IFLR 1000
The Guide to the World's Leading Financial Law Firms

	Allen & Overy
	Linklaters
	Ashurst Clifford Chance Slaughter and May
	Freshfields Bruckhaus Deringer Mayer Brown Norton Rose Shearman & Sterling Sidley Austin Simmons & Simmons White & Case
	Field Fisher Waterhouse

All the talk in derivatives has revolved around regulation this year. Having had to don a hair shirt in the years immediately following the recession, derivatives practitioners are now walking tall as the market has returned with a vengeance. However there is an acceptance that things needed to change and on both sides of the Atlantic new procedures are being put in place or updated to allow regulators to take a more stringent approach.

"Obviously the regulatory landscape is a little bit clearer now, but its still not entirely clear, we've seen lots of clients asking how Emir (European Market Infrastructure Regulation) will impact their business, so we've put on various presentations for clients," says one partner.

The differences and similarities between The European Emir regulations and the US Dodd-Frank Act are obviously the biggest issue and firms have found that they are spending a lot of time advising clients on what they can or cannot do in the new world: "We've seen a lot of questions around what the regulations will mean to people's business and we've seen a lot of action in relation to people trying to figure out what they should do next in terms of what Emir will throw up."

The issue that is causing most debate is that of Central Counter Party (CCP) clearing and more precisely what will and will not need to be put through the process. "The biggest change is going to be around CCP because people don't know what's going to happen," explains one partner. "It'll be an interesting area and active area and there's a chance that it will fundamentally change the way that people go about things," says one peer.

Firm's are hopeful that the cross-Atlantic divide won't prove too vast and that even if perfect synchronicity cannot be obtained that at least the systems can be in the same ball park. "The Americans have regulations for certain kinds of products and the Europeans haven't and there is a sort of flurrying around saying 'well hold on its not good to have a different degree of European regulation for what should be cleared through a central counter party." Another partner points out that the nature of the market should be enough to ensure harmonisation of a sort. "I think over time they will have to come close together because we're talking about a global market, I can't see there being a huge amount of divergence."

Allen & Overy's derivatives team, now run by partner David Benton, continues to be the market leading practice. The team's experience, its name and the reputation of its partners are one thing, add in the firm's much-coveted position as lead counsel to Isda (International Swaps & Derivatives Association) and it becomes difficult to argue with the firm's lead ranking.... [more]

Allen & Overy's derivatives team, now run by partner David Benton, continues to be the market leading practice. The team's experience, its name and the reputation of its partners are one thing, add in the firm's much-coveted position as lead counsel to Isda (International Swaps & Derivatives Association) and it becomes difficult to argue with the firm's lead ranking. "They are obviously very good, but they are consistently good which doesn't run through all the tiers," says a peer.

Client feedback backed this position to the hilt: "Second to none. Crown jewels in this field," says one client. "Benton is good on derivatives, very good at the letter of details, looks beyond the obvious and they are business oriented." Certainly Benton seems to be a good figurehead: "Exceptional. David is a market guru with a massive reputation," says another client.

The future looks in safe hands too: "I worked with Tom Roberts, a mid-level associate, was calm, got the job done and gave the right advice," says another client. "Cracking detail drafting man."

However, peers do point out that the firm is not as untouchable as it may have been perceived prior to the financial crash or indeed in the immediate aftermath. The direct challengers are Linklaters who have their own bragging rights in the form of links to LCH Clearnet. "It's no particular surprise to see Allen & Overy in the top tier," says one peer, "but you could make an argument for Links to be up there too." By a narrow margin though, the feeling was that there is for the moment only one seat at the top table. "I think there probably is still some blue sky between Links and A&O," says one peer and another agrees, "We know A&O have downsized slightly in terms of numbers and have not been taking people on, but I think there is still a gap there."

Strength across the asset classes is a key signifier of a top practice and Allen & Overy can point to recent mandates in almost all the key areas of derivatives.

