Could you share some examples of innovative ways Herbert Smith Freehills is working with clients in the ESG space?

Silke Goldberg: At Herbert Smith Freehills, we are actively engaging with our clients in the ESG space through innovative tools like our Global ESG Tracker and ESRS Navigator.

With the Global ESG Tracker, we offer clients a monthly subscription service that can deliver concise business friendly updates covering the entire range of ESG issues across the globe. This service is tailored to the specific jurisdictions and sectors that are most relevant to our clients, ensuring they receive the most pertinent information. It’s a strategic resource that helps businesses navigate the complex and ever-changing ESG legal landscape, enabling them to stay informed and compliant with the latest regulations, policies and legal cases. Our clients really value the fact that we are able to tailor the tool to meet their global needs and they receive a comprehensive summary of all important ESG updates in one place.

Sarah Ries-Coward: The ESRS Navigator, is another innovative tool designed to support our clients in translating the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD) into practical language for their business teams to implement effectively. This tool serves as a bridge between the technical complexities of regulatory frameworks and the practical needs of businesses. It offers a clear and concise breakdown of both mandatory and voluntary disclosure requirements under ESRS, alongside the underlying process requirements and expectations. By leveraging our extensive global expertise, we provide targeted, actionable insights that empower our clients to proactively meet these standards, ensuring their business remains compliant and competitive in the evolving ESG landscape.

These tools are just a few examples of how we’re leveraging our global expertise to deliver targeted, actionable insights that empower our clients who are ‘running to stand still’ to remain compliant and competitive in the evolving ESG landscape.

What role does tech play in your ESG advisory services, and can you give an example of how it’s being used to enhance client outcomes?

Jannis Bille: Technology plays a pivotal role in our ESG advisory services at Herbert Smith Freehills, particularly through the use of innovative tools like our CSRD Mapper. This tool exemplifies how we leverage technology to enhance client outcomes by providing a clear and efficient pathway through the complexities of ESG compliance. The CSRD Mapper is designed to help clients navigate the CSRD applicability requirements – who falls in scope and when. By inputting specific company data, the CSRD Mapper can generate a tailored report that provides a definitive answer on which companies are caught, availability of exemptions and relevant reporting timelines.

Our use of technology ensures that our ESG services are not just comprehensive but also highly practical, cost effective and aligned with the specific needs and goals of our clients. It’s a testament to our commitment to staying at the cutting edge of ESG advice and using technology to drive better outcomes for our clients.

How do you vary your ESG guidance to meet the specific needs of clients across different industries?

Silke Goldberg: We aim to break down traditional law firm structures bringing together skills across disciplines to assemble bespoke teams of experts and draw in people with deep sector expertise. This allows us to address the unique ESG-related needs of each project and client.

As a team we have been recognised as a leading firm in ESG and have over 30 years of experience advising clients on ESG and sustainability matters. Our market-leading practice delivers expertise in areas such as ESG-related reporting and disclosures, governance and risk management, business and human rights, climate change-related litigation, transition planning, environment, green and sustainable finance, impact investment, and ESG issues relating to due diligence, the M&A process and supply chains.

How is Herbert Smith Freehills helping clients navigate the evolving regulatory landscape?

Sarah Ries-Coward: We’re dedicated to helping our clients navigate the ever-evolving ESG regulatory landscape and understand that keeping on top of the latest regulations and standards and how they interlink (or not!) is crucial for our clients.

One of the most recent ways we assist our clients is through one of the tools we spoke about above, our Global ESG Tracker, an invaluable resource for keeping up-to-date with global ESG legal and regulatory developments.

In addition to the Global ESG Tracker, we also offer bespoke ESG training programmes to our clients. These training sessions are designed to educate and empower our clients’ teams on the nuances of ESG regulations and best practices.

Can you discuss some of the major global trends in ESG that are particularly impacting your clients, and how you are helping them respond?

Jannis Bille: Some of the major global trends in ESG that are impacting our clients include the increasing emphasis on ESG disclosure and reporting such as the EU CSRD and the International Sustainability Standards Board (ISSB), the push on environmental and human rights due diligence in supply chains such as the Corporate Sustainability Due Diligence Directive (CSDDD), the heightened scrutiny on greenwashing and social washing and the rise in ESG disputes. These trends are influencing our clients across various sectors, prompting them to seek guidance on compliance, due diligence, and reporting requirements. They can arise from various issues, including corporate reporting, such as securities claims, and allegations of ‘greenwashing’, where companies are accused of misrepresenting their environmental practices or impacts or making unsupported sustainability claims for their products. Claims may also be brought against company directors in respect of ESG matters, reflecting the growing accountability for corporate leadership on sustainability issues.

Business and human rights issues are increasingly becoming a focal point within the ESG framework. As companies strive to align their operations with sustainable and ethical practices, the integration of human rights considerations into business responses to environmental challenges is gaining momentum. In addition, ensuring human rights compliance across global and intricate supply chains is difficult. Companies must navigate varying international regulations, local laws and cultural norms while maintaining their human rights standards. This is particularly challenging in sectors like agriculture and manufacturing, where labour rights and working conditions are critical.

Nature and biodiversity issues are becoming another significant aspect, the European Union, for instance, has been proactive in this area, with the introduction of the Regulation on Deforestation-free Products. This regulation is part of a broader effort to ensure that products entering the EU market do not contribute to deforestation and forest degradation. This shift towards integrating nature and biodiversity into ESG considerations is not just a regulatory trend but also a response to the growing awareness and demand from consumers, investors, and other stakeholders for more environmentally responsible business practices.

How has the tone of ESG conversations shifted in the last 12 months?

Silke Goldberg: Over the past year, the tone of ESG conversations has notably shifted from being a ‘nice-to-have’ initiative to a critical aspect of business strategy and operations across the globe. ESG is no longer seen as a peripheral concern but is increasingly integrated into Board level discussion and the core decision-making processes of businesses. This change is driven by a growing recognition of the financial materiality of ESG issues and the realisation that sustainable practices can lead to better long-term outcomes for companies and their stakeholders.

