A review of Raj Parker's visit to the Commercium Colloquium

Lizzie Hill (the Commercium Colloquium's Bloomsbury Ambassador, GDL 2012/13) reviews the 02/05/2013 visit of Raj Parker, partner at Freshfields Bruckhaus Deringer LLP:

Background

Raj Parker, now a dispute resolution partner at the London office of Freshfields Bruckhaus Deringer, started at the criminal bar then took on a job at Lloyd’s at a time of scandal and corruption during which he instructed Freshfields, and subsequently (hesitantly) took on a job there which he found he really enjoyed. His favourite thing about working at Freshfields is the quality of work, the variety and challenge and the people. He runs the pro bono practice.

Dispute resolution

The Freshfields team covers a huge number of different industry areas such as sports, construction, insurance, energy, media and telecoms, banking.

Sports has included a lot of work for the FA since the 80s, such as a bid to introduce AstroTurf to allow play in the UK in bad weather conditions, which the ECJ and UEFA blocked. Margaret Thatcher was quite concerned with hooliganism as a problem in football, and Raj Parker had the opportunity to participate in think tanks and policy and help the FA deal with some of these issues. Then the Hillsborough disaster happened and Freshfields represented the FA on matters with fans and the police and advised on introducing seated stadia. Much of the documentation surrounding Hillsborough is now available online. The Report of the Hillsborough Independent Panel in September 2013 upheld the Taylor Report's finding that the fans weren’t to blame and the authorities were – there may be further litigation and compensation in this area.

In 1991, Raj Parker helped prepare and set up the Premier League as the Football League First Division was breaking away from the Football League. Several actions were brought to block this move, including a judicial review claim that it would be ultra vires to form the Premier League as it was moving into the private commercial realm and the FA was a public body, and a breach of contract claim that the Football Association wasn't fairly considering all 92 clubs in the Football League. Ultimately all such actions failed. Raj Parker had no idea what he had helped create, and the Premier League's value soared from circa £300 million in 1992 to over £3 billion today.

Other notable work in the sports arena involved Lance Armstrong and the International Cycling Union, LOCOG and London 2012, Qatar and the 2022 FIFA World Cup, and the Board Of Control For Cricket In India. Raj Parker also works in white-collar crime. This area is seeing a lot of activity at the moment, as is regulatory work.

The current legal landscape

Raj Parker notes an increasing number of crises such as the Deepwater Horizon accident and more hostile bids, unexpected events, and natural disasters. Economic woes have led to more risk-taking, and therefore to more collapses and more 'man-made' disasters.

The emergence of the 'BRIC' economies means that companies are expanding into areas with different business cultures (and regulation), and this means a lot of work to manage risk. Raj Parker mentioned Bumi's issues in Indonesia.

There is an increasing number of class and collective actions in the UK, albeit not yet on a par with America.

There are also growing concerns about the safety of data – especially hacking, by both businesses and states, in defence, finance, and healthcare. Privacy is therefore set to be a big growth area.

Joint ventures in Asia mean more work with different and difficult antitrust laws, and more need to identify and manage risks.

The government sees commercial litigation as a jewel in the crown of British law, and somewhat as a cash cow. Many big international disputes are brought to London and the government is keen to encourage this and to secure London’s place as the pre-eminent arena for arbitration and litigation.

Many international disputes, such as those between Russian businessmen, come to London as people have confidence in English law owing to the high calibre and integrity of the judiciary, who are 'beyond reproach'. All cards are laid on the table and parties have a chance to cross-examine. Litigants also like the public nature of justice, whereby back-room deals and unrecorded minutes are exposed. There are also equitable remedies such as freezing orders, and the chasing of payments as judgments are enforced.

Pro bono

In Hong Kong, the practice has brought medical negligence claims against an international hospital which had been systematically at fault.

Criminal tribunals in former Yugoslavia re genocide involved Freshfields lawyers from offices all over the world.

Trainees have the opportunity to attend clinics and give legal advice, e.g. on child homelessness.

Freshfields help UK asylum-seekers with a very high success rate.

Another review of John Dewar's visit to the Commercium Colloquium

Tarini Barat (LPC 2012/3) reviews the 25/04/2013 visit of John Dewar, partner at Milbank, Tweed, Hadley & McCloy LLP:

On 25th April, the Commercium Colloquium hosted John Dewar, partner at Milbank, Tweed, Hadley & McCloy and head of the firm’s Islamic finance practice. Mr. Dewar, having just returned to London from Saudi Arabia, gave a presentation introducing the basic principles of Islamic finance techniques.

