Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
Tweet us @Fides_Search to let us know your thoughts.
This week:
1. A new dawn for HSBC: Succeeding leadership team appointed by the bank
After much speculation around who will replace Stuart Gulliver in the top role at HSBC, it was announced yesterday (12 Oct) that Chief Executive of Retail Banking and Wealth Management John Flint will be appointed as CEO.
Various names had been tipped to be contenders for the position, including Lloyd’s boss Antonio Horta-Osorio, and ultimately it was a further HSBC lifer that chairman Mark Tucker selected.
The global bank has a track record of promoting long-standing employees to its senior ranks, and Flint’s background of 14 years with the bank’s Asia business, followed by a further 13 years at HSBC in London, is no different.
Flint began his career in the global markets business and in 2010, shifted over to head up HSBC Global Asset Management. He subsequently led the institution’s retail banking and wealth management arm, after a period as Group Treasuer upon his return to London. This contribution to the bank, and well-rounded exposure to the business, put Flint in good stead for his new role. It will be interesting to see how the new leadership team progresses, as he goes forward alongside new chairman Mark Tucker, who is the result of a rare external hire by HSBC.
Tucker previously ran Asian insurance firm AIA, where he “spearheaded AIA’s record-breaking IPO on 29 October 2010” according to the insurer. He is the first chairman to be appointed externally since HSBC was founded in 1865.
The appointment of John Flint coincides with a period of a rising share price for HSBC since June 2016, and the potential end of the Deferred Prosecution Agreement (DPA), which, if unextended, runs until the end of this year. The bank has also nearly completed its phase of extensive restructuring, which involved over 87,000 job losses and a slimdown of its investment banking division.
The leadership duo have a solid platform on which to build their upcoming strategy, and with their combined experience in Asia, investors are expecting strong growth in the region, as well as a return to overall growth for the bank.
HSBC beat estimates for H1 2017, reporting a pre-tax profit of $10.24 billion, five per cent higher than the previous year, whilst revenues fell 11 per cent to $26.6bn during the period.
2. PwC Launches Flexible Lawyering Arm
PwC becomes the first accountancy firm to foray into the contract lawyering service with the launch of Flexible Legal Resources, a flexible lawyering service for large in-house legal teams.
Competing with the likes of Axiom and Lawyers On Demand, the service will help clients with their staffing needs by providing temporary lawyers for in-house teams during abnormal spikes in workload.
PwC expects the service to be used by clients requiring increased resources for tasks such as large-scale contract review, disclosure exercises during investigations, and other implementation challenges driven by regulatory changes. Initially focussing on the financial services sector, PwC’s pool of contract lawyers will eventually cover clients from all sectors.
“The contingent workforce is an attractive option. It allows clients to ramp their legal teams up and down depending on changing business demand, gives them access to a rich talent pool, but still allows them to drive efficiencies in overheads” PwC Legal services Director Anne-Marie Botha told Legal Week.
The service is part of PwC’s New Law offering, which aims to help large in-house legal teams work more efficiently, with a particular focus on the effective use of technology. This is spearheaded by former Radiant Law partners Andrew Giverin and Jason McQuillen who joined the accountancy firm in April.
Much has been made recently of the expansion of the accountancy firms into the legal sector, and the impact this has had on an already highly competitive marketplace.
The Big Four’s formidable brand strength, client base and ability to offer multidisciplinary services has helped them take market share from traditional law firms. Deloitte, EY, KPMG and PwC have invested heavily in their legal services arms in recent years – particularly in Europe – and now collectively employ about 8,500 lawyers globally.
PwC Legal is the largest legal arm of the Big Four, having 2,500 lawyers, which makes it the world’s sixth-largest legal services provider by that measure – up there with the likes of Clifford Chance and Jones Day. As the legal arm is fully integrated with the accounting firm’s UK business, the firm also has offices in 85 countries – far more than any other law firm. Earlier this year, PwC sealed an innovative five-year deal to take on the in-house tax law department of General Electric, including 600 staff, and last month opened its first office in the states with the launch of ICL Legal.
A report this week by legal market research company Acritas, also named PwC as the legal market’s second-strongest brand of alternative service provider, closely behind Thomson Reuters.