A significant shift has also been the importance of ESG in M&A transactions with ESG factors becoming increasingly significant in due diligence, strategic positioning and financing.

In your experience, where do client ESG concerns come from? Are they a result of internal or external pressures?

Sarah Ries-Coward: In our experience, client ESG concerns stem from a combination of both internal and external pressures. Internally, employees and shareholders are increasingly aware and concerned about ESG issues, recognising the importance of sustainability and ethical practices for long-term business success. They are advocating for change and accountability within their organisations, driving the agenda towards more sustainable and responsible business operations.

Externally, pressures come from customers who are demanding greater transparency and responsibility from the companies they support. Regulators are also playing a significant role, as they introduce stricter ESG-related regulations and reporting requirements. This regulatory landscape is compelling companies to adhere to higher standards of ESG compliance, influencing their strategies and policies.

Both these internal and external forces are shaping the ESG landscape, making it an essential consideration for businesses across all sectors. As a result, companies are increasingly seeking guidance on how to integrate ESG principles into their core strategies to meet the expectations of all stakeholders and to comply with regulatory demands.

Why should lawyers care about ESG?

Jannis Bille: ESG has hit the mainstream in legal services, so lawyers everywhere will already be paying attention. There are several reasons for this, including:

1. compliance with regulation – as we touched on before, our job as lawyers is to help clients navigate the fast-evolving ESG regulatory landscape;
2. risk management – it is also important to help clients mitigate liability and reputational risk not only advising clients on their disclosures but also on their wider ESG strategies and policies;
3. sustainable investment and financing – ESG considerations influence investor decisions and access to capital so we help clients align with ESG criteria to attract investment and secure favourable financing; and
4. commercial contract obligations – likewise, ESG considerations are integral to supply chain management and M&A transactions, so through contract drafting and advising on due diligence, lawyers help clients with compliance and risk mitigation.

The reality is, ESG has become a global trend. Aside from helping clients stay ahead of the curve and gain a competitive advantage, having a strong ESG practice leads to innovation and market differentiation.

Would you say ESG expertise is now more of a priority for companies when instructing a law firm?

Sarah Ries-Coward: Absolutely, ESG expertise has become a critical priority for companies when selecting a law firm. We are witnessing a significant uptick in ESG-specific mandates as well as the influence of ESG in wider mandates, reflecting the growing importance of ESG issues in the corporate world.

Furthermore, when engaging with clients, they are increasingly enquiring about our own ESG credentials and metrics. They want to ensure that their legal partners align with their ESG values and commitments. This scrutiny extends to our internal practices and our approach to ESG in our operations. Clients are not only seeking legal expertise but also looking for firms that practice what they preach in terms of ESG.

What do you see as the future of ESG, and how should companies prepare now to stay ahead of the curve?

Sarah Ries-Coward: The future of ESG is poised to become even more integrated into the core of business operations and strategy. Companies should anticipate a landscape where ESG considerations are not just compliance requirements but also key drivers of innovation, competitive advantage, and long-term sustainability. To stay ahead of the curve, companies should:

• Keep up-to-date with ESG developments: Utilise tools like our Global ESG Tracker to stay updated on legal developments and best practices in ESG. This will help companies remain informed about the evolving ESG landscape and anticipate changes that could impact their business.
• Understand ESG reporting requirements: Companies will need to know which ESG reporting standards apply to their operations and when. It’s crucial to understand what information and data is expected to be reported on and processes that need to be put in place – none of which can happen overnight.
• Develop a robust ESG strategy: Reassess ESG strategy to ensure it aligns with the company’s business goals and stakeholder expectations. This strategy should include clear objectives, actionable steps, and measurable targets.
• Foster an ESG culture: Engage with employees at all levels and integrate ESG considerations across the business. This can include working with law firms to provide ESG training for their teams. This will ensure that internal stakeholders understand the importance of ESG and are equipped to implement ESG principles effectively within the company.
• Leverage technology: Use technology to monitor and manage ESG performance. Digital tools will be critical to help track progress, identify areas for improvement, and report on ESG metrics effectively.
• Collaborate and innovate: Collaborate with industry peers, non-profits, and governmental organisations to drive collective action on ESG issues. Innovation in products, services, and processes can also contribute to better ESG outcomes.

By taking these proactive steps, companies can ensure they are not only prepared for the future of ESG but are also leading the way in sustainable business practices. If you need further guidance on developing and implementing an ESG strategy, our firm is here to assist you.

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Jonathan Bower, partner, planning and infrastructure team leader and partner lead for net zero by 2030 strategy at Womble Bond Dickinson, sets out the case for a clear ESG vision with a focus on inspiring behavioural change

Historical events have often led to transformative changes. The Industrial Revolution was one such moment and, today, we’re on the brink of another significant shift – an environmental, social and governance revolution. Although centuries apart, there are clear parallels between the two, not least the considerable cultural and social change needed to create a revolution.

But what needs to happen to ignite that cultural shift and what can organisations do to empower their workforce and industry?

What does history tell us?

The term ESG was first officially coined in 2004 in a report by the United Nations and, since then, has become a concept that is front of mind for many organisations. However, the principles behind ESG are arguably much older.

The report, called ‘Who Cares Wins’, encouraged business stakeholders to explore and embrace ESG as a long-term business strategy, addressing everyone from managers and directors to investors and analysts. The report also pointed to parallels with the Industrial Revolution, where social and governance were needed to improve labour conditions.

Following this, familiar concepts such as ‘net zero’ and ‘energy transition’ started to appear and are now on their way to becoming global movements where organisations must embrace cultural change to encourage their success both within their organisations and collectively in communities. ESG practices have continued to evolve along with a growing demand for guidance.

Womble Bond Dickinson (WBD) has been ahead of the curve in meeting this demand from business leaders grappling with the concept, offering guidance on sustainable practices before the term ESG sprung into the mainstream. In fact, WBD has been the go-to legal firm for advice on cutting-edge sustainable innovation across new technologies; from onshore wind farms and battery energy storage systems, to heat decarbonisation and energy transmission, working with clients to tick off industry firsts as they go.

