Profile Facts: Allen & Overy

ALLEN & OVERY profile,

Allen & Overy

Headquarters	London, United Kingdom
No. of offices	36 worldwide in 26 countries
No. of attorneys	approximately 2,700
No. of employees	approximately 5,000
Major practice areas	General practice
Revenue	£1.09 billion
Date founded	January 1, 1930
Company Type	Limited liability partnership
Website	Allenovery.com

The Allen & Overy is a global law firm headquartered in London, United Kingdom. It is a member of the UK's Magic Circle of leading law firms.

Allen & Overy is one of the largest law firms in the world, both by number of lawyers and revenue. With approximately 5,000 staff and 36 offices worldwide, the firm provides legal advice in Europe, the Americas, Asia, Australia, and the Middle East.

Since 2008, Wim Dejonghe has been managing partner and David Morley senior partner.

History

Allen & Overy was founded in the City of London on 1 January 1930 by George Allen and Thomas Overy, formally partners at Roney & Co. The main purpose was to build a commercial practice but the firm's reputation was made as a result of George Allen’s role as advisor to King Edward VIII during the abdication crisis of 1936.

Over the years, Allen & Overy have been involved in many developments in the legal field. Such work has included advising on the first hostile takeover in the City of London and acting for S. G. Warburg & Co. as arrangers of the first Eurobond (issued by Italian motorway group Autostrada) in the 1960s.

Although now a global player, the firm was quite international from the outset, advising mostly Canadian banks and companies. In the last 15 years, Allen & Overy has become an international practice, opening offices in some international financial centres, branching out into newly emerging legal markets, and merging with some firms on the European continent. Some of the firms with whom they have merged have their roots in the 19th Century, so its history is lengthening as well as deepening.

Since 2000 Allen & Overy has had an office in New York adivising on U.S. law. In May 2004, the worldwide partnership of Allen & Overy converted to a limited liability partnership, Allen & Overy LLP, which works together with associated undertakings in some jurisdictions to form a worldwide legal practice. In July 2008 Allen & Overy broke the £1 billion turnover mark, and, for the first time, over half of its turnover was generated outside of London. Also in that year, Allen & Overy opened five new offices in Riyadh, Abu Dhabi, Mannheim, Düsseldorf and San Paolo, and announced a new association in Romania. The firm also announced a referral arrangement with Trilegal in India.

In February, 2009 Allen & Overy announced a major restructuring in which approximately 10% of staff, associates and partners were laid off and pay was frozen for all employees worldwide. In February 2010, Allen & Overy expanded into Australia for the first time, opening offices in Sydney and Perth.

Notable Matters

Sued for Discrimination

In the fall of 2007, abovethelaw.com and other sources reported that Allen & Overy had been sued in New York by a former associate claiming religious discrimination.

Guantanamo Bay detainees

Allen & Overy partner Pamela Chepiga led a team of six lawyers who filed habeas corpus petitions on behalf of fifteen Yemeni captives in Guantanamo, and filed an amicus brief before the Supreme Court of the United States when it considered Rasul v. Bush.

Charles "Cully" Stimson, then Deputy Assistant Secretary of Defense for Detainee Affairs, stirred controversy when he went on record criticizing the patriotism of law firms that allowed employees to assist Guantanamo captives: "corporate CEOs seeing this should ask firms to choose between lucrative retainers and representing terrorists." Stimson's views were widely criticized. The Pentagon disavowed them. He resigned shortly thereafter.

HBOS / Lloyds TSB merger cleared

On 31 October 2008, UK Secretary of State for Business, Lord Mandelson, decided to clear the proposed Lloyds TSB merger with HBOS. This is an unusual case because it is the first time that a merger has been cleared on financial stability grounds. Allen & Overy are advising HBOS.

Defence of Dick Fuld

Allen & Overy's Patricia Hynes, a counsel in the firm's New York office, is leading the defence of former Lehman Brothers chairman and chief executive Richard S. Fuld, Jr. on an array of intersecting proceedings arising out of Lehman’s well-publicised bankruptcy.

Investigation into BAE Systems

Allen & Overy has led the global defence of BAE Systems throughout the company's various corruption investigations around the world.

BAE Systems has been under investigation by the Serious Fraud Office, into the use of political corruption to help sell arms to Chile, Czech Republic, Romania, Saudi Arabia, South Africa, Tanzania and Qatar.In response, BAE Systems' 2006 Corporate Responsibility Report states "We continue to reject these allegations...We take our obligations under the law extremely seriously and will continue to comply with all legal requirements around the world In June 2007 Lord Woolf was selected to lead what the BBC described as an "independent review. ethics committee to look into how the defence giant conducts its arms deals." The report, Ethical business conduct in BAE Systems plc – the way forward, made 23 recommendations, measures which BAE has committed to implement. The finding stated that "in the past BAE did not pay sufficient attention to ethical standards in the way it conducted business," and was described by the BBC as "an embarrassing admission."