Although the revenue of the accountancy houses is yet to catch up with traditional firms, with the work of the Big Four centered around lower-value work associated with their audit and tax practices, market leaders would be foolish not to consider these firms a threat through their ambition to consider the broader needs of clients, and develop smarter, more flexible and cost-effective legal services.
Indeed, it will be interesting to see the traction PwC’s flexible lawyering service has on the legal market, especially in light of its scale and visibility as a leading professional services organisation.
Movers & Shakers of the week
Panel Watch
Legal & General puts panel review on hold
Appointments
Allen & Overy creates new eDiscovery role with EY hire
Hyundai Heavy Industries appoints new GC
Tunstall Real Estate Management appoints first GC from client Goodwin
Peter Martyr achieves six consecutive term as Global Chief Executive at Norton Rose Fulbright
Co-op interim consumer services GC leaves after double appointment to divide up role
Moves
Linklaters boosts Frankfurt base with Allen & Overy’s former Germany senior partner
Linklaters has hired senior banking partner Neil Weiand from Allen & Overy (A&O) in Frankfurt.
Bakers capital markets head exits for Jefferies Bank in-house role
Baker McKenzie capital markets head Edward Bibko has left the firm to join Jeffries Bank as EMEA head of investment banks legal
Former Linklaters financial regulatory partner joins BLP after Latham move falls through
Daniel Csefalvay joins Berwin Leighton Paisner after a previously announced move to Latham & Watkins in March
Clifford Chance hired Latham’s Asia head of Tech in Singapore
Luke Grubb, head of technology, media and commercial joins CC’s Singapore office
Long-serving Norton Rose Fulbright competition head leaves to join the CMA
Global head of antitrust and competition Martin Coleman leaves the firm to become non-executive director at the Competition and Markets Authority (CMA)
Hogan Lovells further bolsters finance practice
Energy, infrastructure and projects partner Arun Velusami departs Norton Rose
Osborne Clarke further builds Private Equity Team
OC hires UK private equity head Tim Hewens from Squire Patton Boggs
Mergers & Alliances
Linklaters strengthens Middle East offering with Saudi Arabia alliance
DAC Beachcroft’s New Zealand offices join Australian alliance partner
Office Openings & Closings
Squire Patton Boggs closes Kiev office
Charles Russell Speechlys partners break off to launch sports law boutique
Linklaters strengthens Middle East offering with Saudi Arabia alliance
Former Gibson Dunn partner joins with UAE firm for London launch
Hogan Lovells to close Mongolia office as managing partner exits to launch local firm
Partner Promotions
White & Case promotes seven to London partnership including two female lawyers
Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
Tweet us @Fides_Search to let us know your thoughts.
This week:
1). As MiFID II launch date approaches, what’s in store for financial institutions?
As the final countdown to the Markets in Financial Instruments Directive’s (MiFID II) launch date begins, there remains much to clarify for financial institutions, and news outlets are considering some of the outcomes that MiFID II will impose in the near term.
Primary concerns for funds in particular is the rules on costs for third party research. The FT reported last week the assembly of an emergency summit, with the attendance of both banks and asset managers, who met with the Financial Conduct Authority (FCA) to try and resolve some of the outstanding queries around the incoming regulation. Although no answers were given during the meeting, the FCA gave the impression that senior individuals at the FCA, European Commission and Securities and Exchange Commission (SEC) are aware of the gravity of the problem and attempting to resolve it.
On a positive note, the FCA have expressed that they will not commence taking formal action against those who aren’t fully compliant from MiFID II’s start date (3rd January 2018), although all firms must be able to demonstrate best efforts in achieving compliance.
Even without the immediate fear of the eye of the regulator, MiFID II seems to be presenting other problems for some institutions.
According to Bloomberg, UBS recently released a report that indicated Deutsche Bank is likely to be most affected by MiFID II in terms of revenue, with Barclays following the German bank as the second most affected. The report states in the event that European trading revenue slumps by 9 per cent next year, Deutsche Bank could see its growth hit by as much as 4.7 per cent, whilst Barclays should expect a 3.7 per cent drop in revenue. This is due to their level of trading activity within European markets, whereas their U.S. counterparts, namely J.P. Morgan, Morgan Stanley and Goldman Sachs, only generate about a quarter to a third of their trading revenue in Europe.