The aim? To ensure the future is shaped around ESG principles – not as an afterthought, but as a cornerstone of business strategy. This distinctive approach has earned WBD a reputation as a leader in ESG, driving change that resonates across industries.

Barriers to change

With a raft of new sustainability regulations on the horizon, which will critically impact how companies tell their sustainability story over the next 12 months and beyond, the ESG landscape is becoming increasingly complex.

Current barriers, including skills shortages and the need for retraining, add further complexities requiring policy interventions to put everyone on the right track and give business certainty – at the heart of it is embedding in a supportive ESG culture. The UK’s skills crisis is well known. It reflects deep-seated social issues, such as economic uncertainty and the impact of Brexit and Covid-19. These gaps affect economic growth and exacerbate problems like youth unemployment and income inequality. Addressing these issues requires comprehensive education reform, targeted training, and lifelong learning policies.

Similar reform is needed in driving renewable energy. For example, businesses involved in offshore wind must navigate lengthy bidding processes, securing consents, dealing with marine licences, land rights and grid capacity constraints. WBD has advised on over 30 offshore wind projects in the UK, which will account for 26% of the ambitious 50GW target for offshore wind. Meanwhile, new technologies like hydrogen, demand a long-term strategy to deliver the level of health and safety expertise needed to progress.

Another barrier to consider is that, while a majority of organisations are focused on investment and reporting, there is a need for uniform reporting standards. This means, while businesses know ESG strategies should form the basis of everything they do, there is a need for a clear strategic framework to guide longer-term visions that can overcome barriers.

In the same way that the Industrial Revolution changed society and industry, the need for concrete ESG legislation and guidance is creating a similar demand. A long-term strategic vision is essential to embed ESG principles deeply within organisational practices.

More significantly, progress is also being hindered by cultural barriers. For example, decarbonising heat is a major factor in reaching the UK’s net zero goals, yet it requires a significant shift in people’s perceptions and substantial investment to have the positive impact needed. Renting properties versus ownership impacts how organisations can install heat networks, and the UK faces unique challenges compared to mainland Europe.

Inspiring cultural change is paramount to overcoming the increasing number of challenges we face within ESG. While a strategic framework is important, unless we’re able to change behaviour on a larger scale, we’re unlikely to see ESG practices realising their full potential or, at worst, organisations open themselves up to accusations of ‘ESG washing’.

Catalysing change

Longer term-policies and organisational frameworks take on a vital role in inspiring cultural change. From investment decisions to consumer habits, governments play a critical role, needing to create long-term strategies that transcend political cycles.

One example of how a project based on societal and community benefit can have a positive environmental outcome, is WBD’s recent work supporting Ambition Community Energy (ACE), securing ‘highly commended’ in Planning Magazine’s Planning Awards 2022.

WBD worked with ACE on a pro-bono basis before advising on the planning strategy and securing consent for a 4.2MW community-owned onshore wind turbine in Lawrence Weston, near Bristol, which, at 150m high, is believed to be the tallest onshore wind turbine consented in England. Crucially, the project was delivered ‘by-the-community-for-the-community’ and is expected to generate electricity to power between 3,000 and 4,000 homes a year, saving over two tonnes of carbon dioxide annually.

Profits from energy savings made as part of the project will fund the delivery of the development plan for the community of Lawrence Weston and there will be an on-site Energy Learning Zone for schools and communities.

Projects like these work well to address all three pillars of ESG, benefiting the social economy of areas such as Lawrence Weston and helps contribute to a just transition – supporting communities where energy costs can be disproportionately prohibitive without this form of intervention.

WBD is passionate about using the skills of its teams to deliver sustainable energy solutions which create a long-lasting benefit for local communities. This approach fosters a positive shift in attitude, as communities directly experience the long-term advantages of sustainable energy projects. These local efforts demonstrate the global trend of incorporating sustainability into business practices, showing a shift towards greater environmental responsibility. Such projects highlight the potential for positive impact, and by continuing to empower communities, we can further drive cultural change.

The debate over whether ESG can be described as an evolution or revolution will continue, but one thing is paramount. In a period of political change, evolving legislation and complex challenges, it’s important to seek reliable and trustworthy expertise. Organisations should embrace a cultural shift, weaving sustainability into the fabric of business. As the Industrial Revolution shaped history, the ESG revolution can shape a greener, more prosperous future and just transition for all.

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The legal landscape for general counsel (GCs) in the United Kingdom is undergoing significant challenges and transformations in 2024. A comprehensive survey conducted by Wakefield Research and commissioned by Axiom provides crucial insights into the current state of in-house legal departments, shedding light on budget constraints, talent management issues, and the quest for innovative solutions.

Budgetary pressures and resourcing challenges

Budget cuts have become a common theme for UK GCs, with an average reduction of 12% in legal department budgets. This financial tightening has left 95% of GCs feeling critically understaffed, exacerbating their capacity to perform effectively. The economic volatility has heightened concerns, with 90% of GCs fearing they will not be able to invest in the necessary talent and resources needed to navigate the complex legal and regulatory environment in 2024.

The talent conundrum

The resourcing challenge extends beyond budgets to the talent pool within legal departments. A significant 95% of GCs report inadequate staffing levels, which severely impacts their ability to handle both legal and administrative tasks efficiently. Additionally, turnover rates have increased, with 87% of GCs anticipating a hiring freeze, further complicating the talent acquisition landscape.

This staffing shortage has led many GCs to rely heavily on external law firms. In 2023, 99% of GCs engaged law firms to manage an average of 28% of their company’s legal matters. However, this reliance is fraught with dissatisfaction, as 99% of those who outsourced work regretted aspects of the engagement, particularly due to the lack of prioritisation of their business needs and insufficient practical advice.

