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Market watch: Hage Aaronson

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You may have heard about the formation of Hage Aaronson, a new boutique firm specialising in tax and commercial litigation.

It has already made an impact in the tax litigation market – having caused the demise of the tax litigation practice at Dorsey & Whitney, with former Dorsey lawyers Simon Whitehead and Paul Farmer moving to the new firm. They are joined by, among others, another former Dorsey partner, Michael Anderson, who moves from KPMG, and Tom Beazley QC, former head of Blackstone Chambers.

Co-founder Graham Aaronson is, of course, well known for his role as architect of the general anti-abuse rule, due to be enacted in this year’s Finance Act, and for his ongoing work on the ‘group litigation orders’  against HMRC, including the recent wins in the Supreme Court and in the CJEU in Test Claimants in the FII Group Litigation.

The firm is the brainchild of his colleague, Joe Hage, a commercial litigator who first worked with Aaronson at One Essex Court. Hage went on to become adviser to Prince Jefri Bolkiah of Brunai, during which time Hage’s role evolved from barrister to litigation project manager, working with 73 law firms in 13 different countries. It was the experience gleaned from that time, and from his subsequent consultative work managing litigation, that led him to think litigation could be managed more effectively.

What perhaps makes the new firm different is that it will look to work with other law firms, rather than handling everything in-house, and to bring in expertise from the Bar at an earlier stage than is traditional.

A different model?

‘We’re not looking to become a large law firm with lots of associates and trainees and loads of paralegals. That isn’t the model for us at all,’ Aaronson explains. ‘Some cases we will handle entirely ourselves, such as the GLOs, because we already have that team. But if, for example, another major transfer pricing case came along, we’re not going to take on a dozen new people and then hope, at the end of the three years, that we can find something else for them to do. Instead, we will invite sub-teams to work with us – whether from Freshfields, Pinsent Masons or whoever. We will select the people that we think are available of the right calibre, the right price and the right enthusiasm, and we will integrate them into the team.’

Hage says that, where the firm does not have the main conduct of the litigation, it will offer three services. ‘One is to provide the strategic advice for clients: how to handle the litigation. In an international context, that might involve advice on where to sue and, equally important, where not to sue.

‘Another service will be project managing the lawyers; making sure the client is getting good value and getting the most out of their lawyers, intellectually speaking,’ he adds.

‘And the third is that, because we’re independent, we can be used to help settle a case. It’s very hard to settle a case when you’re in the middle of fighting it. I always think it’s a bit like asking the fighters – the people in the trenches – to settle. It can be difficult. So we aim to act in the settlement counsel role.’

Managing other law firms

Selecting and managing lawyers from other firms sounds an interesting prospect, but how might those firms react?

‘I hope favourably, because we could be very good clients’, says Aaronson. ‘We’re hardly a rival of larger law firms like Freshfields, because we’re not going to offer the full spectrum of advice that they provide. We ought to be good clients of them, as we would be of the Bar. We will be looking to combine barristers with teams of solicitors. We’d coordinate it; we’d run it with them. And for the smaller firms, we would be able to give them access to specialist litigation skills which they may lack.’

‘We see ourselves as facilitators and collaborators, as “co-counsel” to use the American expression,’ Hage says. ‘The bigger law firms, and especially the accountancy firms, would probably have more to gain from us than we can take away from them.’

Split in the legal profession

Something both co-founders are keen to stress is the benefit they hope to deliver to clients by bringing in expertise from the Bar at a much earlier stage than often happens at present.

‘There’s such a big divide in the UK legal profession’, says Hage. ‘When I was at the Bar, it felt absurd that I couldn’t speak to the client direct. The whole thing just didn’t make sense to me. I felt there was a need, from a client perspective, to have a team that was much closer together from the beginning.’

Aaronson agrees that the barrister is often brought into proceedings too late in the day. ‘Sometimes I feel I’ve been shut out of things at an earlier stage, when I should have been introduced. Why? Because the solicitors have got their own departments, they’ve got their staff, all their own associates and paralegals; it’s Parkinson’s law, they feel they must use them. But sometimes it’s very frustrating – a whole chunk of work might be a total waste of time. It might be that, for instance, what’s really needed is an expert witness on a particular point. Now we’ve got to go out scrambling looking for it, with the trial in only in four months’ time ...

‘With the better firms that doesn’t happen but even there you sometimes feel that too much time has been spent doing irrelevant stuff. I’m not here to criticise firms – some do it very, very well – but there is a benefit to having a fusion between the two professions and that’s what we hope to bring.’