Context
Islamic Finance has been spreading widely, especially after the credit crunch in 2008. Mr. Dewar explained, that with the downfall of western banks, it was Islamic finance, and in particular Islamic banks that were willing and able to invest money and provide financing for infrastructure, petro-chemical and project finance deals, not just in the Middle East but also Pakistan, India, Malaysia and beyond.

The increasing profile of Islamic finance has meant that Islamic financing techniques now often sit side by side with conventional financing on large global projects and Mr. Dewar shared stories of deals in Texas and Vietnam which involved elements of Islamic finance.

What is Islamic finance?
Islamic finance is the conduct of commercial and financial activities in accordance with Islamic law, i.e. Sharia’a.

There are five key principles in Sharia’a that underpin Islamic finance: -
• Riba: any profit or benefit must be linked to performance of a real asset and its risk. One cannot use money to make more money such as in the case of interest on a loan.
• Gharar: there must be a certainty of contractual terms such as subject matter, price and time of delivery.
• Maisir: commercial risk taking is encouraged but contracts tantamount to gambling are prohibited such as hedging.
• Unjust enrichment
• Unethical purpose or trading in forbidden goods or assets are not allowed.

How are these principles applied?
The banks that invest through Islamic finance techniques have a Sharia’a board. As most Islamic finance deals are bespoke transactions, during the development and structuring process for these transactions they share the term sheet (providing all the details of the transaction) with Islamic scholars, who conduct research to see if the transaction is compliant with Islamic law principles. The scholars will issue fatawa (legal opinions) as to whether the transaction is compliant with Sharia’a. Mr. Dewar emphasised how essential the fatwa [this being singular of sukuk] is to the transaction and in attracting investors; however, he did mention that fatawa issued by the banks made clear that they provided one such legal opinion and that investors might sometimes also undertake their own research as to the compliance of the transaction with Sharia’a and may challenge a fatwa issued by a bank’s Sharia'a board.

Key aspects of Islamic finance structures
Mr. Dewar outlined in his presentation that Islamic finance techniques are asset backed and involve the transfer of risk and ownership from the customer to the banks. It is this Sharia’a-compliant transfer of risk or asset that allows the bank to earn money on its financing deals.

There were three main categories of Islamic finance structures that Mr. Dewar went through: -
• Asset-backed
• Risk-sharing
• Sukuk, aka "Islamic bonds"

ASSET-BACKED
Murabaha (Cost Plus Financing)
A murabaha transaction involves the purchase of an asset by the financier (on behalf of the client) who then sells the asset to the client for the cost of the asset plus a pre-stated margin on a deferred payment basis, which may be pegged to a benchmark such as LIBOR.

[This and all images were kindly provided to guests by John Dewar.]

Ijara (lease purchase finance)
The ijara is a form of lease financing where the lessor/financier purchases the asset from the supplier and then transfers possession to the lessee/client with a profit margin built into each lease payment over the term of the lease.


Istisna’a (commissioned manufacture of specified asset)
The istisna’a is a construction and procurement contract for commissioned manufacture of a specified asset. Following a request from the client, the financier procures contractor to manufacture the specified asset. Client contracts to act as wakil (agent) of financier. Upon construction, the contractor transfers the title to the asset to the financier, who will then either sell the asset to the client outright or lease the asset to the client under an ijarah.


RISK-SHARING STRUCTURES
Mudaraba (investment fund arrangement)
A mudaraba is an investment fund arrangement under which the financier acts as capital provider (rab al-mal) and the client acts as mudareb (akin to an investment agent) to invest the capital provided by the rab al-mal and manage the partnership. Profit of the venture can be distributed between the parties at a predetermined ratio but with any loss (subject to whether the loss is caused by the mudareb’s negligence) being borne by the rab al-mal.


Musharaka (joint venture arrangement)
The financing arrangement for a musharaka is similar to that for a mudarabah, except that any losses are borne in proportion to the capital invested by both the client and the financier.


SUKUK
Often referred to as an Islamic bond, a sakk [sakk being singular of sukuk] represents an undivided beneficial ownership interest in an underlying asset. Unlike conventional bonds where the holder is paid a fixed or floating interest, the returns on a sakk are linked to the performance of a real asset and are also exposed to the risks associated with ownership of the asset. The sakk is linked to the asset through either an ijarah or musharaka arrangement to generate revenues. Below are two respective figures: -


Mr. Dewar also went through a sukuk structure that combined both musharaka and ijarah structures, which was similar to the structure of a deal that Milbank had been acting on.