Balancing values and budget constraints

One of the critical dilemmas faced by GCs is the balance between upholding core department values and managing within tight budgetary constraints. Approximately 27% of GCs have already felt forced to prioritise budget over values, and 51% foresee having to make similar compromises if the economic situation worsens. This tension underscores the need for innovative solutions that align with both budgetary requirements and organisational values.

The push for innovation

Despite the challenges, there is a strong drive among GCs to adopt innovative strategies to mitigate the impact of budget cuts and resource constraints. Modern solutions such as advanced legal technologies, alternative legal service providers, and flexible legal talent are being explored to enhance efficiency and reduce costs. The survey revealed that 85% of GCs would prefer to outsource legal matters to flexible legal talent providers if they could do so at a lower cost while maintaining high-quality standards.

Furthermore, the adoption of alternative fee arrangements (AFAs) with law firms has become more common, with 69% of GCs reporting the use of AFAs in the past year. However, these arrangements are not without their challenges, as 100% of GCs who were offered AFAs experienced difficulties, including reduced service levels and the complexity of benchmarking costs.

The road ahead

The survey highlights the necessity for GCs to rethink traditional resourcing strategies and embrace new models that leverage technology and modern legal service providers. This evolution is critical for achieving the flexibility, productivity, and efficiency required to navigate the increasingly complex legal landscape.

In conclusion, UK GCs in 2024 are navigating a challenging environment marked by budget constraints, talent shortages, and the need for innovative solutions. By addressing these challenges head-on and adopting new approaches, GCs can better manage their departments and support their organisations effectively, even in the face of economic uncertainty.

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The Legal 500 United States 2024 rankings have arrived, and with it a bevy of new numbers to crunch.

Leading Individual rankings rose by 14% – an increase of 246 lawyers on last year’s rankings. More lawyers than ever are being nominated, and with the market active in many areas, attorneys have a greater body of work to put forward for consideration – with clients increasingly willing to sing their praises.

There were smaller, but still notable increases for Next Generation Partner and Rising Star rankings – 2.7% and 5.5% respectively. Firms are increasingly willing to highlight talent in their junior ranks and share their standout work – perhaps a riposte to concerns over working demands and productivity within many law firms.

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McDermott Will & Emery partner Ranajoy Basu, recently named Environmental/Sustainability: Private Practice Champion of the Year at the Legal 500 ESG Awards, discusses how he learned to leverage his structured finance expertise to support ESG causes in emerging economies

I am the seventh-generation lawyer in my family. From my father, I learnt a tremendous work ethic, yet he always remained fully committed to his family and friends. Likewise, my grandfather, no matter how busy, never failed to spend time with family. They both taught me to give 100% effort in my work and take pride in it, but also to make time for others and always keep the door open.

I had a watershed moment in 2006 where I realised that my expertise in securitisation and debt capital markets could be used towards development finance. The development finance sectors have historically been bank led, but very early on I was fortunate to work on a couple of transactions which demonstrated that you could tap the broader capital markets into development finance.

I was very fortunate that I worked on the first development impact bond called ‘Educate Girls’. This was for the education of children in a very remote part of Rajasthan in India, which was fascinating because the financing work was all cross-border. In many ways, that’s where some of my thinking started, but stemming from that, there came many opportunities.

I worked on the International Finance Facility for Education (IFED) transaction which remains one of the largest cross-border education financings for children around the world. I realised that this area of law was not only incredibly rewarding but also allowed me to apply my transactional structuring legal skills towards mobilising finance from all around the world to target critical issues like education and clean water. This is especially relevant now, as the ESG market has grown rapidly over the last decade, along with the need for interventions requiring financing, all against the backdrop of the UN’s 17 Sustainable Development Goals.

It’s very difficult to pick out a single deal but if I had to I would say the Global Islamic Fund for Refugees with the UNHCR. Given the tremendously complex issues around displaced persons around the world, it has a one-of-a-kind financial structure, which has got a number of innovations. That model is not just going to be replicated for other causes like education, sanitation and housing but also to directly impact millions of refugees around the world.

When I was really a junior, I thought I wrote the perfect email, but it had a big mistake. I wrote an email to about 20 people on our transaction but instead of saying ‘If you have any questions, please do not hesitate to reach out,’ I forgot the ‘hesitate’, so it read: ‘if you have any questions, please do not contact me’.

Another time I made a mistake by walking into a meeting room and having a 15-minute conversation about environmental finance with the wrong person. My clients were next door, but it’s funny because the person I was talking to was so interested in what I was discussing that she asked if we could meet up separately. It was hilarious.

If I wasn’t a lawyer, I’d probably choose a path focused on social change. I’ve always been drawn towards the bigger issues in this world, and I always find that if you follow your passion, everything else follows you in a way. I have some friends in the United Nations as well.

My management style is to encourage empowerment. Having worked with some amazing lawyers and leaders in the City, I’ve learnt that you don’t always need to monitor leaders, but you must empower them. As a practice group leader, it’s about creating opportunities for others to be able to have a platform to demonstrate their passions and ability to work hard. It’s very much about being collaborative and when you encourage that environment, there’s no shortage of ideas. Given my experience, of course I can deliberate on certain issues, but my message to everyone in leadership is to always follow a path of empowerment.

My team would describe me as approachable, friendly and extremely passionate about being part of the fabric of change. You don’t need to be a partner at a law firm to effect change. Sometimes I see juniors with drive and an instinct to want to be part of change, and I will always encourage that and work with people to inspire them to get out of their comfort zone. Complacency can very easily set in when you’re doing well at any level. My advice would be to never be complacent and rest back on great achievements but to try and push those boundaries even further. Hopefully for my part I can inspire people to do that.

Outside of work, I’ve got a tremendous passion for LEGO and strategic board games. I construct these huge Star Wars LEGO sets with my son. We don’t have any space in the house because of the size of these things! I’ve got two sons and I spend a lot of time with them. I’ve also got a library of board games in my house. Usually on a Sunday, no matter what we’re doing, there are friends and family at my house playing games. LB

elisha.juttla@legalease.co.uk

Go to the ESG Report contents.

