maximum possible total is 450.have, to being a “must-have”. innovations and, in particular, the value entiator for it in winning pitches. firms Latham & Watkins and Paul Hast- retailing for its core business. The competition in the FT report proposition of their younger lawyers. you have to However, the pace at which the US ings rising through the tables to challenge All the chairmen of the top firms talk US INNOVATIVE LAWYERS 2012 SUPPORTED BYreflects the struggle for market differenti- On the process innovation side, the sig- firms are adopting process innovations is previous incumbents Davis Polk & Ward- about change and the need to “not fightation. The rankings reveal lawyers nificant trends have been a more wide- continually impress much slower than in the UK. Part of the well and Skadden, Arps, Slate, Meagher & the last war”. And yet at the same timeworking at the intersection of different spread adoption of fixed and predictable reason for this is because the financial Flom. With strong submissions across the they cannot, they say, see their firmspractice areas and technologies, actively fees, project managers and low-cost cen- clients’ crisis has continued to deliver a rich seam board, these firms display resilience to being all that different in five years’ time.
6 FINANCIAL TIMES THURSDAY NOVEMBER 29 2012 FINANCIAL TIMES THURSDAY NOVEMBER 29 2012 7US INNOVATIVE LAWYERS 2012 US INNOVATIVE LAWYERS 2012CORPORATE ● CORPORATE Score Dechert 24 Developed a clever agreement and “air cover” strategy to pull off client Medco’s $29bn merger with Express Scripts. Mayer Brown 24 Used an innovative method of valuing contract terms to enable Standout Cemex to identify IBM as the most suitable strategic partner. Skadden, Arps, 23 Acting for Express Scripts, used a new approach to merger Slate, Meagher guidelines and a “double dummy” structure to complete its $29bn & Flom deal with Medco. Davis Polk 22 Advised Dalian Wanda in its $2.6bn purchase of AMC, the largest & Wardwell ever takeover of a US company by a Chinese group. Cleary Gottlieb 21 Used a “poison pill” and an unusual board agreement to defend Steen & retailer Family Dollar against a hostile takeover bid from Trian. Hamilton Kirkland & Ellis 21 Developed a complex merger and ﬁnancing arrangement to enable three buyers to acquire shoe company Collective Brands, then split the business between them. Kirkland & Ellis 21 Highly commended Crafted a novel indemniﬁcation structure to ensure American brewer Molson Coors’ €2.65bn ($3.37bn) acquisition of StarBev was acceptable on both sides of the Atlantic. Paul Hastings 21 Secured EU competition approval for $1.375bn sale of Samsung hard disk drive business to Seagate Technologies, paving the way for clearance in other key jurisdictions. Davis Polk 20 Employed mergers and acquisitions principles to create a ﬂexible & Wardwell mechanism and bring about Delphi Automotive’s initial public offering. Skadden, Arps, 20 Devised a novel agreement to separate Amilyn from Eli Lilly, Slate, Meagher preserving Amilyn’s value before acquisition by Bristol-Myers Sqibb & Flom and AstraZeneca. White & Case 20 Overcame signiﬁcant hurdles to enable Industrial and Commercial Bank of China to acquire controlling stake in Bank of East Asia of the US. Cravath, Swaine 19 Developed a highly complex transaction to allow Pentair to merge & Moore into Tyco Flow and redomesticate the new business to Switzerland. Latham & 19 Created a way to assure National Football League players’ incomes Watkins during a dispute with owners, helping to prevent cancellation of the even though it filed with the commission a Express Scripts and Medco could were not 2011 season. SWEETENING day later, its deal was reviewed after the actually close competitors. The FTC Samsung one. subsequently found at least 10 significant Mayer Brown 19 Balanced the interests of airlines, government agencies and lenders “That 24-hour difference in the filing others. to secure the privatisation of Luis Munoz Marin Airport in Puerto Rico. turned out to be decisive,” says Mr Hata- “There has been a revolution in anti- way. “The other group was viewed to be the trust in the last 10 years. Historically mar- Skadden, Arps, 19 Took an unusual approach to Delaware law to successfully ‘three to two’ instead of the ‘four to three.’” ket shares ruled. Now more weight is THE PILL Slate, Meagher defend Cephalon against a hostile takeover bid from Valeant As a result, the Samsung/Seagate deal placed on competitive effects analysis,” & Flom Pharmaceuticals. was cleared without conditions, while says Dechert partner Mike Cowie. Sullivan & 19 Provided multi-faceted advice on Frank McCourt’s divorce, the Commended Western Digital and Hitachi had to agree After an eight-month review, the work Cromwell bankruptcy and sale of the LA Dodgers and a settlement with Major to substantial divestitures. of Dechert and Express Scripts counsel League Baseball. “Samsung latched on to this in a way Skadden, Arps, Slate, Meagher & Flom that most clients would not,” says Mr Hat- was successful and the merger was Akin Gump 18 Devised a legal structure combining non-proﬁt services and away. “Doing all this work before the deal approved. Strauss Hauer for-proﬁt management approaches to provide affordable healthcare Law firms have skilfully identified ways to make & Feld in Texas. is negotiated was a bit unusual.” In other deals, finding the right solution An even more dramatic bout of consoli- was not so much about overcoming oppo- Kirkland & Ellis 18 Created an unusual agreement between Bristol-Myers Squibb and sure that corporate mergers get the regulatory dation was also going on in the US phar- macy benefits-managers (PBM) market at sition as about hedging risk. When an auction for Amylin Pharmaceuticals, a AstraZeneca, providing a template for collaboration in the pharmaceuticals sector. green light despite