Q&A following presentation
After the presentation, the floor was thrown open for questions and there was keen interest shown by the audience. Students asked a wide range of questions touching on the Sharia'a board process and methods of gaining expertise in this field.

Mr. Dewar recommended students who were interested in gaining a better understanding of this field to read Islamic Finance: Law and Practice published in 2012 by Oxford University Press. He also shared with us a book he has edited, International Project Finance: Law in Practice published in 2011 by Oxford University Press.

The presentation on Islamic finance provided students with a broad primer. Mr. Dewar was able to outline and bring to life the intricacies of Islamic financing techniques and principles by providing first hand experiences and anecdotes. His presentation not only helped to demystify complex transaction structures but also helped us to appreciate the growing role of Islamic finance in the global market.

One review of John Dewar's visit to the Commercium Colloquium

Tamara Lucas (LPC 2012/3) reviews the 25/04/2013 visit of John Dewar, partner at Milbank, Tweed, Hadley & McCloy LLP:

John Dewar, a partner in the London office of of Milbank, Tweed, Hadley & McCloy, has a wealth of experience across the Middle East, Africa and India in Sharia’a-compliant financing. Following a fascinating talk, he was particularly generous with his time, answering all the questions sparked by many issues raised — all the more impressive given that he had stepped off a plane that morning from Saudi Arabia.

Rather than reiterate all the specifics of Islamic deal structures given in the talk, I recommend the PLC UK law overview of Islamic finance.

Background
Milbank specialises in corporate finance; i.e. banking capital markets and project finance, mergers and acquisitions, often cross-border. The main jurisdictions which Milbank deals with are New York, England and Germany. English law is often used in financing projects because the investment community is familiar with it and the courts in England are trusted to come to the right judgment, if proceedings are issued. Fortunately the default rates in project finance are very low and litigation is rare.

John Dewar began his career in project finance, especially energy projects. His first project involving Islamic finance was 20 years ago in Karachi, but it was another 10 years before his next Sharia’a-financed project. Over the years the sector continued to grow, experiencing rapid development after the banking crisis. Previous inhibitors to growth had included the relative expense of Sharia’a-compliant financing, regulatory and tax issues, and ethical considerations. There was some debate, for instance, as to whether Islamic banks could accept deposits. Post banking crisis, the margins worldwide had tripled, narrowing the disparity between Sharia’a and other financing structures. Some jurisdictions, and in particular the UK, addressed regulatory and tax disadvantages to encourage the UK to be in the forefront of this developing financing structures. Methods of structuring deals to comply with Sharia’a law developed. The problems in other structures, exemplified by the banking crisis made people and companies more receptive to the principles of Sharia’a financing.

What is Sharia’a financing?
Sharia’a financing is a type of deal structure which has been certified by a committee of Sharia’a law scholars. There are several schools of thought in Sharia’a law. Different schools predominate in different areas: for example, Hanbali is dominant in Saudi Arabia. Different banks have their own Sharia’a committees and different practices. The most conservative compliance is in Saudi Arabia. Malaysia, for instance, has more liberal interpretations of Sharia’a-compliant financing. There are no set forms for a deal (which would be comparable to those recommended by the the Loan Market Association for instance) nor is there consensus as to precisely how deals should be structured to be compliant.

Sharia’a financing is usually in conjunction with conventional banking arrangements. If the deal is certified as Sharia’a-compliant this is merely an opinion of the Sharia’a board which has been appointed by the bank or project. Investors are supposed to do their own assessment as to whether they consider that the product or deal meets the requirements of Sharia’a law.

Sharia’a-compliant financing is now potentially available worldwide. John Dewar has seen Islamic financing used in deals in Texas and has recently been consulted on its possible use for a project in Vietnam. The lack of liquidity in the banking sector, tripling of margins, normalising of deal structures, improved regulatory adjustments and distrust of the conventional banking sector have fuelled growth in the Islamic finance sector. Population growth and growing GDP also helps – money is being deposited and is available for investment. The heartland is in big project finance and asset based deals. The Middle East has always favoured investment in infrastructure but Islamic banks are growing further afield. Conventional banks such as HSBC have now established Islamic finance divisions and John Dewar believes that these giants of conventional financing they will become the major players in Sharia’a financing in the next 10-15 years.

