Offshore law firms spread to all points of compass

  • 11 Jun 2007
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Offshore law firms are merging and expanding globally to meet the increasingly sophisticated demands of clients. Channel Islands firms are keeping a close eye on raiders from the Cayman Islands and Bermuda, and vice versa. And away from the main skirmishes, Ireland has become a dominant force in offshore Europe. Neil Day reports.

It’s a tough life working for an offshore law firm. When the Mourant flag was being raised in yet another jurisdiction last month, a team member logged the occasion in his journal: "Bright sunshine, light winds, minus 25 degrees."

Hang on a minute. Minus 25 degrees? That can’t be right. Surely the only reason a lawyer would want to give up his partnership in a magic circle law firm to join an offshore firm would be for the lifestyle?

"We’re struggling to staff that office at the moment," jokes Ben Robins, a partner at Mourant du Feu & Jeune in St Helier, Jersey.

Indeed, the Mourant flag was raised not by Robins, but by a friend winning the Polar Challenge race to the magnetic North Pole as part of the team Bearing 360˚ North, which was raising funds for Orchid, a charity dedicated to men’s cancers.

Although opening an office at the North Pole is a step too far for even the most ambitious offshore law firms (even though the magnetic North Pole is in onshore Canada), the areas of the globe in which the leading offshore firms do not have a presence have shrunk dramatically in recent years.

In February, for example, Mourant announced that it was merging with Cayman Islands firm Quin & Hampson to boost its presence in that market. Just a week later it became the first offshore law firm to open an office in New York. These are alongside its offices in Dubai, Guernsey, Jersey, London, Luxembourg and San Francisco.

And in January, Appleby Hunter Bailhache added to its offices in Bermuda, the British Virgin Islands, the Caymans, Jersey, London and Hong Kong when it became the first offshore law firm to open an office in Mauritius.

"The last three years has been one of change and evolution for the firm," says Shaun Morris, managing partner at Appleby in Hamilton, Bermuda. "It will take time to fully integrate our practices, but we are very pleased with where we are right now and very encouraged by the strength of our presence and brand in the marketplace. We are now present in seven jurisdictions and well on our way to achieving our objective of establishing ourselves as the leading offshore financial firm."

The multi-jurisdictional mantra

Morris’s experience and sentiments are not dissimilar to those of practitioners at the other firms — Maples and Calder, Mourant and Walkers, to name a few — that view international expansion as the way forward. Since they face similar competitive pressures, this is perhaps not surprising.

"Right now we are a leading law firm in the Channel Islands and we have to do two things," says Stephen Ball, who joined Mourant du Feu & Jeune as chief executive officer a year ago. "Firstly, we have to nurture the Channel Islands franchise, nurture our client base, and secondly, we need to look after our clients in other offshore jurisdictions."

For the offshore lawyers, "multi-jurisdictional" has become the mantra of the times. "We were one of the first firms to move beyond our home jurisdiction. That was because it was what our clients wanted," says Shaun Denton, a partner at Maples and Calder in London. "Our clients are increasingly sophisticated, they do jurisdiction-shop, and for particular transactions they will favour one jurisdiction over another. It is, therefore, important for us to have coverage in the popular jurisdictions."

Denton’s colleague Linda Martin, a partner at Maples and Calder in London, says this was borne out by her experience in Hong Kong. "A number of our Chinese clients wanted both Cayman and BVI companies and related legal services," she says. "Our ability to offer both products was a great advantage. Our multi-jurisdictional strategy has been very successful for us."

The firm is being reactive as well as proactive in its expansion. "Maples Finance Ltd, the side of the business that provides administration services, has just opened an office in Luxembourg," says Denton. "That was motivated by a specific request from clients looking, for tax reasons, to replicate in Luxembourg — with Maples Finance as the common corporate administrator — a significant platform that we had set up for them in Cayman. That said, we have been encouraged by the volume of instructions for this new office from other clients in the short time it has been in operation."

Shaun Morris says the merger between Appleby Spurling Hunter and Jersey’s Bailhache Labesse, announced in May 2006, has paid dividends.

"That was only completed in September, but thus far the merged entity has benefited significantly from the move," he says. "We can now refer work to Jersey from the other entities within the group and Jersey is able to refer work to areas elsewhere. That is the benefit of having a wider organisation like this: it gives us the opportunity to provide advice and services to our clients, no matter where they are around the world."

To sea or not to sea

This argument clearly carries weight. A client seeking an independent but informed view of the different jurisdictions is more likely to be convinced by a single, cross-jurisdictional review examining Bermuda, BVI, Cayman, Jersey and Mauritius — by five Appleby partners and associates — than by views from separate firms in each area.

Shaun Morris, Appleby
 Hunter Bailhache:
"our objective is to
 become the leading
offshore financial firm"

But lawyers say that, in practice, law firms’ moves into new jurisdictions are hampered by inertia.

"In terms of competition, at the moment we have yet to see them really take on any significant market share," says one Jersey lawyer, refering to the Cayman firms that have moved into the Channel Islands. "We are obviously keeping a very close eye on them as they are a potential threat to our business, and we are keeping the situation under review as far as moving into Cayman ourselves is concerned.