‘Another inevitable feature of the split profession is that law firms tend to have their favourite barristers,’ Aaronson says. ‘There’s no question that they’ll be good, but they may not always be the very best person for a particular case.

‘What we really are trying to do in this firm is to have people within the firm of serious seniority who, right at the beginning, will be discussing with clients the problem and then setting out a strategy.’

What’s next?

Tax litigation is a core part of the firm’s work but the firm will be looking to expand its commercial practice.

‘It just happens to be that we already have a substantial tax litigation team because of the way the numbers are made up initially,’ says Aaronson. ‘The fact is that there are a number of tax cases pending, so we will be focusing on them first. We’ve got the next round of the FII case coming up, and we’ve got the Prudential, another GLO. Before that, there’s the Marks & Spencer case going ahead in the Supreme Court. But we will be growing the commercial team.’

‘Do you think it will work?’ Hage asks. One never knows for sure, but the senior hires and the flexibility of the enterprise perhaps bodes well.

‘Market watch’ is a new, occasional feature, which covers significant developments in the tax market. For further information, email Tax Journal editor Paul Stainforth

Boutiques are back in taxing times

By Ben Rigby, freelance legal journalist

The creation of tax litigation boutique Hage Aaronson is the latest development in a sequence of moves which has seen senior practitioners seeking greater professional freedom outside larger law firms and tax chambers.

That firm brought together Graham Aaronson QC’s tax nous with that of fellow named partner, Joe Hage, and the arrival of a dedicated team of tax litigators from Dorsey & Whitney; one capable of either acting alongside law firms, or possibly in place of them, making use of the Bar and referral relationships to staff up or down as appropriate.

The model proposed is clearly attractive, not just to solicitors, either; the additional arrival of the former head of Blackstone Chambers, Tom Beazley QC, to the firm shows that very senior barristers are also taking the new boutique seriously.

Beazley – whose caseload has included major commercial court and appellate cases in London, as well as internationally, in Hong Kong and offshore tax jurisdictions – recently represented Russian oligarch Oleg Deripaska in a billion-pound litigation claim, which later settled.

The Hage Aaronson model – of the sophisticated litigation boutique, interposing itself between the major law firms and corporates – has been mirrored elsewhere.

Outside the tax world, ex-‘magic circle’ partners have seized the opportunity to develop their portfolio careers. Take

ex-Herbert Smith senior partner, Lord David Gold, for example. Gold’s firm, David Gold & Associates, works with leading law firms in augmenting their own resources, drawing on his experience of different global legal regimes.

Gold was reported to have played an influential role in augmenting the team behind Roman Abramovitch’s successful litigation against the late Boris Berezovsky. It seems that there is a growing need in the market for senior statesmen like Gold who provide strategic counsel. The same is true of senior barristers, like Quinn Emanuel partner Sue Prevezer QC – and now Beazley.

Firms like Mark Humphries Legal with ex-Linklaters’ advocacy supremo, Mark Humphries – and Fox – with ex-Law Society president and honorary silk, David McIntosh QC – also follow the US co-counsel model by offering similar strategic counsel, as well as carriage of the main action. None can, on their own, support major associate-heavy cases, nor would they wish to do so.

There is movement the other way, of course. Hogan Lovells’ head of indirect tax, Michael Conlon QC switched from the Bar recently, as reported by Tax Journal. And tax departments have made hires of employed barristers at all levels for a number of years, although the reforms engendered by the Legal Services Act have increased the career opportunities for barristers to become partners and so steer the business.

Likewise, senior barristers have been swept up by offshore law firms for work in tax havens such as the BVI and the Cayman Islands. The sets themselves seem unwilling to develop ABS structures, other than outside the common law Bar, or in the rapidly diminishing world of legal aid lawyers, as Tax Journal’s sister magazine, New Law Journal, has noted.

Of course, there is no shortage of ‘conflict-free’ litigation boutiques, such as Stewarts Law and Enyo Law. Yet none have a significant tax litigation capability, and they may lack the financial clout to attract the really big hitters.

Yet the need to augment individual advice and case management exists, so a structure that offers the best of the Bar and law firm counselling surely makes the Hage Aaronson offering attractive. The Dorsey arrivals clearly think so, and they are all very credible lawyers.

Aaronson’s move, like those of others, also marks an independence of mind amongst senior lawyers to chart their own career. Just look at senior figures like Michael Napier QC (ex-Irwin Mitchell) and Leslie Perrin (ex-Osborne Clark), who have transferred from private practice to portfolio careers.  Some careers, it seems, are set to end not with the Bench, but with a flourish.