With clearing being the hot topic it's no surprise that the team has been kept busy advising a number of key clients in terms of putting structures in place to allow them to synchronise with central clearing authorities. This has included work for Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan and RBS to name but a few in their reviews of the rules and procedures of major clearing houses ICE Clear, ICE Trust and LCH Clearnet as part of their compliance in regard to Dodd-Frank and Emir.

The team has also taken the initiative and set up various working groups and updates to keep clients abreast of developments in regulation changes.

Isda work of course also remains a feather in the firm's cap. Although no longer the body's sole advisor, as lead counsel it remains the first port of call, "A&O act for Isda so they've clearly got the perceived market lead," says one peer.

This status as premier advisor was shown last year as the firm chaired and acted as lead advisor on Isda's Financial law Reform Committee which coordinates the body's various global reform efforts. The team has also been called upon to help draft consultation responses on specific issues including the strengthening of close-out netting procedure in relation to proposed EU regulation and the resolution of cross-border issues relating to the World Bank Insolvency Law Task Force.

The team has also advised on proposed amendments to the Isda Master Agreement including Section2(a)(iii) – which arose out of the UK High Court Case Lomas vs JFB Rixon – and the definitions of various terms within the agreements in the light of reforms.

Clients were also keen to point out the added value the firm adds through training, seminars and updates: "They offer a lot of training sessions, a lot of free advice as well as providing secondees to see what we do day to day," says one, "It also allows them to gain insight of our business and therefore highlights our positive areas which in turn reflects well on us." Another adds: "Good at regular contact, making as aware of new development or specific transactions. Highly valued as a client, you do feel like they put the firm at your disposal."

The firm has also acted in other growth areas of the market including advice on carbon structures, housing finance and notably Islamic finance structures. The market in shariah-compliant structures is young and under-developed and numerous procedures have been put in place to stimulate the market. In this area the firm has been heavily involved in the development of a framework for Islamic derivatives including the drafting of the Isda/IIFM Tahawwut Master Agreement, which would allow murabaha (deferred sale) hedging transactions to be documented, and a template for sukuk (Islamic bond) credit default swaps.

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The position of leading firm in UK derivatives is seen by most of the market as a straight fight between Allen & Overy and the up and coming team at Linklaters. "With the shift away from OTC towards clearing, it's Linklaters who are behind LCH Clearnet," says one peer, "so it'll be interesting to see how that turf battle evolves.... [more]

The position of leading firm in UK derivatives is seen by most of the market as a straight fight between Allen & Overy and the up and coming team at Linklaters. "With the shift away from OTC towards clearing, it's Linklaters who are behind LCH Clearnet," says one peer, "so it'll be interesting to see how that turf battle evolves."

The image consistently conjured up by the market is one of contrast between the old guard represented by Allen & Overy and the young pretender represented by Linklaters. "I think Links have capitalised," says one practitioner, "but still because of the industry stuff there is a gap [between the two firms] but it's very much smaller than it used to be." Another agrees: "They're are the heirs of A&O and they do have the Lehman link."

The firm's links to Lehman continues to throw up plenty of new work and though it has been seen as something of a mixed blessing in recent years, both in terms of market perception and the enormous time commitment it demands, it has provided the firm with a steady workflow. Last year saw Simon Firth and Pauline Ashall acting for PricewaterhouseCoopers on a landmark case in the UK High Court. Lomas vs JFB Rixon, which arose out of the Lehman administration, raised questions in regard to the definition of Section 2(a) (iii) of the Isda Master Agreement. The conclusions are likely to lead to an amendment to the clause to clarify the issues surrounding payments between defaulting parties.

Rivals cite two main reasons for the success of the team: a greater focus on this area of the market and its positioning at the forefront of new regulation and definitions in the clearing space: "The fact that Linklaters is leading on the derivatives definition though, that's why I'd say I'd put them together," says a fellow practitioner and another agrees: "Linklaters have obviously gone charging ahead. They've really focused around this and because A&O had a massive exposure [during the financial crisis] because of their clients, this area became less profitable for them."