opposition, finds David Gelles about the same time. In July 2011, Express Scripts, the third-largest player in the biotechnology company specialising in diabetes drugs, began this year, most of Sullivan & Cromwell 18 Developed a complex holding company structure to enable Chile’s LAN Airlines to merge with Brazil’s TAM, creating the leading Latin industry, said it would buy Medco Health the big pharmaceutical companies took American carrier Solutions, the second-largest, for $29.1bn. note. The industry already had only three big Kirkland & Ellis client Bristol-Myers Jones Day 17 Used an exchange offer to help tempt S1 shareholders away from an A existing offer and accept a bid from ACI Worldwide. rivals, and this deal would reduce that Squibb, the pharmaceutical group, was number to two. As is the case with most among those interested. But the Amylin McDermott Will 17 Provided critical advice on Chinese law to enable the Fila/Mirae-led “three to two” mergers, opposition came price tag, of around $7bn, was rather too & Emery consortium to win South Korea’s largest ever outbound consumer from all sides. The pharmaceuticals indus- much for Bristol to tackle alone. So Kirk- products deal. try lobbied hard, and the Federal land helped Bristol to partner with Astra- Trade Commission, 32 state attorneys-gen- Zeneca, another drug company with which eral and both houses of Congress held it already collaborated on diabetes drugs. hearings. Though so-called “club deals” are com- To win over regulators, attorneys from monplace among private equity firms, it ny significant transac- two. The law firm Paul Hastings knew Dechert realised they would have to make was unprecedented for two public compa- a structure under which Bristol assumed partner, who represented Wanda. These tion has challenges – which may be that its client Samsung would face an the case that market share was no proxy nies to team up to buy another public full ownership of Amylin. But through a sensitivities led Mr Mills to exercise unu- related to regulation, competition or price. uphill battle if it were viewed as the fol- for market power. With a new interpreta- company with the intention of jointly new contract, AstraZeneca assumed 50 per sual caution while working with AMC’s And while it is up to bankers to orches- lower. So New York partners, including tion of the recently revised merger guide- owning and operating it. cent ownership of the company. The unique private equity owners. In a move trate the deal and the companies to reap Scott Hataway, looked for ways to regain lines in the US, Dechert demonstrated that But because Amylin was being sold in structure protected the companies from to ease the sellers’ nerves, Wanda depos- the rewards, it is often the corporate law- first-mover advantage. The team identified a fast-moving auction, Kirkland had to substantial tax liabilities. ited a large sum of money in a Hong Kong yers who are left to do the dirty work of a precedent in European law that would work with Bristol and AstraZeneca to Another risky deal earlier this year came account that AMC would be entitled to figuring out just how, exactly, to get a allow the Samsung deal to be reviewed by establish rules for the bidding, and a max- in the form of the biggest-ever acquisition collect even if the deal were to fall apart. deal done. the European Commission before the imum price the companies were willing to of a US corporation by a Chinese company, Such reverse termination fees are not When Samsung Electronics began the Western Digital deal, even though Sam- pay. A stipulation was included that if Dalian Wanda Group. The conglomerate uncommon in deals in which private process of selling its hard disk drive oper- sung’s was announced later. If either company either company wanted to continue bid- said in May this year that it would buy the equity firms are the buyers. ations to Seagate Technology, the compu- Standard practice is to announce the ding without the other, it could do so only cinema chain AMC Entertainment Holdings “It was a sign that we had meaningful ter storage manufacturer, for $1.375bn, it deal, then file for review with the wanted to continue on its own and not with a new partner, for $2.6bn. skin in the game and did not want to walk knew obstacles lay ahead, with the market commission. Simply putting together the and that the company that did not con- Chinese acquisitions of North American away,” says Mr Mills. already consolidating. Then, as it was pre- filing can take months, and by the time bidding without the tinue would not then be able to re-emerge companies are viewed warily these days, Ultimately the fee was not needed. paring the deal, rivals Western Digital and Samsung was set to announce its deal, as a buyer. “This was particularly chal- and almost all such deals come under scru- Davis Polk was able to get the deal Hitachi said they wanted to Western Digital still had not filed. other, it could do so lenging given that we were in a competi- tiny from the Committee on Foreign Invest- cleared by the regulators. Nonetheless the cut a deal on their hard disk drive busi- So Samsung worked with the commis- tive auction process,” says Kirkland part- ment. “From a purely rational point of view reverse termination fee was an innovative nesses as well. Taken together, the two sion beforehand, then filed for review only on its own, not ner Daniel Wolf. it seemed benign, but the fact that it was a solution to an unusual problem – some- transactions would reduce the number of within an hour of announcing the deal. Once Bristol and AstraZeneca won the Chinese buyer made the sellers nervous,” thing that is so often needed to push com- big players in the market from four to Western Digital was caught off guard. And with a new partner bid, Kirkland helped the companies devise says Philip Mills, a Davis Polk & Wardwell plex deals through.