A further outcome MiFID II could bring is a rise in the level of dark trading, says Bloomberg. The regulation apparently allows flexibility for certain venues in how they share prices. As regulators have attempted to restrict the use of dark pools and flow trading back through the stock exchanges, traders have a found a loophole using alternative platforms that could potentially cause overall dark trading to increase, rather than decrease under MiFID II.
In the run up to the 3rd Jan, as regulatory compliance functions and senior management are under pressure on readying themselves for the incoming regulation, it’s only a matter of time until we see what exact impact MiFID II will have on the industry, and of course on firms’ revenue.
2). Expansion continues in the Irish capital
Simmons & Simmons has become the third international firm to open an office in Dublin, following the hire of Mason Hayes & Curran investment funds and financial regulation head Fionan Breathnach.
The office will service the firm’s asset management clients, and is the first office opening for Simmons since opened in Luxemborg in 2015.
They follow in the steps of Pinsent Masons, who became the first international firm to open in Ireland in June this year, complementing the firms’ pre-existing base in Belfast. The office launched with a trio of partners from local firms: investment funds partner Gayle Bowenfrom from Walkers; outsourcing partner Andreas Carney from Mathesons; and corporate partner Dennis Agnew from firm Byrne Wallace.
US firm Covington & Burling is also planning on launching a life sciences and technology practice in the city, pending regulatory approval from the Irish Law Society.
These sit alongside other UK and Irish firms with bases in the Irish capital, including Eversheds Sutherland, DWF, insurance firms DAC Beachcroft, Kennedys and BLM and US firm Dechert. It is believed that other international firms, such as DLA Piper, are also considering a launch in the city.
The Irish legal market has become increasingly attractive for UK and international businesses since the Brexit vote last year.
Like their major clients in the banking sector, many law firms have been examining their post-Brexit footprints to ensure they continue to have access to the European Union (EU) single market and the EU’s courts and decision-making bodies when the UK leaves the EU.
The number of solicitors qualifying in Ireland has also hit record highs, with 810 English qualified solicitors joining the roll in 2016.
Movers & Shakers of the Week
Panel watch
Homes & Communities Agency puts £30m panel up for tender
Credits Suisse delays global legal panel as it opts to remove UK and EMEA panel arrangements
12 firm-strong legal panel for National Grid has been renewed for a further two years
Appointments
Barclays creates new in-house role for UK retail banking arm
Majestic Wine appoints first GC after group expansion
Moves
New addition to Hogan Lovells’ London finance practice
Partner Arun Velusami has joined Hogan Lovells from Norton Rose Fulbright’ finance practice and will also sit in the firm’s Africa practice, energy and natural resources group and the infrastructure, energy, resources and projects team
Eversheds adds enforcement head to its partner ranks
Head of investigations and enforcement at TLT Jake McQuitty has joined Eversheds Sutherland as a partner in London
DWF brings in Addleshaws heavyweight
Andrew Carpenter joins DWF after missing out on senior partner election
Osborne Clarke hires UK private equity head from Squire Patton Boggs
Tim Hewens joins Osbourne Clarke after 16 years at Squire Patton Boggs
Latham & Watkins hires A&O Corporate veteran in New York
Peter Harwich moves to Latham’s as the latest in a string of high-profile M&A hires from A&O
Withers and Stephenson Harwood hire from US rivals
Tracy Evlogidis, Head of Immigration at Morgan Lewis is set to join Withers, whilst Rubin Weston joins Stephenson Harwood from Baker Botts.
Office Openings & Closings
Linklaters lawyers take over best friend firm ahead of Shanghai JV
Freshfields Tokyo quartet leave to launch new firm in Japanese capital
DWF announces association with Australian firm MVM Legal
Bird & Bird to launch first US office
Kennedys hires DLA Piper partners for Bangkok launch
Mergers & Alliances
Hunton & Williams and Andrews Kurth explore merger
Partner Promotions
Kirkland & Ellis announce bumper partner promotion round of 13
Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
Tweet us @Fides_Search to let us know your thoughts.
