city legal index 2015

City Legal Index 2015 quarter 2 Released: 27 August 2015

www.lawsociety.org.uk

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Contents

Page

City Legal Index Structure of indices 3

City Legal Index Summary 2015q2 4

Top 50 UK law firms deals All deals 5

Large deals Jan-June 2015 7

Top 50 UK law firms deals Deals by industry 8

Top 50 UK law firms deals Deals by matter type 10

Data - Deals of top 50 UK law firms by industry (Indices 2009=100) 12

Data - Deals of top 50 UK law firms by industry (Actual figures) 13

Data - Deals of top 50 UK law firms by matter type (Indices 2009=100) 14

Data - Deals of top 50 UK law firms by matter type Actual figures) 15

Appendix Using deals as an indicator of future changes in GDP 16

Contact details for further information 17

The next release of the City Legal Index is expected to be in February 2016 and will include data up to the end of December 2015.

www.lawsociety.org.uk 3

City Legal Index Structure of indices The Law Society/Legal Monitor City Legal Index tracks publicised business deals facilitated by the top 50 UK law firms, providing a gauge of City firm input into the wider economy. The headline figures for the total number of deals compares the number of deals in a quarter with the average number of deals over the first year of data collection in 2009, which is set to 100 for the index. The underlying trend in the number of deals is shown by the change in the 1-year moving average in the figures (i.e. the change in the average number of deals over the previous 4 quarters up to and including the quarter under review). Indices are also produced for the average value of deals and the total value of deals along with the 1-year moving averages for these figures.1 The total number of deals, average value, and total value are all analysed by the main industry sectors generating the deals and by the main matter type of deals.2 The 7 broad industry sectors tracked are:

Finance & Banking Fund/Investment Management Technology, Media & Telecoms Energy & Utilities Real Estate & Construction Manufacturing Other (covers a range of sectors including Healthcare, Life Sciences & Chemicals;

Government & Public Policy; Transport and Logistics; and Business Services)

The 5 broad transaction/matter type categories tracked are:

Corporate/Commercial Banking & Finance Mergers & Acquisitions Property/Property Finance Other (covers a range of matter types including Antitrust/Competition, EU & Trade;

Planning & Development; and Intellectual Property)

The data in the City Legal Index is taken from Legal Monitor's Market Tracker product, a comprehensive database of all publicly disclosed deals and representation activity. The product includes data on more than 80 leading global law firms by fee income, covering 17 key practice areas and 25 industries. Data is derived from a comprehensive base of primary and secondary sources, including law firm websites, trade & legal press and multiple news portals.

1 Value data is not available for every deal so the total value and average value of deals figures involve an element of estimation. In addition, these figures can be affected on a quarter-by-quarter basis by one-off high value deals the 1-year moving averages partially smoothes out the effects of these outliers. 2 The detailed Legal Monitor data breaks down deals by 25 industries and 30 matter types which have been aggregated into 7 broad industrial sectors and 5 broad matter type categories.


City Legal Index Summary 2015q2

The total number of deals continued to decrease in the first half (Jan-June) of 2015. The number of deals in 2015h1 was 6.2% lower than in the comparable period the year before (2014h1).The rate of decrease in 2015q1 was also greater than in 2014h2. However, there is some indication that the number of deals may have increased towards the end of the first half of 2015.

This could indicate that UK GDP growth could slow down in 2015q3 but begin to pick up

again in 2015q4.

The number of deals index fell to 138.0 in 2015q1 from 159.8 in 2014q4. However, the index increased to 152.7 in 2015q2.

The average value of deals (£m per deal) increased in the first half of 2015. The

average value of deals in 2015h1 was 15.6% higher than in the comparable period the year before. As a result, the total value of deals (= total number of deals x average value of deals) in 2015h1 was 8.4% higher than in the comparable period the year before. There is some indication of an underlying increase in average values. This increase does however seem to be largely due to the large Royal Dutch Shell deal in April and large deals in the telecoms sector, and also because of the appreciation of the pound against the US dollar increasing the value of deals that are denominated in dollars.

The average value index increased to 70.5 in 2015q1 and to 75.6 in 2015q4,

compared to 68.5 in 2014q4.