Principles
Sharia’a-compliant deal structures are based on principles of trading used in the Islamic world for centuries. This means that there is a basis of consensus to work from. There are two main types of deal: asset-backed deals and risk-sharing deals. All deal structures are used to adapting to commercial realities, whilst adhering to strict principles: -
• Riba: any profit must be linked to performance of a real asset and a share of the risk. (As a shorthand riba is often referred to as the no-interest principle.) In practice it means that the lender must own the asset before advancing money.
• Gharar: there must be no uncertainty in the deal. This is much stricter than the certainty required in English law contracts.
• Maisir: there must be no speculation, such as gambling. This makes contracts which work on principles similar to derivatives controversial. The Swaps and Derivative Association (ISDA) has devised a Sharia’a-compliant document but this is not universally accepted.
• Unjust enrichment of the lender is forbidden.
• Unethical purpose or trading is prohibited (so a project cannot be connected to alcohol or gambling, for example).

Within these principles John Dewar felt there was considerable flexibility within financing arrangements. There was a sense of collaboration to find an appropriate commercial and ethical solution. "Everything is permitted unless it’s prohibited."

The process
Every Islamic company has a committee of Sharia’a scholars who scrutinise day-to-day activity of the company; new transactions (non-repeated) must be checked and amended if required. At the end of the year the scholars issue a letter stating that the business has been run according to principles of Sharia’a law, which will be included in the company’s annual report.

When working on a deal the contract must be submitted to the Sharia’a board for scrutiny. The contract may have to be translated as well. Aside from any delays in translation, the board may take 2-3 weeks to comment on the contract. The comments must then be addressed by the lawyers, who return the document to the Sharia’a board. When they are happy, the main board can assess the contract from a commercial perspective.

Large transactions will be reviewed by the committee, and if approved a legal opinion (fatwa) will be issued stating that the deal is Sharia’a compliant.

Drafting the contract
When drafting the contract, which is usually based on English law, you must consider Sharia’a principles and the local framework as well. Some national laws are mandatory and cannot be derogated from. Also, if a court in the Middle East, for instance, is asked to apply English law, they may not want to disregard the legal practices of that country. There are many considerations in drafting. The client must be advised of potential problems and when considering so many legal practices it is not always possible to ‘draft your way out of it’.

Following the Shamil Bank judgment (Beximco Pharmaceuticals Ltd and others v Shamil Bank of Bahrain EC [2004] EWCA Civ 19) which stated that Sharia’a law was not a temporal law and could not be applied to a contract, there was much consternation in the Middle East as to the effect on Sharia’a compliant contracts. Consequently, in Saudi Arabia, there is a preference for using Saudi law and not English law. This affects inter-creditor relationships. The complex deal structure usually has an international element. To make the deal acceptable to the other creditors there is usually a provision that those creditors can have disputes heard in English courts under English law.

Deal structures
Deal structures in Islamic finance broadly fall into the following categories: -
• Asset-backed: -
o Murabaha: cost plus financing
o Ijarah: lease purchase financing
o Istisna’a: commissioned manufacture of specified assets
• Risk-sharing: -
o Mudaraba: investment fund arrangement or financed by way of trust
o Musharaka: joint venture or financed through partnership
• Sukuk: Sharia’a-compliant financial instruments including bonds
• Sharia’a-compliant derivatives

The above structures can be used individually or in combination. Flexibility and adaptability appear to be hallmarks of Sharia’a financing.

John Dewar foresees rapid growth in the next 10-20 years.

If you’d like to find out more, John Dewar has edited the book International Project Finance published in 2011 by Oxford University Press which has a chapter on Islamic Finance. A new edition will be published in 2014.

A review of Christa Band's visit to the Commercium Colloquium

Cintia Aguilar (GDL 2012/3) reviews the 04/02/2013 visit of Christa Band, partner at Linklaters LLP:

1. HOW HAS THE LEGAL MARKET EVOLVED OVER THE YEARS?

Work experience
Students are able to acquire work experience before commencing a career in law. Before, there were no opportunities to take vacation schemes or other related work experience to learn first-hand the role and skills required of a commercial solicitor.

Working hours
Technology has made it possible to work 24/7. However, it has also made it easier to work outside the office allowing individuals to tailor and balance their schedules.

