Editor: Please describe your practice areas and those of your office.
Pegg: My own practice focuses on corporate and project-related transactions. As a projects lawyer, you need to know many different areas of the law. For example, we’re doing a project in West Africa at the moment. It is a massive mining concession that also involves construction and financing of a port, a power project and other infrastructure. You need to know corporate law because it’s a joint venture. You need to know employment law. You need to know real estate and construction law as well as financing and banking law.
Involvement in projects work requires drawing upon skills you develop throughout your career. I spent an early part of my career in-house and focused on energy and natural resources, particularly oil and gas, electricity and minerals. These were common threads throughout my career that I draw upon when I work on a major project.
Most of the deals I do are joint ventures. They require parties to get together, then stay together for 25 or 30 years or more. My skill base requires keeping people at the table and making the deal work.
Work in energy market sector projects is a big part of our London office practice, an area in which we've been investing heavily and almost doubled in headcount during the last 18 months. The team also serves clients who are involved in disputes and High Court litigation as well as arbitration. We have capabilities in employment law, tax, real estate and project finance.
Those are the main building blocks for us here in London. We’re not trying to be full service to everybody, but we do have the credentials and team to service our clients in key areas. We counsel clients involved in energy and natural resources and in the world of finance, including with respect to litigation growing out of their activities. In these critical areas we have aligned our London practice to service our clients in those areas where they need us most.
Editor: I understand that before you became outside counsel, you served as in-house counsel to major corporations. Describe that experience and how it has contributed to making you more effective as outside counsel.
Pegg: I went into private practice first and then spent time at Chevron and BHP Billiton. My time as an in-house counsel was invaluable, and that’s an understatement. As a projects lawyer now, I attribute my skills in large part to the experiences I had in-house.
As in-house counsel, you get to understand that you are a small cog in a very big, multi-disciplined team. You get to understand your proper role when sitting down the corridor from your company’s engineers, economists, accountants and other lawyers. It gives you a great insight into decision making in major corporations and the many skills that contribute to their success. It’s very easy for people who go to a great university, great law school and finally a great law firm to think that they are God’s gift to the companies they serve. In fact we’re all part of the wider team.
I am very proud of my profession and my technical skills, but, most importantly, the understanding I gained while an in-house lawyer of the role that lawyers play in major global corporations. You really do learn that in-house.
Editor: What are some of the recent major transactions that the London office has handled?
Pegg: We’ve had a healthy spread of transactions. London office deals that our firm has officially published for 2012 include:
- A near £200m deal for GSK (the first-ever corporate deal we closed for that client).
- A $73m Asian arbitration.
- Advising the Greek government on its first oil license tender since 1996.
- Acting for Middle East investors on a £100m-plus financing for King's Reach Tower in London.
- Working on the sale of Hamleys, an iconic toy store in London.
Editor: Due diligence has become essential in handling cross-border transactions, including with respect to anticorruption. What role does your office play in this?
Pegg: The majority of our work is international, so we are in a good position to see the trends. As for the first part of the question, I think many transactional lawyers would say the amount of due diligence that clients are doing now on smaller transactions is markedly less than it used to be. From the buyer’s point of view, due diligence is a very expensive exercise, and if you ask most lawyers how many warranty claims they’ve become involved in over the years, there would be relatively few. So, clients are asking, is it worth having so much due diligence in a relatively small acquisition?
The one area where everyone is doing more due diligence (sell and buy side) is with respect to bribery and corruption. We have seen a pickup in this type of work because the FCPA, UK Bribery Act and the like are more likely to be enforced and heavy penalties imposed. Companies are making sure they are bulletproof when it comes to their internal practices and procedures.
Editor: London has long been a dominant venue for dispute resolution and a principal source of financing. Do you see this changing?
Pegg: London has a history of legal development going back over 900 years. In the world of commerce and finance, I think English law (often the law of choice) and that of other common law jurisdictions provides more certainty than civil law. People want certainty, especially when entering expensive contractual agreements. They also prefer to have their disputes resolved in London because the judges have all been practicing lawyers. In civil law systems the judges are often academics.
It was felt for a long time that the cost of proceedings in the UK was too expensive and that the time periods were unacceptably long. This is no longer the case. The courts have become intolerant of costly delays and law firms have responded to judicial pressure to cut through red tape to get straight to the heart of a matter, whether it’s in pretrial preparation or during the trial itself.
Editor: Is London also a desirable venue for arbitration?
Pegg: London remains one of the main seats for arbitration. The actual cost of running an arbitration in certain other hubs around the world can be surprisingly high compared to London. As to cost and time, London is highly competitive.
Editor: Does London offer a good location from the standpoint of serving clients?
Pegg: London is ideal. My office is in the heart of the city. As I look out of my window now, I see the London offices of major global clients doing business throughout the world.
From the standpoint of serving global clients with projects throughout the world, London is one of the best places to be. Whether it is the U.S., the Middle East or Asia, most countries can be reached with a direct flight. In addition, many major projects are taking place in Africa right now. We are in exactly the same time zone as large parts of Africa, while not so far behind or in front of Asia or the U.S.
Editor: What about access to the financial markets?
Pegg: From my office, I see Deutsche Bank and Barclays. JP Morgan is just around the corner. The City of London is one of the world’s most important places to seek financing. Not only are most global banks here, but the London Stock Exchange remains one of the global standards for capital markets.
Editor: U.S. and other foreign companies have long preferred the UK as a place to establish the office from which to manage their European operations. What advantages does this offer?
Pegg: The UK is a great place to establish a business. Increasingly, our own and other firms’ tax partners are recommending a structure that involves something along the lines of a UK company. The UK has proven itself very smart in adjusting its tax take. Our employment laws are protective of employee rights, but there’s more of a balance than in many European countries. Real estate is expensive in London, but not nearly as expensive as it used to be.
London is such a hub that, even if you don’t have your headquarters here, you almost certainly need some presence. People are flying in and out of London all the time. It’s one flight to most commercially important locations as opposed to many places where you have to change planes. We need to think about a new London airport in order to assure our continued role as the hub for international business.
Corporations are all about people, and London is a very popular place for people to want to come to live, work and enjoy life. Getting around isn’t difficult. Sure, the cost of living is high, but it’s a desirable place to live and an easy place to do business. If you have a family, there are some beautiful places to live. It’s also very safe, and I don’t think you can underestimate these elements in the equation.
Editor: I also see that the company tax will be reduced to 21 percent in 2014.
Pegg: The UK wants to attract business and people involved in business. Higher personal incomes are taxed at the top rate of 50 percent now. However, in France it’s 75 percent. The UK is trying to get a right balance between our national revenue needs and providing incentives to attract businesses to come here – not only in terms of business taxes but personal taxes imposed on their employees. I am pleased to see that our government understands the need to encourage people to be creative and successful, because that’s what creates jobs. There is a close alignment in the way we want to do things in the United Kingdom and how things are done in the U.S. There’s definitely a special relationship.
Published December 18, 2012.