Clients are also impressed: "They're excellent, they are the ones we use," says one, although they point out that partner contact could be improved. "With Jon you do a bit more work with associates, it's less co-ordinated through the partner."

Providing advice to Isda (International Swaps & Derivatives Association) itself is of course seen as the mark of an established practice and last year a Linklaters team including partners Gary Barnett, Chong Liew and Michael Voisin advised the body on the new definitions for equity derivatives. This updates the definitions laid down in 2002 and with equity derivatives accounting for an estimated $7 trillion in trades in 2010, the mandate is a sign of the team's growing reputation.

Another highlight, this time led by partner Vinay Samani, was the team's advice to Barclays on the establishment of 'level two' programmes for the issue of exchange traded securities. These fall under the bank's iPath Global Structured Products Programme, which offer securities linked to the performance of various indices. Originating in the UK these have now spread across Europe.

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The securities and derivatives group at Ashurst was until recently very much defined by partner Erica Handling. Since her departure to an in-house position at Barclays Capital, Chris Georgiou has taken the helm and has managed to steady the ship, always a priority during a succession process.... [more]

The securities and derivatives group at Ashurst was until recently very much defined by partner Erica Handling. Since her departure to an in-house position at Barclays Capital, Chris Georgiou has taken the helm and has managed to steady the ship, always a priority during a succession process. "Ashurst have been very up and coming recently," says one peer.

Although not seen as competing directly with Allen & Overy and Linklaters the market had respect for the practice, which still picks up notable mandates from the likes of LCH Clearnet, who James Coiley advised last year on the clearing procedure for various CDS transactions. This relationship was fostered initially by the firm's Paris team, but the firm is now advising on English-law aspects of the clearing procedure.

Another major client is Merrill Lynch who last year called in the team to advise its European commodities arm on trading and risk management issues relating to the Eggborough Power Station. The team also been appointed to provide netting and due diligence advice going forward.

Christopher Whitely, working again alongside the Paris team, advised Credit Suisse and RBS on the termination of equity derivatives and collateral arrangements with Eurazeo related to its stake in Accor.

The firm has also been busy providing opinion on structured derivatives transaction documentation for the likes of Morgan Stanley and RBS and prime brokerage documentation for the likes of Nomura, Bank of America Merrill Lynch and Haymarket.

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The Clifford Chance derivatives team's main strength according to peers is its capacity: "A huge number of derivatives lawyers, but we haven't really seen them on the fall out from Lehmans," says one partner. "They've got Habib [Montani] who's extremely impressive but that aside I haven't had a whole lot to do with them.... [more]

The Clifford Chance derivatives team's main strength according to peers is its capacity: "A huge number of derivatives lawyers, but we haven't really seen them on the fall out from Lehmans," says one partner. "They've got Habib [Montani] who's extremely impressive but that aside I haven't had a whole lot to do with them."

Certainly there is a consensus that the firm's magic circle peers Allen & Overy and Linklaters are a step ahead: "Clifford Chance are OK, they have definitely dropped significantly behind A&O and Links," says one peer and another agrees: "They still do a lot of loan related stuff, they've got some nice people there but I don't think it's a big focus for them."

A key deal last year saw the team advise the International Finance Corporation (IFC) on the guarantee of $1 billion in emerging market trade finance receivables by Standard Chartered. The transaction sees the bank originate the portfolio from various merging market banks.

The team also advised on the restructuring of £500 million in floating rate securities of Pearl Group Holdings involving two bondholder consent solicitations.

