But for Linklaters it seems this particular cloud has a silver lining. Rafts of firms have managed to win substantive roles in the transactions but in the
The firm has a team of around 20 partners acting for PricewaterhouseCoopers as
Admittedly, the latter instruction may not be the biggest role in the world, but in a market when every mandate counts, it is not to be overlooked — particularly if it opens doors to wider instructions from the newly-enlarged banking giant. And the importance of a major insolvency mandate in a downturn should never be underestimated. The sheer level of complexity and fees involved can mean one or two big-ticket instructions are enough to feed a hungry magic circle firm through the lean point of the deal cycle, as British Energy did for Clifford Chance (CC) a few years back.
And, while none of the three banks are new clients for Linklaters, that doesn’t lesson the significance of the deals. Particularly as Slaughter and May and Herbert Smith at the time of going to press were yet to land major corporate roles on any of the deals. That is likely to be particularly galling to Herbert Smith given its position on the panels of both Lloyds and HBOS and its historical standing as the lead transactional firm for Bank of Scotland prior to its 2001 merger with
For Linklaters this recent purple patch is also fortunate in its timing. Though it had managed to turn its role as lead adviser to NatWest into a role as primary counsel to RBS, it was surpassed by Allen & Overy (A&O) for HBOS — despite previously being the main adviser to
And, while Lloyds has been a good client for Linklaters, those within the firm concede that its retail banking focus and conservative growth strategy had not generated masses of high-end work. Linklaters also lost out on a major role on Northern Rock when Lloyds backed out of merger talks last year, instead having to content itself with an instruction from incoming executive chairman Ron Sandler on his position and the establishment of a new board.
And, of course, there is the matter of Linklaters’ painful blacklisting by JPMorgan earlier this year for upholding its existing commitments to another longstanding client, Barclays.
Elsewhere, CC and A&O have had cause for cheer with the firms respectively picking up roles on Barclays’ acquisition of Lehman’s US businesses and for HBOS on the Lloyds takeover.
For CC, Barclays’ elevation to Wall Street credibility must be viewed as a major opportunity, though the City giant has more work to do in terms of securing that key clients’ US work judging by Cleary Gottlieb Steen & Hamilton’s instruction as US counsel on the Lehman deal.
How last week’s events will impact on global M&A markets is harder to gauge. So far deal markets have held up better than in 2001-03 as strategic buyers have, to a considerable extent, made up for the slump in leveraged deals. In theory, the conditions underpinning acquisitions — expanding emerging markets, corporates with strong balance sheets — are there, but confidence will have to recover for the deal-doing to resume.
Keep abreast of all the latest post-Lehman developments in our Legal Week Wiki special.