The total value of deals index increased to 97.9 in 2015q1 and to 116.1 in 2015q2, compared to 97.6 in 2014q4.

The largest decreases in number of deals in the first half of 2015 were in the

Technology, Media & Telecoms sector, and the Energy & Utilities sector. However the decrease in the number of deals in the first half of 2015 seems to be wider and has affected a broad range industries such as healthcare, chemicals, transport, transport, government and retail. Deals did increase in the Finance & Banking, Real Estate & Construction, and Manufacturing sectors.

Note This update is based on figures up to the end of June 2015. The previous report was based on figures up to the end December 2014.

Total numberof deals

Average value of deals(£m/deal)

Total value of deals(£bn)

2015q1 2015q2 2015q1 2015q2 2015q1 2015q2

Index 2009=100 138.0 152.7 70.5 75.6 97.9 116.1

Q/Q % change -13.7 10.7 2.9 7.2 -11.1 18.7

Y/Y % change -8.9 -3.5 17.0 14.1 6.5 10.1

Actual figures 664 735 £650m £697m £432bn £512bn


Top 50 UK law firms deals All deals

The number of deals in 2015h1 was 6.2% lower than in the comparable period the year before (2014h1).The rate of decrease in 2015h1 was also greater than in 2014h2. However, there is some indication that the number of deals may have increased towards the end of the first half. There is evidence that the number of legal deals is an indicator of the direction of future growth in the economy as a whole in 6-9 months time. (See Appendix). Therefore the decrease in the number of deals over most of the first half of 2015, and increase towards the end of the period, may indicate that UK GDP growth could slow down in q3 but begin to pick up again in q4. The average value of deals (£m per deal) increased significantly in the first half of 2015..The average value of deals in 2015h1 was 15.6% higher than in the comparable period the year before. As a result, the total value of deals (= total number of deals x average value of deals) in 2015h1 was 8.4% higher than in the comparable period the year before. There is some indication of an underlying increase in the average value of deals. However, the increase in average value in the first half was affected by the large Royal Dutch Shell deal in April, and by three large deals in the telecoms sector in February and March. These large deals accounted for over half of the increase in average value in the first half. Also, some of the increase was due to changes in the pound exchange rate in the first half. In particular, the depreciation of the pound against the US dollar increased the pound value of deals denominated in dollars. The average value of deals would have increased by 12.6% in h1, instead of 15.6%, if the pound had not depreciated against the dollar over this period.

The total number of deals of the top 50 UK City law firms continued to slow down in the first half of 2015, although they increased towards the end of the period.

This could indicate some slowing down of UK economic growth in 2015q3, though possibly picking up in q4.

The average value of deals increased significantly in the first half. There is some indication of an underlying increase in average values. However the majority of the increase was due to one-off large deals, and also the depreciation of the pound against the US dollar.


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Source:Law Society/Legal Monitor

(29 July 2015)

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Large deals January-June 2015 Large deals over the period January 2015 to June 2015

Date Value(£bn) Client(s) Industry Matter type

Jan 2015 £6bnRobert G. Miller (CEO, Albertsons)

Retail/ConsumerM&A: Acquiror's Counsel

Feb 2015 £13bn Deutsche TelekomTechnology, Media & Telecoms

M&A: Seller's Counsel

Feb 2015 £13bn OrangeTechnology, Media & Telecoms


Mar 2015 £11bn GlaxoSmithKlineHealthcare, Life Sciences & Chemicals

Banking & Finance - Capital Markets: Equity

Mar 2015 £10bn TelefonicaTechnology, Media & Telecoms


Mar 2015 £7bnIslamic Development Bank

Finance & BankingBanking & Finance - Capital Markets: Debt

Mar 2015 £5bn Sumitomo ChemicalHealthcare, Life Sciences & Chemicals

Banking & Finance - Capital Markets: Structured/Project

Apr 2015 £47bn Royal Dutch Shell Energy & UtilitiesM&A: Acquiror's Counsel

Apr 2015 £18bn GE Capital Finance & BankingAsset Sale: Seller's Counsel

Apr 2015 £7bn GTECH GamingBanking & Finance - Capital Markets: Debt

Apr 2015 £7bnBank of China,BTMU,Citi,Deutsche,HSBC,JP

Finance & BankingBanking & Finance - Bank Lending/Credit Facilities

Apr 2015 £5bn GTECH Gaming M&A

May 2015 £19bnAbbey National Treasury Services,Santander UK


May 2015 £6bn Royal Dutch Shell Energy & UtilitiesBanking & Finance - Capital Markets: Debt