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In line with its general philosophy, the Slaughter and May derivatives team is part of the broader and more generalist finance team. Most clients appreciated this broad knowledge base and one points out that it can add to the firm's commerciality: "They are generalists at Slaughters, that is the nature of the firm.... [more]

In line with its general philosophy, the Slaughter and May derivatives team is part of the broader and more generalist finance team. Most clients appreciated this broad knowledge base and one points out that it can add to the firm's commerciality: "They are generalists at Slaughters, that is the nature of the firm. Robert [Byk] is an excellent lawyer, he's knowledgeable, he's extremely commercial, sometimes he gets confused between being our advisor and our lawyer."

However as you'd expect from Slaughters, clients pointed out that technical expertise is the main selling point: "I do quite complicated structures and I have worked with a lot of people and I'd put him right at the top," says one client. Another points out that Richard Levitt is the firm's star: "He's very very technically gifted, you can throw anything at him and he'll always get you an answer," the client continues: "When we do derivatives they are extremely bespoke in our area, he knows exactly what he is doing."

The firm was involved in a number of derivative portfolio restructurings last year including Byk's advise to Premier Foods on the restructuring of its secured interest rate swap portfolio in an attempt to reduce financial risk. The result will see premier making bullet payments to swap counterparties on the maturity of their swaps to reduce the impact of a expected drop in market value.

In addition, Miranda Leung advised Bupa as it established an Isda (International Swaps and Derivatives Association) template in connection with the health company's establishment of an Isda suite in conjunction with a group of banks including HSBC, RBS and Barclays.

Where the team does fall down is on those transactions with a more international element, as one client says: "That's the one weakness of Slaughter and May, you look at Links and Freshfields and you get a more co-ordinated approach. If you're looking at doing a deal in Luxembourg you naturally look at those firms who can offer the combined operation in two offices." Another agrees: "Say I was doing something with complicated cross border elements, in that situation its imperative to the deal that things have to knit together perfectly so I would pick one firm."

In a derivatives related transaction in M&A, Guy O'Keefe also advised Macquarie on the acquisition of Sal Oppenheim's derivatives brokerage business, with the acquisition structured using portfolio total return swaps.

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Mayer Brown enhanced its team this year through the hire of Chris Arnold from Allen & Overy in June 2010. This will no doubt be a boost to the team led by Edmund Parker.... [more]

Mayer Brown enhanced its team this year through the hire of Chris Arnold from Allen & Overy in June 2010. This will no doubt be a boost to the team led by Edmund Parker. Having come from A&O, Arnold maintains strong links to ISDA and is still a member of a number of the organisations committees.

The firm itself has been appointed US counsel to ISDA and this status will no doubt help it as it attempts to establish itself further in the UK market.

One of the firm's key clients is Citigroup and the firm has acted for the bank in various issues linked to its structured products portfolio. This has included settlement processes for credit events across these portfolios including repacking CDOs and credit derivatives.

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The Norton Rose team, led by Dean Naumowicz, is generally found advising on the bank side when it comes to derivatives transactions.Clients were impressed by the department head's technical skills: "Very good technical skills in respect to derivatives.... [more]

The Norton Rose team, led by Dean Naumowicz, is generally found advising on the bank side when it comes to derivatives transactions.

Clients were impressed by the department head's technical skills: "Very good technical skills in respect to derivatives. Professional, he knows the market, he has the relevant experience and expertise." Perhaps unsurprisingly in such a specialised area, client also pointed out that their relationship with the Naumowicz was key to the process, even more so than the firm's reputation: "We use them in variety of areas, setting up different structures, litigations," says one. "Partner relationship is key, I always choose law firms around the lawyers."

The firm can draw on its healthy reputation in the Islamic finance area and one example saw the team acting for BNP Paribas on a suite of shariah-compliant OTC products. The firm is also providing ongoing advise in regard to establishing it's shariah-compliant product line. In a similar deal the team acted for Barclays on a shariah- compliant metals trading structure, which links the fund to the price of metals.

Other bank side mandates include acting for Bank of Ireland on synthetic equity volatility linked transactions and Société Générale on an innovative risk pass through a structure linked to sovereign debt.