This week:
1. Legal Market trends: What are they telling us?
This week saw the release of annual market reports into the sector from Legal Week (The Global 100) and Legal Business (LB 100). Below we break down the trends behind the headlines for what this means for you and your firm.
The Global Picture
Closer to Home
In conclusion, how firms develop and execute their strategies will become critical in what is clearly becoming a more challenging and competitive marketplace. How successfully firms do this will depend on how the market itself will evolve going forward, and if we will continue to see dominance of the sector from across the Atlantic.
Movers & Shakers of the week
Appointments
Bristows appoints Cohen as new joint managing partner
Moves
Dechert hires Kirkland & Ellis duo in London
Dechert has made two hires from Kirkland & Ellis’ London office with corporate partner Christopher Field and tax partner Jane Scobie
Mayer Brown to lose financial regulatory duo in London
The Lawyer reports Guy Wilkes and Mark Compton have been reported to be preparing to move to Mischon de Reya and an in-house role at a financial institution respectively.
Linklaters appoints Moscow disputes head with Herbert Smith Freehills hire
Vladimir Melnikov departs his role as disputes head at HSF to join Linklaters global disputes practice
Pinsent Masons boosts financial services offering in Dubai with key new hire
Mark Bicknell has joined Pinsent Masons as a partner, leading the firm’s insurance and wealth management offering in Dubai. He joins from Clyde & Co, where he served as a legal director in the corporate insurance team.
Mayer Brown DCM duo join Hogan Lovells in Frankfurt
Partners Jochen Seitz and Peter Maier will move to Hogan Lovells’ international debt capital markets practice in Frankfurt.
Mergers & Alliances
Kennedys and Plexus rule out merger as news of talks emerges
Dentons set to combine with Ugandan firm as global expansion continues
Office Openings & Closings
Insurer LV pulls plug on legal services
Amsterdam has seen a flurry of activity over the last few months, with various financial institutions choosing to shift their bases over to the Netherlands rather than the anticipated districts, such as Frankfurt and Dublin. Last month it was announced that two leading FX traders, MarketAxess and Tradeweb, will be setting up in Amsterdam, whilst NatWest Markets Division and Japan’s largest bank Mitsubishi UFJ Financial Group are also planning to house their investment operations there.
Here we have taken a look at some of the reasons why this trend is beginning to emerge and what makes Amsterdam such an attractive option.
Regulation
For traders, Amsterdam poses a viable option for a European hub. The experience built up by the Netherlands Authority for Financial Markets (AFM) offers a regulatory incentive for trading firms as the Dutch licence is essentially tailor-made for markets activity.
Due to the lengthy history of trading in the Dutch financial district as well as its openness towards derivatives, the AFM expresses a more liberal outlook on these products compared to other regulators.
A major incentive specifically for proprietary trading firms is the rare ability to trade directly with big pension funds and insurance companies without considering them clients, something which massively reduces their legal and regulatory burden and is uncommon in other EU locations.
High frequency trading
It can’t be denied that Amsterdam presents essential benefits for high frequency traders. The city operates on some the world’s fastest data links, a fundamental aspect to the operation of HFTs.
Good data connectivity will further benefit businesses in the foreign exchange industry, for whom speed is also vital. However, due to the existing high-speed sub-Atlantic cables between London and New York, primary bases for these institutions may well remain in London.
After the financial crisis in 2008, Amsterdam suffered a blow to its financial services economy, leading to cap on bonuses for individuals working in this sector. For prop traders however, they remain unaffected by the bonus cap as they don’t use depositors’ money and therefore wouldn’t ever require a taxpayer bailout. Although this barrier would deter the larger banks from settling in the city, traders can enjoy the logistical and regulatory benefits without the financial downfall.
It’s no surprise given Amsterdam’s setup as the ideal hub for high frequency trading, but the Dutch have also fostered a burgeoning fintech movement across all areas of banking and finance, which is driven by their appetite for lean efficiencies and advancements in technology. The AFM is one of the most forward-thinking regulators in catering for innovation in financial markets and those choosing the Dutch city as its new base will likely benefit from this when it comes to staying ahead of the curve and integrating fintech as part of its offering.