"However," the lawyer add, "we are constantly speaking to our clients and if you speak to the partners at the City law firms that refer significant amounts of work to the offshore law firms, if they are setting up a deal in Cayman they will go to one of the big Cayman firms, and if they are setting up a deal in Jersey they will come to one of the big Jersey firms."

He says some firms seem to overestimate the value of their brand in the offshore world. "We don’t think we can go into the Caribbean and take on the Maples and Calders and Walkers because they are doing the same job that we do in Jersey and they are doing it very well," he adds, "and it would be a very difficult thing to take them on in their own backyard."

This has not deterred Mourant in its efforts to push into Cayman through the merger with Quin & Hampson and the opening of its New York office. But Mourant’s decision to go for a merger with Quin & Hampson supports the Jersey lawyer’s argument that starting an office afresh in a competing jurisdiction — or even merging with a law firm that is not a leading commercial player — is not the way to grab market share. In fact, Mourant has had an office in Cayman since 2004, but still felt it needed the boost of a merger.

"One reason I think we are going to succeed in Cayman is that Quin & Hampson is a 40 person legal and administration services firm," says Ball. "With Quin & Hampson I really wanted critical mass — greater presence and capabilities in Cayman."

He believes Mourant has the right strategy to crack the market, but is realistic about the challenge that lies ahead.

"Firstly, Quin & Hampson is an established brand with its own links deep in the US market, and don’t forget that they have been around for a long time," he says. "Charlie Quin has been practising law in Cayman since 1984, and has been integral to the Cayman legal community.

"Secondly, in trips to New York and Washington existing and potential clients have been very receptive and excited about the opportunities of having another adviser in Cayman. Following our meetings and the very positive reception we received, we are confident of winning new work."

Ben Robins, a partner at Mourant du Feu & Jeune, adds that the firm has already been building its brand in the US through its administration business. "Particularly in funds circles the Mourant brand is starting to get a lot better known in the US and that strong administration element differentiates us from the offshore competition generally," he says.

Ireland takes the lead

Away from the two competing offshore financial centres, growth appears to be less of a challenge. Denton at Maples and Calder, for example, cites Ireland as a key driver.

"Ireland as the domicile for debt issuing vehicles has just gone from strength to strength over the last four years," he says. "The catalyst was the introduction of the special taxation regime for section 110 companies, establishing Ireland as, in effect, a tax-neutral jurisdiction for this transaction type.

Linda Martin,
Maples and
 "our Dublin
offering is unique"

"It has taken over as the jurisdiction of choice within Europe and, in the numbers game, beats the principal competitors, the Netherlands and Luxembourg, hands down. The most recent figures for listed debt deals show Ireland has for the first time overtaken Cayman to take top spot. This is particularly significant as it is against a background of record numbers of Cayman-based deals."

Since Maples and Calder established its Dublin presence in January 2006, the number of partners has more than doubled and Dublin-based staff now exceed 80. The firm’s latest hires are Andrew Doyle, a senior partner at Matheson Ormsby Prentice, who joins Maples as managing partner of the Dublin office, and David Maughan, a prominent Irish capital markets and asset finance practitioner, who joins from A&L Goodbody.

"Our Dublin offering is unique," says Martin at Maples and Calder. "We are the only firm that can offer a one-stop shop, with administrative services, legal services and listings under one roof."

Indeed, while geographic expansion is a popular growth strategy — several leading offshore players are considering offices in Dubai and the broader Middle East — another is to offer a broader range of products.

"We think the area where there is more opportunity to expand is on the fiduciary services side, where the same skillset is necessary across jurisdictions," says Shane Hollywood, a structured finance and securitisation partner at Bedell Cristin and director of Bedell Cristin Trust in Jersey. "For years we have been getting involved in what appear to be natural add-ons to the core corporate administration function."

This explains the firm’s move into asset backed commercial paper conduit administration. Since March 2006 it has been running Landesbank Hessen-Thüringen’s Opus Alpha ABCP conduit and Hollywood says the firm is in advanced talks to run two other, bigger conduits. He hopes Bedell Cristin will be able to pick up more mandates, having now established a track record: a pre-requisite for many potential clients.

While taking on the likes of Bank of New York, JP Morgan and Deutsche Bank might not seem any less daunting than taking on their Cayman competitors, Bedell Cristin can at least offer something different from the goliaths of the industry: it is not a competitor with its clients, as the larger players are.

"And whilst the London office is aiming at getting the conduit business," says Hollywood, "it is now fully geared up to provide the full range of corporate management and administration services to UK vehicles participating in any kind of structured finance arrangement."
  • 11 Jun 2007

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 163,028.47 711 8.04%
2 Citi 160,005.15 642 7.90%
3 Bank of America Merrill Lynch 132,268.74 528 6.53%
4 Barclays 127,185.71 494 6.28%
5 HSBC 106,407.22 534 5.25%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Bank of America Merrill Lynch 12,912.95 35 6.60%
2 BNP Paribas 12,334.48 61 6.31%
3 UniCredit 11,196.47 58 5.73%
4 Citi 9,580.75 37 4.90%
5 Deutsche Bank 8,953.95 35 4.58%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Morgan Stanley 5,578.64 26 10.66%
2 JPMorgan 4,866.13 28 9.30%
3 Goldman Sachs 4,404.70 21 8.41%
4 Citi 3,774.39 24 7.21%
5 UBS 3,602.23 16 6.88%