May 2015 £5bn SiemensDiversified Conglomorate

Banking & Finance - Capital Markets: Debt

May 2015 £5bnDeutsche Bank Securities,Barclays Capital,Citigroup Global


May 2015 £5bn Aviva InsuranceBanking & Finance - Capital Markets: Debt

Jun 2015 £10bnConsortium of Lenders (Unspecified Client)

Finance & BankingBanking & Finance - Bank Lending/Credit Facilities

Jun 2015 £6bn DBS Bank Finance & BankingBanking & Finance - Capital Markets: Debt

Jun 2015 £5bn Aviva InsuranceBanking & Finance - Capital Markets: Debt


Top 50 UK law firms deals Deals by industry

The number of deals in the Energy & Utilities sector in 2015h1 was 19.4% lower than in the comparable period the year before, reflecting the decrease in oil prices. The number of deals in the Technology, Media & Telecoms sector in 2015h1 was also 20.5% lower than in 2014h1. (Although a large part of this is due to the particularly high number of deals in the sector towards the end of 2014h1. Taking out the high number of deals in the sector towards the end of 2014h1, the number of deals in 2015h1 would have been 4-5% down on 2014h1). The

sector includes a wide range of industries including healthcare, chemicals, transport, government and retail, and therefore indicates a wider downturn in deals in the first half of the year. The number of deals in the Finance & Banking sector and the Real Estate and Construction sector in 2015h1 were significantly higher than in 2014h1. Finance & Banking sector deals were 7.6% higher, therefore to some extent reversing the downward trend seen in this sector over the previous year. Real Estate and Construction sector deals were 14.5% higher, reflecting the slightly more buoyant UK commercial property market. Deals in the Manufacturing sector were also 3.8% higher, indicating that the sharp falls seen in the second half of 2014 may have come to an end.

The largest decreases in number of deals in the first half of 2015 were in the Technology, Media & Telecoms sector, and the Energy & Utilities sector. However the decrease in the number of deals in the first half of 2015 does seem to be wider and has affected a broad range industries such as healthcare, chemicals, transport, transport, government and retail.

Deals increased in the Finance & Banking, Real Estate & Construction, and Manufacturing sectors.


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Finance & Banking

Fund/Investment Management

Technology, Media & Telecoms

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Other


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Top 50 UK law firms deals Deals by matter type

There is less information on deals relating to litigation/arbitration matters, and therefore these are not included in the figures presented elsewhere. However, to the extent that we do have information on litigation/arbitration deals, the figures show that there was a significant increase in these deals in 2014, but since the beginning of this year there has been a large fallback. The number of litigation/arbitration deals increased from 106 in 2014q1 to 139 in 2014q4, but then fell back to 98 in 2015q2.

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The number of deals in the broad Corporate & Commercial matter type category in 2015h1 were 28.7% lower than 2014h2.

Deals in the Property/Property Finance matter type category in 2015h1 were 4.8% higher than in 2014h1.

Separate figures from the Legal Monitor database show that litigation/arbitration increased significantly in 2014, but fell back in the first the first half of this year.


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Data - Deals of top 50 UK law firms by industry (Indices 2009=100)

Total number of deals 2011 2012 2013 2014 2014q3 2014q4 2015q1 2015q2Finance & Banking 108.7 121.6 145.7 140.8 139.9 153.2 117.6 172.8Fund/Investment Management 157.7 143.0 153.4 152.5 165.2 150.8 161.3 133.8Technology, Media & Telecoms 123.9 147.9 127.6 144.8 135.0 157.1 95.7 132.5Energy & Utilities 142.2 163.9 145.6 177.6 182.3 190.5 136.1 136.1Real Estate & Construction 118.3 129.0 235.1 248.1 201.5 265.6 302.3 299.2Manufacturing 147.6 113.4 150.0 126.8 92.7 156.1 107.3 161.0Other 123.0 130.4 141.2 143.8 126.5 141.4 122.8 125.9Total market (All deals) 127.4 133.6 150.1 153.5 144.4 159.8 138.0 152.7