Overall, there is a clear incentive for traders to move to the Netherlands, however, due to disproportion in advantages for traders compared to major banks, it could bring about a fragmentation of the financial services sector. As the trading community mulls over a move to the Netherlands; retail banks consider a shift to Dublin; many firms likely to remain in London, and various larger players moving to Frankfurt – it looks like everyone could win a piece of the pie.
If you would like to talk further about opportunities in the Dutch market, please get in touch with Directors Tom Spence (tspence@fidessearch.com / 0203 642 1871) and Phil Burdon(pburdon@fidessearch.com / 0203 642 1873) who lead our Amsterdam offering and have an extensive network in the local market which they have built over a number of years working in the region
Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
Follow us on Twitter and LinkedIn for more regular market updates.
This week:
The City hits “crunch time” for Brexit transition
Prime Minister Theresa May received a warning yesterday from a City lobby group which claimed that it is “crunch time” for a Brexit deal for UK finance firms.
On Thursday, the day before May is set to deliver a Brexit speech to EU leaders in Florence, lobby group TheCityUK issued a stark warning on the lack of a transitional deal for the financial services industry, which has already led to a number of firms moving their operations out of the UK. “When they’ve gone, it’s hard to see them coming back”, says Miles Celic, CEO of TheCityUK.
“We need the UK and the EU27 to agree a time-limited and legally-binding transition period that resembles the status quo as closely as possible.”
It is expected that decisions of where to be headquartered will be made by financial institutions by the end of year, which makes it crucial that a transitional deal, allowing firms to continue to operate within EU jurisdictions from the UK, is struck by this point at the latest. However various major banks, insurers and fund managers have already kicked off in implementing contingency plans. This week, Lloyds of London owners XL Group announced it will be shifting its headquarters to Dublin in 2018 pending regulatory approval, whilst Royal Bank of Scotland, Bank of America, Barclays and Morgan Stanley have all selected their new European bases.
One subsector within the FS industry to have notably kickstarted the outflow from London is foreign exchange traders. Earlier this month we took a look into why global traders have started to shift their bases over to Amsterdam in particular, which you can read here.
Meanwhile, the industry is also awaiting a vital report from the International Regulatory Strategy Group (IRSG) which will lay out the most ideal trade pact to come out of Brexit negotiations that mutually benefits both UK and EU firms. The paper is due to be published in Brussels next Tuesday.
Without transitional arrangements being made, and given the possibility of faltering Brexit talks, businesses will have no other option but to prepare for a hard Brexit, an action which would impose an irreversible hit to the UK’s financial hub.
In today’s speech, the PM is expected to offer to continue UK funding to the EU budget until the end of 2020, over a year after Britain completes its exit in March 2019. In return, she requests a time-limited transition period, to preserve access to the single market until 2021.
Movers & Shakers of the week
Appointments
Pinsents appoints new chairman
Richard Masters has been named the next chairman of Scotland and Northern Ireland for Pinsent Masons
Virgin names new head of Legal
Virgin Enterprises has appointed IP lawyer Bill Budd as its new head of legal and IP, following the departure of Charlie Everitt to Reckitt Benckiser
Moves
CLO of Innovation Group departs
James Liddard has left his position as chief legal officer of The Innovation Group to join Colt Group
HSF makes push in China infrastructure
Herbert Smith Freehills has hired three projects partners from Pinsent Masons to boost its Asia practice. Hew Kian Heong, Ellen Zhang and Michelle Li will sit in the firms Mainland China team.
CMS hires 12-strong real estate team in Paris
CMS Bureau Francis Lefebvre has taken on Herbert Smith Freehills’ Paris real estate team, including practice head Pierre Popesco and partner Florence Cherel. Real estate partner David Lacaze will remain at HSF and take on the role of head of real estate at the firm.
Pinsents loses two partners in Manchester
Real estate partners Mike Edge and Rachel Pitman have joined Mills & Reeve in Manchester from Pinsent Masons.