Relationship between law firms and clients
In an increasingly competitive market clients often send their work to a number of different firms.

Relationship between commercial solicitors and barristers
The relationship has become less formal and more collaborative.

Documentation
The amount of documentation to handle has increased significantly. Managing such volume of material and form of documentation has led to improvements and development of e-disclosure.

Diverse roles
Law firms are employing more and more professionals from other fields – management, marketing, etc. – rather than lawyers thinking that they could/should undertake every role.

2. HOW TO MAKE THE MOST OUT OF LIFE AS A COMMERCIAL SOLICITOR

Enjoy the job
A decision to become a commercial solicitor based on practical experience will more likely turn into a more enjoyable experience. The demand on time the job bears on family, friends and relationships must be worthwhile.

Ask questions
It is important to understand the deal every step of the way. That will require sometimes asking obvious questions. Choose an appropriate moment to pose these questions to the team. It is also important to learn from the senior lawyers around and to contribute to the debates.

Never disappoint
Only agree to realistically achievable aims.

Work hard and be nice
You will move further by being a decent person.

Benefits of training as a lawyer
Training as a lawyer will provide you with a good working structure that allows you to take on problems with a logical approach. These skills are very transferrable.

Personal take
The best thing about the job is that it is unpredictable. It is constantly challenging.

3. WHERE ARE WE GOING?

Business is more global
Emerging markets are becoming important players in the world economy. English law will compete with U.S. law for business in this market. This will require firms to become more adaptable and global. Language skills and cultural adaptability are necessary skills for future lawyers.

Firm of the future
The law firm of the future will need to be flexible and diverse. To retain talent law firms will have to tailor greater choice and opportunities for increasingly broadminded individuals. Technology may be able to assist them in suiting other commitments. However, the legal business is a people-based business that requires teamwork in person. A balance must be struck.

A review of Chris Stoakes's visit to the Commercium Colloquium

Agnieszka Lukaszuk (GDL 2012/3) reviews the 12/11/2012 visit of Christopher Stoakes, bestselling author of All You Need to Know About Commercial Awareness and All You Need To Know About The City:

Commercial awareness operates at different levels:
• money
• strategy
• business

Money
• why companies need money and how they use it
• capital, debt and equity
• ‘gearing’ - term used to describe the level of a company's net debt compared with its equity capital, and usually it is expressed as a percentage or ratio
• sources of funding
• loans and bonds
• profit and loss
• balance sheet
• distributable profits (what it's all about)
• market perception
• share price
• M&A

Strategy
• vision
• mission
• normative strategy (see the Harvard Management Update, "Beyond the Carrot and the Stick: New Alternatives for Influencing Customer Behavior")

The Boston Consulting Group growth-share matrix (see Bruce D. Henderson's article, "The Experience Curve - Reviewed IV. The Growth Share Matrix or The Product Portfolio")

[Image source: hbr.org]

Organisational uses of scenarios (see Arie de Geus's article, "Scenarios and Decision-Taking")
• ‘what if…?’
• contingency planning

PESTL
• Political
• Economic
• Social
• Technological
• Legal

Technology
• IBM v Microsoft (vision of the world)
• not the best but the most (Sony VHS v JVC Betamax)
• convergence of platforms (mobile/TV/laptop/MP3)and of content (mobile/videogame)
• import of viewing habits
• digitalisation (photography)
• disintermediation (iTunes)
• long-tail effect (Amazon)
• hidden value (eBay)
• social networking (Facebook, MySpace)
• virtual world (Second Life)

Porter's five forces (see Michael E. Porter's article, "The Five Competitive Forces That Shape Strategy")

[Image source: hbr.org]

Business and corporate structure
• chairman, director, CEO, MD and executive
• role of the board
• remuneration committee

Organisational design
• functions (marketing, R&D, logistics)
• role of general counsel
• brand management

A review of Robert Sutton's visit to the Commercium Colloquium

Ulrich Zanconato (the Commercium Colloquium's Research Director, GDL 2012/3) reviews the 05/11/2012 visit of Robert Sutton, former senior partner of Macfarlanes LLP:

Robert Sutton, senior adviser and former senior partner at Macfarlanes, was the guest of the second Commercium Colloquium event held this year, and over fifty students came filling up the room to hear him talking about commercial awareness.