On the regulatory side Naumowicz, acted for Chicago Mercantile Exchange Clearing Europe on the establishment of its new clearing house. The lead partner was again involved acting for TriOptima on various regulatory issues.

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The derivatives team at Sidley Austin is led by Elizabeth Uwaifo and last year she acted for KBC Financial Products in the restructuring of collateral arrangements in several CDO transactions. Paul Matthews was also called in by KBC Financial Products to advise on the new generation of synthetic CDO products and their synchronisation with older product types.... [more]

The derivatives team at Sidley Austin is led by Elizabeth Uwaifo and last year she acted for KBC Financial Products in the restructuring of collateral arrangements in several CDO transactions. Paul Matthews was also called in by KBC Financial Products to advise on the new generation of synthetic CDO products and their synchronisation with older product types. Matthews also acted for Swiss Re on the issuance of insurance linked securitisation catastrophe bonds valued at €275 million by Calypso Capital.

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The Simmons & Simmons derivatives team is led jointly by Allan Yip and David Roylance and both had a hand in the firm's major work last year. In one example, Roylance acted for UBS on the securitisation of a €1.... [more]

The Simmons & Simmons derivatives team is led jointly by Allan Yip and David Roylance and both had a hand in the firm's major work last year. In one example, Roylance acted for UBS on the securitisation of a €1.5 billion portfolio of derivative transactions. He also advised another international bank on a secured multi-currency variable drawdown financing related to a $1.3 billion revolving portfolio of loans and high-yield bonds.

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White & Case's derivatives team was expanded last year as Jeremy Trinder was promoted to partner. He also works on real estate linked structured finance and securitisation.... [more]

White & Case's derivatives team was expanded last year as Jeremy Trinder was promoted to partner. He also works on real estate linked structured finance and securitisation.

The team led by Gavin McLean also had to adjust to seeing partner David Barwise relocating to the Singapore office, while Rich Reilly moved across from New York.

The firm's strength is seen to be in emerging markets and one client who worked with the firm in Indonesia was pleased with the depth of knowledge displayed by the team. "Very innovative, during the transaction there was a lot of dangerous Indonesian law issues, collateralising Indonesian law. They zeroed in on the best options."

Another client who worked with Barwise pointed out the lengths the firm goes to maintain relationships: "They always make the effort to meet up. David recently gave an in-house presentation on derivatives and the latest developments on it They treat us very well. Friendly bunch, nice to deal with."

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Field Fisher Waterhouse has a small but dedicated derivatives team in London led by Guy Usher.

The firm is gradually building a reputation in the City as evidenced by new clients such as Aviva, Commerzbank and the Ministry of Defense (MOD).... [more]

Field Fisher Waterhouse has a small but dedicated derivatives team in London led by Guy Usher.

The firm is gradually building a reputation in the City as evidenced by new clients such as Aviva, Commerzbank and the Ministry of Defense (MOD).

Existing clients were impressed by the firm's responsiveness and consider them to be a good value for money alternative to some of the larger firms in the market. "Interactions between clients and partners was very good," says one, "They were busy, but they made themselves available. They also hold seminars."

One of the firm's most impressive mandates came from the MOD, who mandated the firm to advise it on its use of derivatives as part of a hedge against fluctuations in the fuel market. Edward Miller led on the deal which was significant in part due to the scale of the MOD's fuel usage.

A high profile mandate saw Guy Usher acting for long term client Lehman Brothers Finance on the close out of exchange trade derivative positions within its European arm. The team is acting on a court dispute. The firm also acted for the Brevan Howard Master Fund on the sale of its derivatives and repo claims against Lehman Brothers International's European operations.

Finally, another interesting deal due to its geographic connections saw Usher acting for Standard Bank on a equity total returns swap. The deal sees the bank providing a client with access to companies within Iraq.

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