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Associate pay reaches eye-watering heights as the war for talent at the top of the market goes further into the salary stratosphere

With all eyes on the upcoming election to see what a potential new government might do about the cost of living crisis, this May saw things get a little easier for the notoriously hard-done-by Magic Circle associate demographic, as their salaries reached new heights.

Freshfields Bruckhaus Deringer fired the starting gun on a new pay race at the beginning of the month, increasing newly-qualified (NQ) rates from the previous benchmark of £125,000 to £150,000.

Trainee pay was also bumped up, with first-year rates rising from £50,000 to £56,000 and second-year salaries up from £55,000 to £61,000.

In a statement announcing the increases, London managing partner Mark Sansom said the firm was ‘committed to embedding a culture that supports our people to deliver their best, knowing their contribution is valued and rewarded’.

‘This move follows a year of strong growth for the London business,’ he added, while also citing ‘the success of the material investments in the US’, where the firm has made big strides in recent years with a bold series of lateral hires.

That hike piled the pressure on the rest of the Magic Circle to follow suit, particularly considering the competitive pay packages on offer at their US counterparts, such as Quinn Emanuel, where NQs are now paid £180,000.

And sure enough, Clifford Chance, Linklaters and A&O Shearman joined the party at the end of the month matching Freshfields’ £150,000 hike, leaving Slaughter and May the sole Magic Circle firm still on the lower rate of £125,000.

Linklaters firmwide managing partner Paul Lewis said the firm was ‘committed to rewarding our people competitively’, and that the salary changes would ‘enable us to attract and retain exceptional lawyers to provide the highest quality service to our clients’.

A&O Shearman’s statement, meanwhile, quoted new London managing partner Denise Gibson, who said that the compensation structure gives the newly merged firm ‘flexibility to reward expertise, performance and wider contribution’ and that it was ‘designed to be highly competitive to reflect the markets in which we operate.’

That move also means that legacy Shearman lawyers at the now-merged firm will avoid a situation in which the tie-up would have seen their pay decrease as a result of the deal. It had been reported earlier this year that A&O Shearman would stick with the legacy A&O NQ salary of £125,000, rather than matching Shearman’s £145,000, but the new rates mean £150,000 is now the benchmark for all.

‘The compensation structure is designed to be highly competitive to reflect the markets in which we operate.’ Denise Gibson, A&O Shearman

While this is of course good news for London associates, some market-watchers are warning that this latest round of pay hikes will raise concerns among mid to senior-level lawyers.

Speaking to Legal Business, David von Dadelszen, director at James Legal, said: ‘This is a slightly alarming continuing trend that isn’t [reflective] of increasing salaries for more senior lawyers where it may create retention issues. Clients must question getting advice from junior lawyers who are paid so highly.’

In a similar vein, Hannah Benger, business manager at Montresor Legal told LB: ‘Magic Circle salaries usually level out at the mid to senior level, which may create some issues, particularly given the consistent increases at leading US firms.’

The increases are likely to pile the pressure on other London firms to up salaries. Slaughter and May last raised NQ salaries in November, with no further increase after its most recently six-monthly pay review in April.

This pressure is exacerbated by the fact that many US firms continue to offer pay packets still more generous than even the increased Magic Circle rates. In Benger’s words: ‘The client base of Magic Circle firms is different to US firm clients who are used to paying a lot more.’

With NQ bonuses to be paid out in the coming months, Benger added: ‘It will be interesting to see what the Magic Circle firms do with bonuses. It is coming up to bonus season, and there is likely to be renewed interest in making a move to premium US firms if Magic Circle firms cannot compete with Cravath bonuses.’

Legal Business

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US West Coast firm becomes latest to target London tech transactions market with eye-catching hire of ex-White & Case dealmaker

West Coast firm Perkins Coie has become the latest US player to set up shop in London, launching a technology-focused corporate practice led by former White & Case, Linklaters and Clifford Chance partner Ian Bagshaw (pictured).

The move marks a return to law for Bagshaw, who left White & Case – where he was global co-head of private equity – in 2021.

As office managing partner at Perkins, he will initially lead a team of six lawyers in London, all of whom previously worked at White & Case. Three of the group were previously based in Prague – Jan Andrusko, who joins as European head of M&A, fellow corporate partner Jan Stejskal and senior counsel Jan Jakoubek. Former White & Case associates Craig Fagan and Barry O’Driscoll are also joining as partners after spells in-house.

With 21 offices worldwide, this is Perkins Coie’s first international office outside Asia, where it has three offices, with the rest located across the US.

Looking ahead, Bagshaw said the firm plans to grow in multiple practice areas, with an emphasis on aligning its strengths with the wider US practice, including private capital investment, tech transactions, privacy and litigation.

Instead of opening offices across Europe like Paul Weiss, which recently launched in Brussels after its London launch, Perkins Coie intends to use London as the central hub for its European operations. ‘We want to build a European team in London, with one culture and one form of training for everyone,’ explained Bagshaw.

The firm will initially focus on advising high-growth tech companies, their founders, mid-market private equity funds, and family offices in corporate transactions, complementing its US tech focus. The firm last year represented Microsoft in its acquisition of Fungible, a tech startup specialising in hardware and software platforms for data centres, as well as its acquisition of video game developer Activision Blizzard King, and also works with other key clients such as Amazon and Stripe.

Perkins’ decision to invest in London comes amid a busy time for the UK startup scene, with UK startups raising $21.3bn in 2023, the third highest annual total on record, according to data provider Dealroom.

So far in London, Bagshaw and his team have advised Highview Power, an energy storage pioneer, in securing a £300m combined debt and equity investment for the first commercial-scale liquid air energy storage plant in the UK, alongside firms such as White & Case, Orrick, and Hogan Lovells.

The move comes after fellow West Coast tech-focused firms Cooley and Wilson Sonsini both put down roots in London over the past decade – Cooley in 2015 and Wilson Sonsini in 2018.

According to a partner at another US firm, the interest of West Coast tech firms in London ‘mirrors that of West Coast VC funds’.

