Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
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This week:
1. London Calling: MUFG boosts UK outlook with the hiring of 180 staff
Japan’s biggest bank has chosen the UK as the hub of its EMEA expansion plans by boosting its London headcount by 180.
With the aim of strengthening its position in the region’s corporate and investment banking market, Mitsubishi UFJ Financial Group plans to hire “a few dozen” more following the 180 new staff members already brought on board, says Sebastien Rozes, EMEA head of corporate banking.
In an interview with Reuters, the Japanese bank has mentioned that its expertise in structured finance and lending is a key driver behind its plans to grow, specifically across the TMT and healthcare sectors.
Whilst MUFG is positioning its EMEA operations in London, which is an all-important vote of confidence for the City as a financial district, the bank is also putting in place preparations in the case that Britain loses access to the single market. It has selected Amsterdam as its preferred region on the continent in which to set up a subsidiary, and is contemplating a further investment banking branch in Paris.
While contingencies are being developed for multinationals around Brexit, and decisions being made about ‘where to have presence’ are more thought about than ever, it is good to see significant investment into the UK from a large banking entity.
2. Another law firm set to float on LSE
Keystone Law is set to become the third publicly traded law firm in the UK as it prepares to float on the Alternative Investment Market (AIM). After the rise of Alternative Business Structures (ABS) in the legal sector, and following Gateley’s and Gordon Dadds’ decision to float, becoming a Plc appears to be the latest trend. We’ve looked into the previous law firm listings to understand more about the benefits and risks in delivering legal services this way.
Benefits
Capital raisings
Raising funds is a hugely tempting reason to be traded on a stock exchange. AIM-listed firm Gateley raised £30m when it floated, providing valuable funds that they used to grow through hiring more lawyers and strategic acquisitions. The firm acquired Birmingham-based property consultancy Hamer Associates in September last year, and tax incentives advisory business Capitus in April 2016.
Listing also offers the potential to raise equity capital outside of relying on partners, which can offer greater growth opportunities and peace of mind to those running the business!
Talent retention
It can introduce a more collaborative approach to running a law firm. Stepping away from a traditional lockstep and offering your senior individuals a transparent and potentially highly rewarding method of remuneration is an exciting prospect for many up and coming partners. Additionally, those who are keen to improve and grow the business as a whole could profit well from a shareholder approach, rather than cultivating an atmosphere in which lawyers are expected to thrive as lone wolves.
Growth prospects
Opportunities for expansion and long-term growth can be more attainable for mid-smaller sized outfits. James Knight, chief executive of Keystone Law Group plc has said: “Our decision to list on the London Stock Exchange will provide us with the most resilient and stable platform to support our ambitious growth plans long into the future”.
Investors will expect to see considerable growth year on year, so plans for investment in geographical and practice area expansion could prosper.
Risks
Investment risk
Growing through acquisition can pose numerous risks, and the expectation of capital growth from shareholders implies that this form of expansion would be necessary. Markets, although they can be lucrative, don’t necessarily bring stability to a firm. A less profitable year could mean a cut in dividends, which can then take a toll on share price.
Market perception
Losing ‘rainmakers’, low deal count, practice or sector group restructurings: all could spark weariness in investors and affect share price. Investor relations will play a big part in running the firm, and any weaknesses in investor confidence, whether it’s through poor financial postings or internal management conflicts, can have an adverse effect on the firm.
With ever increasing pressure in the legal services market, law firms are constantly looking at ways in which to ‘consolidate and grow’ to secure their place in the moving landscape. Some do this effectively through domestic or cross-border mergers while others can effectively achieve the same results through constant organic growth. The IPO route albeit relatively new by comparison offers firms another way to secure their futures, ironically through releasing sole control of their direction.
Movers and Shakers of the week
Panel Watch
Appointments
Moves
W&C expands corporate practice with Ashurst hire
Ashurst loses it second partner in three weeks as Dominic Ross exits the firm to join White & Case in London, serving as a partner in its global M&A practice
Real estate duo departs BLP as the firm continue tie-up talks
Head of hotels group Karen Friebe and real estate partner Anthea Bamford are both set to leave Berwin Leighton Paisner, each joining Bird & Bird and Weil, Gotshal & Manges, respectively.
KPMG bolsters its legal offering with a double corporate hire
Richard Lewis has left Eversheds, where he served as an M&A partner, to lead the London corporate legal team at KPMG. Corporate partner Emma Gibson has also joined the Big Four firm in Reading from Shoosmiths.
White collar partner Ed O’Callaghan has left Clifford Chance’s’ New York office to become the principal deputy assistant attorney general for the US Department of Justice
Office Openings & Closings
Dentons launches new consulting business
Dentons kicks off new in-house consulting venture, Nextlaw In-House Solutions, made up of over 50 former GCs, providing consulting services to in-house legal teams
Partner Promotions