The incipit was a strong statement, "commercial awareness is not as important as people say". Mr Sutton went on explaining to the quite baffled students that as a lawyer you do not get paid for your commercial awareness, but for your knowledge of the law. An exhortation, thus, to focus on the law and to study hard in order to acquire the best possible knowledge of the law. "Black letter law is the start, commercial awareness is the cherry on the cake. There is no point in having the cherry without the cake," summarised Mr Sutton.

This cherry on top of the cake can, however, by no means be disregarded. In the last 25 years lawyers have come to occupy a much more central position in transactions. Lawyer are now regarded as a very important part of the client's advisory team. Hence, they must make sure to understand not only the legal structure but also the economic rationale of the transaction. This is particularly important because lawyers, by spending increasingly more time with clients, need to speak their same language and be proactive in understanding what the clients' needs are, from a business point of view.

Commercial awareness is very important to City law firms and therefore applicants must show their commercial acumen in the interview. Since all applicants will have baked a delicious cake, it is the cherry on top that can prove decisive.

How should a student become more commercially aware? Mr Sutton gave three key pieces of advice: research the firm you apply for; read the Financial Times; speak to your friends in business.

During the final Q&A session, Mr Sutton compared the degrees of commercial awareness in the US and the UK and argued that US lawyers are more commercially aware, which is a factor, together with the relevance of litigation, for their stronger domestic influence and importance, if compared with the UK.

Furthermore, Mr Sutton advised students who will have a gap year before starting their training contract to go abroad, intern in foreign law firms and improve legal and language skills. To go to Bejing and to come back fluent in Mandarin would be very enriching, both from a personal and professional point of view.

On a question whether macroeconomic trends should determine the fields students specialise in, Mr Sutton expressed the view that, although by way of example M&A and private equity are very unlikely to return to their pre-crisis level, students should not look at macroeconomic trends but only at their passions when deciding their field. Law firms are still hiring people in their M&A and private equity departments, while other departments like financial investigation and financial litigation are comparatively increasing in importance.

The insights given by Mr Sutton were very helpful and appreciated by the attending students, as shown by the many questions they posed. Apart from these valuable insights, Mr Sutton left the students also with a positive note: the international importance of UK law is not waning and overall we can all be optimistic about the future of London as a legal hub.

Another review of David Cheyne's visit to the Commercium Colloquium

Tom Mason (the Commercium Colloquium's Treasurer, GDL 2012/3) reviews the 01/10/2012 visit of David Cheyne, former senior partner of Linklaters LLP:

‘Understand the bigger picture and you’ll have fun.’

As a junior lawyer you will be doing a lot of due diligence, which is boring.

Commercial awareness means looking up accounts, gearings, price/earnings ratios and so forth. More importantly it is understanding what your commercial clients are after. Do they want a contract, a loan? What is the size and nature of the deal?

The fundamental principle of commercial awareness is ‘the whole way you handle the deal’. This includes how you work with people in groups, as well as dealing with the client.

It is how you deal with the client. Can you talk to them about their business? A limited understanding of the economy of the issue is an asset. Mr Cheyne said that he had worked a great deal with mining interests, and while he didn’t have a detailed knowledge of the area he knew all the fundamental principles, and could at least tell the difference between copper and iron.

When negotiating on behalf of the client it is not a good idea to play cards you don’t have. Your client will not thank you for ruining a deal by being too aggressive.

It is also important that the client should understand your trade. Explain what you are doing to them in a way that means they appreciate the way you work. If they understand what you’re doing they’re likely to trust you a great deal more.

The hours are very long. On the Mannesmann deal his team was working for 100hrs/week for 5 weeks, and they were still volunteering for more.

‘If you never ask a stupid question then you’re a rotten lawyer’ – Mr Cheyne doesn’t trust people who don’t occasionally ask a stupid question. It shows that they’re small minded.

An expert is ‘someone who knows more and more about less and less’. They are increasingly less valuable in an organisation. Aim towards being more of a generalist.

‘Don’t be beastly to the people at the bottom. They have influence, and may rise.’

Don’t associate with people you don’t like more than you have to. ‘Get busy with people who appreciate you’. Get a client you’ll like.

Regarding bubbles
• We are probably not in a tech bubble this time.
• ‘Buy on hope, sell on reality.'
• These days more investments are done by hedge funds, who dump the investment quickly after making a profit. Traditionally investment was done by insurance and pension companies, which are more likely to keep their investments.