Average value of deals (£m/deal) 2011 2012 2013 2014 2014q3 2014q4 2015q1 2015q2Finance & Banking 87.4 94.1 58.2 52.5 47.3 63.1 47.5 62.0Fund/Investment Management 120.3 84.8 76.7 71.4 72.0 66.3 86.2 85.8Technology, Media & Telecoms 113.1 125.8 246.0 95.1 98.7 113.3 189.0 80.1Energy & Utilities 93.4 122.0 81.2 69.3 68.2 76.4 76.3 154.9Real Estate & Construction 168.5 175.9 95.5 79.2 54.9 97.6 96.3 88.7Manufacturing 59.3 60.2 56.8 60.8 53.5 60.0 71.3 35.9Other 87.6 90.7 66.3 77.5 86.1 61.5 79.4 72.3Total market (All deals) 91.6 97.3 75.1 65.6 65.8 68.5 70.5 75.6

Total value of deals (£m) 2011 2012 2013 2014 2014q3 2014q4 2015q1 2015q2Finance & Banking 94.9 114.4 84.8 73.9 66.9 97.8 56.4 108.3Fund/Investment Management 189.7 121.2 117.7 108.8 118.5 99.6 138.5 114.3Technology, Media & Telecoms 140.1 186.0 313.9 137.7 141.2 188.6 191.8 112.6Energy & Utilities 132.8 200.0 118.3 123.0 127.4 149.2 106.3 215.9Real Estate & Construction 199.3 226.9 224.5 196.5 112.3 263.3 295.7 269.5Manufacturing 87.6 68.3 85.2 77.1 57.8 109.0 89.2 67.3Other 107.7 118.3 93.6 111.5 108.5 86.5 97.0 90.6Total market (All deals) 116.7 129.9 112.8 100.8 95.6 110.1 97.9 116.1

Total value of deals (£m 2009 prices) 2011 2012 2013 2014 2014q3 2014q4 2015q1 2015q2Finance & Banking 92.1 108.9 78.8 66.1 60.0 86.6 49.7 94.7Fund/Investment Management 183.8 115.3 109.7 97.6 106.5 88.4 122.2 100.1Technology, Media & Telecoms 136.0 177.3 292.5 123.4 126.9 167.4 169.3 98.7Energy & Utilities 129.2 189.7 109.8 110.1 114.3 132.2 93.7 188.9Real Estate & Construction 194.4 215.4 208.9 175.9 100.9 233.5 260.8 236.0Manufacturing 85.0 65.1 79.2 69.2 52.0 96.8 78.8 59.0Other 104.4 112.6 87.1 100.0 97.4 76.7 85.6 79.3Total market (All deals) 113.2 123.6 104.9 90.3 85.8 97.6 86.3 101.6


Data Deals of top 50 UK law firms by industry (Actual figures)

Total number of deals 2011 2012 2013 2014 2014q3 2014q4 2015q1 2015q2Finance & Banking 488 546 654 632 157 172 132 194Fund/Investment Management 481 436 468 465 126 115 123 102Technology, Media & Telecoms 202 241 208 236 55 64 39 54Energy & Utilities 209 241 214 261 67 70 50 50Real Estate & Construction 155 169 308 325 66 87 99 98Manufacturing 121 93 123 104 19 32 22 33Other 797 845 915 932 205 229 199 204Total market (All deals) 2453 2571 2890 2955 695 769 664 735

Average value of deals (£m/deal) 2011 2012 2013 2014 2014q3 2014q4 2015q1 2015q2Finance & Banking 1319 1421 879 793 723 964 725 947Fund/Investment Management 651 459 415 386 388 358 465 462Technology, Media & Telecoms 816 908 1774 686 754 866 1445 613Energy & Utilities 957 1250 833 710 716 803 801 1626Real Estate & Construction 654 683 371 307 216 385 380 350Manufacturing 449 455 429 460 471 528 628 316Other 729 755 552 646 714 509 658 599Total market (All deals) 839 891 688 601 606 631 650 697