‘A decade ago, there were few West Coast funds or tech firms in London, but the recent growth is fostering a US-like ecosystem in the UK, with these firms playing a significant role in shaping the city’s tech industry.’

The Perkins London team is currently working from a base in Fitzrovia but is looking at a move into more substantial offices in the City, with 22 Bishopsgate – home to US firms including Cooley, Skadden and McDermott – reportedly the likely destination. ‘Our headcount is focused on being at the right level for the volume of client work we generate. We are not going to build a law firm like its 1999,’ Bagshaw adds.

After having previously worked at much larger firms, there has been some surprise in the market about Bagshaw’s choice of Perkins for his return to law, after three years which have seen him take up a number of board roles and chair Zero Gravity, a UK tech startup aimed at enhancing social mobility for students.

Bagshaw said he was enthused by the prospect of building up a practice, rather than returning to a bigger firm. ‘The European tech scene has grown fast and really matured, and there are not many firms who can make it a priority from a client perspective. The same thing happened with private equity in the early noughties – this is a classic business opportunity,’ he said.

‘My priorities have changed – I now want to build a “mission business” with a clear purpose. For me, the purpose is as big a motivator as the commercial mission, to be honest,’ he added.

‘I looked at different opportunities and I’ve learnt a lot since I left White & Case. I love the startup culture and scaling a business, working with founders and growth capital investors – I enjoy being with them on their journey.’

elisha.juttla@legalease.co.uk

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ESG Champion Oscar Davies on being a role model at the Bar and the importance of allies.

What was your motivation to come out professionally as non-binary?

For me, there were two coming outs. The first was coming into the profession as a baby barrister and trying to get pupillage, and there’s always a difficulty in terms of to what extent you should out yourself. When everyone is essentially splitting hairs at that point, you don’t want to give them ammunition to not give you pupillage. I think there’s always a concern when you’re coming into a profession like the Bar, which is quite small-c conservative, that maybe you’re not going to be welcome there. If you met me in person, you would probably think I’m somewhere on the LGBTQ+ alphabet (although you might not know where), so I didn’t really have to come out in terms of sexuality – something fruity was assumed.

The non-binary coming out at work was more complicated in that it’s less well-known. I’ve always been quite fluid in my gender but I initially resisted the term because I found it quite restrictive. But I think things changed around the Taylor v Jaguar Land Rover Ltd case in 2020, which was the first case where it was considered that ‘non-binary’ could be a protected identity under section 7 of the Equality Act 2010, which relates to gender reassignment. When the judgment came out, a solicitor friend and I decided to co-write a substantive review of the judgment. When we’d finished, we decided we should put our pronouns at the top to show solidarity. I hadn’t secured tenancy yet, so I was scared I was going to out myself, but the judgment stated you shouldn’t be able to discriminate based on non-binary identity, so it’d be extremely ironic if chambers didn’t take me for that reason! I took a leap of faith and put my pronouns (which at the time were they/he) on the article.

‘My chambers asked what honorific I’d like on the barristers board; we went with ‘Mx’ – I put a photo on Twitter and it went semi-viral as a “legal first”’ Oscar Davies, Garden Court Chambers

Later, when I got tenancy, my chambers administrator asked what honorific I’d like on the barristers board and I thought that mine could be ‘Mx’. We went with that and I took a photo and put it on Twitter and it went semi-viral as a ‘legal first’. From that opportunity, I thought I could use my public voice to help others, so I started my Instagram, @nonbinarybarrister, where I share resources on trans and non-binary law and try to democratise the law to help those that it affects understand it.

As the first publicly recognised non-binary barrister, do you feel an obligation to be a role model?

Yes, definitely. I feel like I got here (being a public voice) by accident – it just so happened that this is how it panned out. But I certainly feel like I have an obligation to speak up for those who are more marginalised than me.

In terms of challenges in the legal sector, is it primarily the toxicity that can occur when discussing gender identity, or are other challenges more prevalent?

Somewhat ironically, when I came out as non-binary in the profession, I didn’t get that much pushback. I thought I would get much more. People were generally supportive, which was surprising as these aren’t typically the kind of people you might think would be open to it. It might have been that people thought it was a load of rubbish and they didn’t have the audacity to tell me, but to be honest, if you keep your belief to yourself, I couldn’t care less. In my day-to-day practice, it doesn’t really come up. My client is the most important person, and conveying their message to the judge is key.

The only hate I’ve had is more recently, delving into the ‘gender-critical’ cases as this overlaps with a lot of my belief/discrimination work, with actors in that field making comments that are quite disrespectful. In reality, the fight for equitable rights for all should be a common cause; however, that cannot be done if parties attack each other, or target extremely marginalised groups for misconceived reasons.

Rights are not limited as percentages on a pie chart; marginalised groups can gain rights without taking away the hard-fought rights of others. Presenting rights as mutually exclusive misunderstands their very nature: rights can (and should) be extended for each group that faces adversity in society. This is crucial for society to become fairer.

Is there anything the legal sector could be doing better in terms of representing and supporting non-binary colleagues?

Non-binary people aren’t going away, no matter how much hate is expressed towards us. I truly think that the seeming increase in non-binary people is more about people feeling confident enough to say it, especially as Gen Z comes through.

In terms of support, having a non-binary person’s back when they’re in the room is important, but also when they’re outside the room, is really important. If I tell you my pronouns are they/them, you should try your hardest to get them right. If you get it wrong once or twice, no-one is going to be mad at you, but you should at least make the effort, and correct others if you hear them using the wrong ones. Non-binary people shouldn’t have to do all the work. I’m happy doing a lot of the heavy lifting, but allies also need to pull their socks up – whether it’s putting pronouns in your email signature or on LinkedIn, or checking in on your trans and non-binary colleagues. LB

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Once seen as the next big thing for all self-respecting international law firms, China is now seeing a wave of retrenchment by US firms, with Morrison Foerster the latest to close an office in Beijing – Alex Ryan spoke to those who know the market to find out why

As statements of intent go, they don’t come much bolder than Dentons’ groundbreaking 2015 tie-up with China’s Dacheng. In one move the firm became the biggest in the world by headcount, with the verein combination bringing together more than 6,500 lawyers and granting Dentons access to what was then seen as the must-have market for truly global firms, dwarfing the efforts of many UK and US players to build up a presence in the country.