In September 2009, the Serious Fraud Office announced that it intended to prosecute BAE Systems for offences relating to overseas corruption. The Guardian claimed that a penalty "possibly of more than £500m" might be an acceptable settlement package.On 5 February 2010, BAE Systems agreed to pay £257m criminal fines to the US and £30m to the UK. The UK already massively benefited from £43 billion contract in tax receipts and jobs in the UK, and had dropped an anti-corruption investigation into the Al Yamamah contracts later taken up by US authorities. Crucially, under a plea bargain with the US Department of Justice BAE was sentenced in March 2010 by U.S. District Court Judge John D. Bates to pay a $400 million fine, one of the largest fines in the history of the DOJ. U.S. District Judge John Bates said the company's conduct involved "deception, duplicity and knowing violations of law, I think it's fair to say, on an enormous scale". BAE did not directly admit to bribery, and is thus not internationally blacklisted from future contracts. Some of the £30m penalty BAE will pay in fines to the UK will be paid ex gratia for the benefit of the people of Tanzania.On 2 March 2010 Campaign Against Arms Trade and The Corner House were successful in gaining a High Court injunction on the Serious Fraud Office's settlement with BAE. The High Court may order a full review of the settlement.

Goldman Sachs, Abacus and Fabrice Tourre

According to a 2009 New York Times story by Morgenson and Story, Goldman Sachs created collateralized debt obligations (CDOs), sold them to investors, and then bet short against them. Jonathan M. Egol was named as a 'prime mover' behind the products, called 'Abacus' deals, worth billions. A Goldman worker named Tetsuya Ishikawa was involved in these deals and later wrote a novel called "How I Caused the Credit Crunch". Goldman did 25 Abacus deals from 2004-2008. The article claims Goldman tried to pressure Moody's to rate its products higher than they should have been.

The article also claimed that many mortgage backed CDOs (Abacus, and others) sold by Goldman performed very poorly. It uses the example of the Hudson Mezzanine CDO, which Goldman bet against, but also sold to investors. It also claims that various rules regarding CDO-default pay outs were modified to favor short sellers in 2005.

Goldman claimed that it was simply hedging, not expecting the CDOs to fail. It also said that its investors knew it was betting against the products it was selling to them.

Goldman and one of its traders, Fabrice Tourre, were later sued by the SEC over circumstances surrounding one of these CDOs, Abacus 2007-AC1. Allen & Overy led the defence of Mr Tourre.

On April 16, 2010, the Securities and Exchange Commission (SEC) announced that it was suing Goldman Sachs and one of its employees, Fabrice Tourre.The SEC alleged that Goldman materially misstated and omitted facts in disclosure documents for a synthetic CDO product it originated called Abacus 2007-AC1.Goldman was paid a fee of approximately US$15 million for its work in the deal. The allegation is that Goldman misrepresented to investors that an independent selection agent, ACA, had reviewed the mortgage package underlying the credit default obligations, and that Goldman failed to disclose to ACA that a hedge fund, Paulson & Co., that sought to short the package, had helped select underlying mortgages for the package against which it planned to bet. The SEC further alleged that "Tourre also misled ACA into believing that Paulson invested approximately $200 million in the equity of ABACUS 2007-ACI (a long position) and, accordingly, that Paulson's interests in the collateral section process were aligned with ACA's when in reality Paulson's interests were sharply conflicting." Goldman Sachs stated that the firm never represented to ACA that Paulson was to be a long investor, and that as normal business practice, market makers do not disclose the identities of a buyer to a seller and vice versa.

The complaint states that Paulson made a $1 billion profit from the short investments, while purchasers of the materials lost the same amount. The two main investors who lost money were ABN Amro and IKB Deutsche Industriebank. IKB lost $150,000,000 within months on the purchase.ABN Amro lost $840,909,090. Goldman stated the firm also lost $90 million and did not structure a portfolio that was designed to lose money. After the SEC announced the suit during the April 16, 2010 trading day, Goldman's Sachs's stock fell 13% to close at 160.70 from 184.27 on volume of over 102,000,000 shares (vs. a 52 week average of 13,000,000 shares). The firm's shares lost $10 billion in market value during the trading session. On April 30, 2010, shares tumbled further on news that the Manhattan office of the US Attorney General launched a criminal probe into Goldman Sachs, sending the stock down more than 15 points, or nearly ten percent to $145.

Experts on securities law contacted by The Wall Street Journal believe the success or failure of the suit will depend on whether the facts not disclosed by Goldman were material. Some, such as James Cox, a Duke University law professor, believe the suit has merit. Cox opined that Goldman was aware of the relevance of Paulson's involvement and took steps to downplay it. Others, including Wayne State University law professor Peter Henning, note that the major purchasers were sophisticated investors, capable of accurately assessing the risks involved, even without knowledge of the part played by Paulson.

On July 15, 2010, Goldman agreed to pay $550 million -- $300 to the U.S. government and $250 million to investors -- in a settlement with the SEC. The company also agreed to change some of its business practices regarding mortgage investments, including the way it designs marketing materials. The SEC called the fine the largest commission penalty for a Wall Street firm. The company did not admit or deny wrongdoing. The settlement does not cover Tourre.