Total value of deals (£m) 2011 2012 2013 2014 2014q3 2014q4 2015q1 2015q2Finance & Banking 643814 775862 575168 500999 113483 165816 95665 183626Fund/Investment Management 313298 200080 194366 179632 48927 41123 57159 47165Technology, Media & Telecoms 164745 218732 369028 161884 41490 55426 56365 33084Energy & Utilities 200105 301287 178175 185351 47972 56192 40045 81319Real Estate & Construction 101369 115378 114164 99903 14275 33477 37591 34261Manufacturing 54273 42306 52813 47805 8957 16895 13820 10425Other 580876 637924 504921 601639 146306 116619 130876 122170Total market (All deals) 2058480 2291570 1988636 1777212 421411 485547 431520 512049

Total value of deals (£m 2009 prices) 2011 2012 2013 2014 2014q3 2014q4 2015q1 2015q2Finance & Banking 625109 739684 535218 448681 101935 147072 84397 160821Fund/Investment Management 303403 190379 181062 161153 43948 36474 50426 41307Technology, Media & Telecoms 159828 208358 343646 144925 37268 49161 49726 28975Energy & Utilities 194833 286077 165527 166040 43091 49840 35328 71220Real Estate & Construction 98844 109562 106257 89458 12823 29693 33163 30006Manufacturing 52636 40291 49025 42819 8046 14985 12192 9130Other 563116 607415 469843 539763 131418 103437 115461 106998Total market (All deals) 1997769 2181767 1850577 1592839 378529 430662 380694 448458


Data - Deals of top 50 UK law firms by matter type (indices 2009=100)

Total number of deals 2011 2012 2013 2014 2014q3 2014q4 2015q1 2015q2Corporate & Commercial 135.3 168.2 185.5 177.9 173.4 157.4 153.4 118.3Banking & Finance 97.7 105.9 134.2 132.4 127.2 145.7 103.0 155.0M&A 184.6 152.9 136.4 145.7 126.0 153.9 148.0 153.9Property/Property Finance 130.4 188.0 313.0 348.9 321.7 352.2 391.3 365.2Other 87.5 98.4 94.6 112.0 113.0 143.5 100.0 108.7Total market (All deals) 127.4 133.6 150.1 153.5 144.4 159.8 138.0 152.7

Average value of deals (£m/deal) 2011 2012 2013 2014 2014q3 2014q4 2015q1 2015q2Corporate & Commercial 133.8 101.0 116.5 75.3 61.6 63.5 65.0 88.1Banking & Finance 91.8 106.2 67.6 63.3 67.8 67.2 65.7 67.8M&A 71.5 93.0 62.6 67.6 74.7 67.8 85.6 88.6Property/Property Finance 229.2 101.6 95.5 90.6 87.2 102.1 117.6 72.5Other 87.1 109.5 132.3 103.5 80.2 120.2 97.4 78.3Total market (All deals) 91.6 97.3 75.1 65.6 65.8 68.5 70.5 75.6

Total value of deals (£m) 2011 2012 2013 2014 2014q3 2014q4 2015q1 2015q2Corporate & Commercial 181.1 169.9 216.1 134.0 109.0 102.0 101.7 106.4Banking & Finance 89.6 112.5 90.8 83.9 86.8 98.5 68.0 105.7M&A 132.0 142.1 85.4 98.5 97.2 107.8 130.8 140.8Property/Property Finance 298.9 191.1 298.8 316.1 281.7 361.3 462.1 265.9Other 76.2 107.7 125.1 115.8 87.1 165.6 93.6 81.7Total market (All deals) 116.7 129.9 112.8 100.8 95.6 110.1 97.9 116.1