However, less than a decade since that deal, new fears around data privacy and cyber security in China have reached such heights that no fewer than six US firms have closed offices in either Beijing or Shanghai since Dentons called time on the tie-up last August, on top of three others calling it quits earlier in 2023 (see box, below).

The latest is Morrison Foerster, which this week confirmed it is winding down its Beijing base. In a statement, the firm said that its Beijing lease was due to terminate later this year, and that ‘nearly all’ of its work for clients in China was already being handled by its offices in Shanghai, Hong Kong and elsewhere. The process of closing the office is expected to be completed by the autumn.

In addition, Winston & Strawn closed in Hong Kong earlier this year, while Mayer Brown ended its longstanding combination with Hong Kong’s Johnson Stokes & Master in May.

On the rationale for the split from Dacheng, Dentons global chief executive Elliott Portnoy sets out the central issue in plain terms. ‘Clients come to a law firm to solve their most important confidential problems,’ he explains. ‘If we cannot solve that problem or advance that highly sensitive and confidential business opportunity with an assurance that the information they have shared with us remains confidential, then we are literally unable to meet one of our most important obligations.’

‘The current regulatory framework in China imposes on lawyers in China a set of obligations that are inconsistent with those best practices, such that if the government were to seek information about client business activities, client data, or other confidential information, it is a legal obligation imposed on a Chinese lawyer to share that information with the government.’

‘If we cannot provide assurance that the information clients share with us remains confidential, then we are literally unable to meet one of our most important obligations.’ Elliott Portnoy, Dentons

China passed its revised Counterespionage Law on 26 April 2023, with the US National Counterintelligence and Security Center stating that the new law raised the risk that: ‘any documents, data, materials, or items could be considered relevant to PRC national security due to ambiguities in the law.’

The concerns appear well-founded. The Chinese government has already raided the offices of multiple US-headquartered consulting companies, including a police visit to Bain & Co’s Shanghai office on the same day the new law was passed.

While to date no international law firms have been publicly reported to have been raided, some are concerned that it is only a matter of time.

‘There is no limit about which I am aware,’ says one partner. ‘Everything in your server is subject to review and access by regulatory authorities, simply on request.’

While most firms closing offices have been reluctant to comment on their China operations, all have so far opted to refocus on other offices in the region rather than closing altogether.

Indeed, despite the challenges and concerns around the Chinese regulatory regime UK firms have yet to announce similar plans to close, with some actively continuing to expand in China. HFW and Bird & Bird, for example, both opened in tech haven Shenzhen in the second half of last year.

But there are concerns that even Hong Kong’s position may come under threat in future, with some partners pointing to the territory’s new Article 23 national security law – which relates to what the Chinese government views as espionage – as a potential challenge.

One recruiter says there is already a sense of government intrusion casting doubts over the island’s prospects, pointing out: ‘Hong Kong has been tainted by the same brush.’ Another adds: ‘It’s just not as free a market as it used to be.’

It was these concerns around Hong Kong and China that prompted Eversheds Sutherland to shift its approach to the region when it announced an exclusive referral agreement with APAC leader King & Wood Mallesons in July last year.

‘We felt a referral agreement with one of – if not the best – law firms in China was a more sensible strategy than trying to build offices in China in a changing regulatory and geopolitical world,’ the transatlantic firm’s co-chief executive officer Lee Ranson tells Legal Business.

Commenting more broadly on the shift in firms’ approach to China, he expands: ‘Some of it is a response to lower activity levels. Some of it is a response to changing geopolitical dynamics, which have meant that China isn’t considered at the heart of strategy for US firms in particular. And some of it is concerns around issues like data.’

Despite these concerns, he stresses: ‘It’s very difficult to see how firms can have a long-term, realistic Asia strategy that doesn’t involve China in one form or another. China is the world’s second largest economy; our clients can’t ignore that. But they do need a different type of service than what was provided five or ten years ago. Our relationship with KWM gives us the resources to meet those changing needs.’

Whether more firms go down the referral route remains to be seen, but even Portnoy acknowledges that ‘the time may come when China is resurgent, and businesses may want to staff up or refocus their attention on China.’

As firms grapple with their approach to China and Hong Kong, some suggest the region’s challenges will likely produce a pivot from firms towards other countries in Asia, such as Singapore and potentially India. Orrick explicitly mentioned its existing Singapore office as part of the statement on its China closures, while Proskauer opened in Singapore last year, the same year it closed in Beijing.

‘It’s very difficult to see how firms can have an Asia strategy that doesn’t involve China. But they do need a different type of service than what was provided five or ten years ago.’ Lee Ranson, Eversheds Sutherland

‘Broad geopolitical conditions in the last four or five years have made doing business in China more difficult,’ says Ashish Raivadera, managing director for South Asia in the partner practice group and Singapore office founder at Major, Lindsey & Africa. ‘American law firms in particular find it an increasing challenge to do business in China.’ He adds: ‘We’ve seen more firms coming to Singapore, more of an investment appetite to put bodies in Singapore rather than in Hong Kong and China, and more looking at Asia through a pan-Asian lens rather than solely through a Chinese lens.’

‘That many companies are pivoting their Asia-Pacific businesses towards other countries is good news for us,’ says Portnoy. ‘We’re the only global law firm in India, and we have a very strong presence in many of the markets in the region that clients in the region are quietly or not so quietly shifting their focus to.’

Raivadera concludes: ‘We’re in a phase at the moment where big American firms who are going gangbusters in the US are saying, “Why are we active in these Asian markets when we’re less profitable there?” But these questions have been asked as long as I’ve been in this business. We talk to clients about the concept of “but-for” revenue: the revenue that you wouldn’t win from clients in the US and elsewhere if you didn’t have offices and a presence in Asia.’

alexander.ryan@legalease.co.uk

Firms readjusting operations in China

*Firm did not respond to request for comment.