Are there too many lawyers?
• Mr Cheyne has always thought it would be rather nice if there were only three or four firms.
• However, there is not a ‘fundamental oversupply’; they are now far better managed. It used to be that a partner wouldn’t have to do much work, this is now impossible.
• ‘We exaggerate the difficulty’ that the legal sector is in.
• Disclosure has had an enormous impact on the sector – people now know how much people are paid.
• Clients now like to hire more than one law firm.

The collapse of the eurozone?
• Mr Cheyne doesn’t think the eurozone is going to collapse. There will be a ‘limping crisis’ for a long time, but no actual collapse. He referred to the fact that the 70s were a period of continual crises. Lawyers need people to ‘do things’, and a looming crisis tends to paralyse. However a constant crisis produces the expectation that there will not be an imminent disaster, which means that they get used to it. Every time the market fluctuates upon hearing bad news from the eurozone it fluctuates less. Business will begin to return to normal.
• He commented that inflation might save the eurozone. Governments pretend to hate it but actually love it, as long as it is slow enough for them not to be blamed. It ruins creditors.

Investment banker v lawyer
• Investment bankers are in first, involved in pricing, presentation and basically work like estate agents.
• Lawyers are involved in the mechanics and drafting.
• All mergers and acquisition deals need both.

The alternative business structure
• Mr Cheyne doesn’t care, although while he was at Linklaters he was often tempted to sell it for enormous amounts of money.
• Lawyers are quite neurotic, and are hard to manage – their temperament is unlikely to be improved by someone else taking their profits. The creative lawyers won’t work well in that environment.
• Alternative business structures will do well with ‘volume’ work, which doesn’t require much imagination.

The most important quality of a lawyer
• ‘Willingness to give advice’
• You have to have the nerve to say ‘This is the answer.’
• Mr Cheyne is very proud that he once managed to deal with a client by saying ‘No, No, Yes’ to a sequence of three questions.
• You need to be able to say ‘This is the problem; this is the solution.’
• It’s probably the case that if you’ve written a memorandum which is 32 pages long you probably won’t understand.
• Being willing to give a direct answer promotes loyalty in the client.
• You have to be willing to put your ‘head on the block’ and express a view.
• If you don’t know, say so (perhaps not when you’re a junior lawyer). When Mr Cheyne says he doesn’t know people seem to be impressed since they assume it’s an indication that the area is very complicated.

Commercial barristers
• Commercial solicitors tend to go to them for an authoritative opinion if they’re at a loggerhead between two opinions. They are excellent advice and are great at finding the legal answer.
• The Bar is now quite commercial – they want to know about the background of an issue is, and understand the market significance.
• Barristers' is strength in advocacy – they know how to present a case and how to get it through court.
• Barristers don’t negotiate, and don’t do due diligence.

What makes a great trainee?
• Enthusiasm – enjoy it.
• Commitment – hard work is essential.
• Listen, accept everything, and do everything you can.
• Being enthusiastic and committed will mean that you get interesting work.
• You must be keen and interested.
• Work long hours.
• Someone who does really ‘rotten’ (unpleasant) work will be rewarded with interesting work.
• Volunteer for the hard work keenly.
• Trainees used to be idle but badly paid. The learning curve was extreme and based around being thrown into things. In his first year Mr Cheyne was given a £25m deal and given a week to draft a £250m loan agreement, as well as a solo private acquisition job.
• These days trainees are given far more help, but it is now ‘too easy’, which leaves people doing far more work than you need to.

On being teetotal
• Mr Cheyne doesn’t drink.
• Most lawyers don’t actually drink much, and only an idiot gets paralytic drunk. When you’re drunk you make stupid comments that you think are funny.
• Once in Korea Mr Cheyne was negotiating with a man so exhausted that he was reading a document upside down. He settled rather fast.

English law
• US litigation is mostly domestic.
• English law is the biggest law for finance and contracts in Europe, partly because it’s very predictable.
• If Spain is lending money to Poland it is likely to use English law.

Chinese law
• Chinese Law Firms are likely to be working for mostly Chinese clients.
• No Chinese lawyer can say with certainty what their law means.
• European contract law would be an absolute disaster.
• English law is very good for cross border deals.

Secondment
• Secondment to a client is often a reward and a form of making someone’s departure ‘gentle’.
• International secondment helps give an insight into the ‘big picture’, but there is an (untrue) perception that it hinders the chance of being partner.

'Preconceptions are invariably wrong.'

(Terms referred to included greenshoe and grey market.)