Total value of deals (£m 2009 prices) 2011 2012 2013 2014 2014q3 2014q4 2015q1 2015q2Corporate & Commercial 175.3 161.1 200.8 120.1 97.8 90.4 89.7 93.1Banking & Finance 86.9 107.1 84.4 75.1 77.8 87.3 60.0 92.5M&A 128.0 135.4 79.4 88.3 87.3 95.6 115.4 123.3Property/Property Finance 292.6 181.5 278.7 283.6 253.3 320.8 408.1 233.1Other 74.2 102.6 116.7 104.0 78.4 147.2 82.7 71.7Total market (All deals) 113.2 123.6 104.9 90.3 85.8 97.6 86.3 101.6


Data Deals of top 50 UK law firms by matter type (Actual figures)

Total number of deals 2011 2012 2013 2014 2014q3 2014q4 2015q1 2015q2Corporate & Commercial 540 671 740 710 173 157 153 118Banking & Finance 759 823 1043 1029 247 283 200 301M&A 873 723 645 689 149 182 175 182Property/Property Finance 120 173 288 321 74 81 90 84Other 161 181 174 206 52 66 46 50Total market (All deals) 2453 2571 2890 2955 695 769 664 735

Average value of deals (£m/deal) 2011 2012 2013 2014 2014q3 2014q4 2015q1 2015q2Corporate & Commercial 859 649 748 484 403 416 426 578Banking & Finance 1010 1169 744 697 751 744 727 751M&A 754 981 660 713 814 739 933 965Property/Property Finance 589 261 246 233 225 264 304 187Other 614 772 934 730 544 815 660 530Total market (All deals) 839 891 688 601 606 631 650 697

Total value of deals (£m) 2011 2012 2013 2014 2014q3 2014q4 2015q1 2015q2Corporate & Commercial 464016 435285 553601 343318 69802 65339 65166 68148Banking & Finance 766293 962088 775879 717225 185438 210593 145431 226022M&A 658520 709182 426002 491466 121227 134471 163210 175624Property/Property Finance 70740 45230 70713 74797 16667 21377 27340 15732Other 98912 139785 162441 150406 28276 53767 30373 26524Total market (All deals) 2058480 2291570 1988636 1777212 421411 485547 431520 512049

Total value of deals (£m 2009 prices) 2011 2012 2013 2014 2014q3 2014q4 2015q1 2015q2Corporate & Commercial 449572 413255 514921 308014 62699 57953 57490 59685Banking & Finance 743939 916975 722161 642545 166568 186788 128302 197952M&A 638972 675696 396389 440524 108891 119271 143986 153813Property/Property Finance 69177 42893 65870 67027 14971 18961 24120 13778Other 96109 132948 151236 134730 25399 47689 26796 23230Total market (All deals) 1997769 2181767 1850577 1592839 378529 430662 380694 448458


Appendix Using deals as an indicator of future changes in GDP To determine whether the recent level of deals is an indicator of future changes in GDP, or whether the relationship is the other way round ie recent GDP is an indicator of future changes in deals, we estimated two equations:

(1) Current GDP as a function of lagged (or past) number of deals

(2) Current number of deals as a function of lagged (or past) GDP

Equation (1) has a better explanatory power, so therefore it is reasonable to propose that deals are an indicator of future changes in GDP, rather than the other way around. Deals are not a perfect predictor of future changes in GDP, and can only give an indication of the direction of future changes. The level of deals can be quite variable on a quarter-to-quarter basis, and also the relationship between deals and GDP is based on the relatively short run of data for which deals figures are available. Nonetheless, the recent level of deals gives some indication of possible future changes in GDP.

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Quarterly % change UK GDP

Actual GDP growth

GDP growth that would have been predicted by the City Legal Index 6 months beforehand

Source:Law Society Research Unit(July 2015)


Contact details for further information For further information on City Legal Index please see: http://www.lawsociety.org.uk/representation/research-trends/research-publications/city-legal-index/ or http://legal-monitor.com/citylegalindex Or contact: Keith Blakemore Senior Economist Law Society Email [email protected] or David Kekwick Commercial Director Legal Monitor Email [email protected]

http://www.lawsociety.org.uk/representation/research-trends/research-publications/city-legal-index/

http://www.lawsociety.org.uk/representation/research-trends/research-publications/city-legal-index/

http://legal-monitor.com/citylegalindex

mailto:[email protected]

mailto:[email protected]

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