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I’m the only one in my immediate family who isn’t a scientist – they’re all biologists and engineers. My grandfather, though, was a lawyer in a small market town in Fife so I’d always been interested in law as a career. He was a traditional high street lawyer – doing very little corporate work – so training at Clifford Chance (CC) was a completely different professional life from his. But from him I saw someone who was regarded as an upright person in the community.

I began my career at CC which, at the time, was the biggest firm in the world. I came to London to follow my then girlfriend who was a professional violinist, but we’d split up by the time I got there! I wanted the experience and challenge of working in a huge organisation.

A few years later I got married and we took a year off to travel. I’d seen my friends from uni back in Scotland with evenings off and hobbies, and I’d always had at the back of my mind that I might go back. They were working on the Scottish side of transactions I was on in London so I knew I didn’t have to compromise on the quality of work or clients to achieve a better work/life balance.

You have more time free as managing partner than you might think – the challenge is what you do with it. I gave up all client work; I realised the most important thing to do with the time was stop and think. Think about the things that you could get involved in that nudge the business in the right direction, to help the people.

Every Friday afternoon I find someone to say thank you to. You never run out of people to say thank you to – it’s like a super power that never wears out.

The person who inspired me most professionally is our chair, Christine O’Neill. She is, by any margin, the brightest lawyer I’ve ever met. But allied to that she can think in 3D and combines a fearsome intelligence with a waspish sense of humour. It’s no surprise the Scottish government and the BBC (among others) seek her counsel – our firm benefits from that 365 days a year.

My next chapter won’t involve any paid role. I’m going to go back to university to study history of art. I studied it in between requalifying into English law and have been interested in it ever since. It’s history through the lens of art – it’s as much about who’s creating the art as what the painting is about.

‘My next chapter won’t involve any paid role. I’m going to go back to university to study history of art. It’s history through the lens of art – it’s as much about who’s creating the art as what the painting is about.’

As managing partner you’re on two terms and my second term was up. It’s 32 years since I was a trainee and it’s a good time to do something else. When I started at CC my old boss retired at 47; I always had in mind that I should force myself to do new things at about 50.

I liked real estate because it’s tangible; you can see these structures being built, and I could explain it to my mum(!). It’s friendly and a great industry to be involved in.

I always remembered the deals less than the people I worked with on them. In this role, I haven’t missed the client work. I was ready to do something different; I wanted a new backdrop against which to test myself.

Management is all about the people. You can get caught up in P&Ls and balance sheets but it’s all about people. Our most important audience is our internal audience; are they optimistic when they’re spending time with you? I would like to think that for all of the tangible success we have enjoyed, folk would say we cared about our people. We put a huge amount of investment into our people.

Twenty years ago we were the 13th biggest firm in Scotland but now we’re the biggest, with revenue of £100m. I wanted our firm to get to £100m – it was important to me to show that a firm in Scotland could do that; and to show our colleagues in the firm what the view looked like from there. I’ve also spent a lot of time getting our offices to reflect the firm we have now become. And I’m proud of making sure we celebrate everyone in the firm – business services colleagues, as well as lawyers. They have careers, degrees, hopes and aspirations too. We banned the use of non-lawyer as a word.

Half of the firms that were here 20 years ago no longer exist; they’ve been replaced with international or national UK firms. We welcome them all, because it makes it easier for us to differentiate ourselves. There are pros and cons of the big international firms versus independents; they force us to distinguish what’s compelling about our proposition.

We have a strategic review every three years in which we challenge everything – right down to why we are still together, but we’re proud of what we’ve created. Everyone in Brodies feels they have a stake in what we’ve created.

Our target hours for our lawyers are 1,200, which is much less than everyone else. We want our folk to spend time mentoring, training their younger colleagues.

‘Twenty years ago we were the 13th biggest firm in Scotland, but now we’re the biggest, with revenue of £100m.’

It was a privilege to be in management during Covid – you saw people at their best, all the acts of human kindness. Pride, and humanity, don’t come from job titles and seniority didn’t matter; sitting in the middle you saw all the wonderful things people were doing. I’ve been very fortunate with the hand I was dealt.

The danger for any business comes in setting plans that aren’t ambitious enough and then achieving them. There’s still plenty of space to grow in Scotland, and beyond. Energy transition is driving work everywhere. We’ve already set our 2024-27 strategy – it tells us how our firm will continue to grow.

Tech is an opportunity, not a challenge. Our biggest constraint has always been recruitment – getting as many people as we need; if you can have tech to help the people we already have be more productive and free them to focus even more on clients, that’s something we should welcome with open arms. I don’t see it replacing lawyers, but we’ll have more data scientists, project managers etc so we’ll be competing more with other industries for the same talent. It will force us to challenge ourselves.

I once judged the property awards in Scotland and I read out the prizes in the wrong order. Luckily they laughed but I made a fool of myself in front of more than 400 industry folk!

Personality-based conflict is the hardest bit of the job. People puffing up their chests for the sake of it. Usually I just say the two of you can go away and come up with the answer, or I’ll get someone else to do it. That frequently works.

I’m a big fan of Wes Anderson. In The Life Aquatic, Steve Zissou stands looking out at the ocean and says: ‘This is an adventure – you shouldn’t know what’s coming.’ That’s what I’m looking forward to now.

I have a twin brother. He’s an engineer but in life we’re fellow mariners. It’s a nice thing to have a twin brother – there’s always someone on the journey with you.

I want to do a lot of travelling. My wife was a lawyer but by the time we had our third child she gave up work to look after our kids. She is the better part of my story; the part seldom told; behind my career is someone who gave up her career so I could see mine out. We always had a plan to go travelling again and I am honouring a commitment I made to her.

My kids are all doing the science bit – they know I’ve enjoyed the law, but they’re going back to our family’s natural routes.

Words: Georgina Stanley; Portrait: Juan Trujillo

georgina.stanley@legalease.co.uk

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