Latham strengthens London finance practice
Finance partner Simeon Rudin is joining Latham & Watkins’ London office from magic circle firm Freshfields Bruckhaus Deringer
Office Openings
PwC prepares to launch a law firm in US, with its office to be based in Washington DC
Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
Tweet us @Fides_Search to let us know your thoughts.
This week:
1). The Collapse of Northern Rock: Ten years on
This week marked the ten year anniversary of the collapse of Northern Rock. Following the announcement of Bank of England intervention, leading to the first run on a British bank in 150 years, it was a sign of things to come and the start of a crisis the country is still recovering from.
Despite an estimated 1.2 trillion pounds being pledged to support the financial system, and the UK’s biggest banks slashing $3.6 trillion of assets, profitability remains low.
Of the large retail banks that survived the crisis, Barclays and RBS remain smaller than they were a decade ago, with the latter still being 71% state owned. All of the ‘big four’ are less profitable, as they comply with capital requirements alongside the payment of record-breaking regulatory fines. According to data compiled by Bloomberg, the average return on equity has plunged from 18.4 percent in 2007 to 4.5 percent today, way below the 10 percent ‘cost pf equity’ investors typically demand.
And the markets are yet to fully recover either. UK M&A volumes have also fallen drastically since 2007 when levels reached nearly $650bn, data from Thomson Reuters shows. So far this year UK M&A volumes have reached just $258bn – failing to break the $2bn mark last year – due to Brexit’s destabilising effect on the market.
As such, analysis this week in the press has been directed at the extent to which UK banking practices have changed, and the susceptibility of the sector should it face another crisis.
Although great progress has been made to curb irresponsible lending and rebuild banks capital buffers, concerns have been made about a return to more risker consumer lending practices, such as long interest-free periods on balance-transfer credit cards. Unsecured consumer credit has risen since 2010, with rates of growth returning to pre-crisis levels of about 10 per cent. Borrowing rose above £200bn in July for the first time since 2008, in a sign that banks are pushing more aggressively into unsecured lending to boost profits.
As the UK’s biggest banks struggle to grow and recover, one hopes that financial lessons of the past have been learnt one way or another.
2). International Growth: A&O’s Blueprint
The internationalisation of law firms is a given in today’s climate with firm’s taking different approaches to expansion. Each firm approaches this in their own way which will fit with their ambitions and the agreed outlook of their partnership. Some opting for the scale model and a ‘bigger is better’ approach through multiple mergers whilst others are implementing a more piecemeal strategy to develop their business in a more organic way. Today we look at the Magic Circle and Allen & Overy in particular as they look to maintain their place at the top table in the global legal marketplace.
In their recent interview with The Lawyer Andrew Ballheimer and Wim Dejonghe discussed the expansion the firm has gone through in recent years, opening 14 offices since 2010 evidencing their focus on the execution of their global strategy. Whilst their Magic Circle peers have seemingly struggled with finding the right balance between international growth or retrenchment, Allen & Overy have continued a smooth upward trajectory in their financial performance.
The firm seems to be realising a balance between international growth, strength in London and global integration and is clearly benefiting from it. With historically UK focused firms, the challenge has been diversifying revenue generation away from London to remove a hub and spoke model that can lead to integration and cross selling issues. If not managed well this process can also result in public tensions within the partnehsips and mass departures within international offices. Allen & Overy’s ability tospread income across the network is shown by the statistic that ‘just 38% of the firm’s total fee income was generated from its London office last year’ whilst their ability to integrate their practices and clients internationally is nicely evidenced by 74% of the firm’s revenue coming ‘ from matters involving two or more countries. Also an impressive ‘30% of turnover is derived from work involving five or more countries.’
Whilst these statistics cannot yet be assessed against competitors or other global firms, they do show a firm growing internationally and succeeding in cross-fertilising their clients and revenue to enhance integration which can only be praised in such a competitive and challenging industry. How Allen & Overy continues to develop their business will be seen in the coming years. What we can expect however, is that they will do so in a considered and strategic manner with a focus on maintaining and improving their services to clients globally through an integrated and cohesive business.
All firms have their own philosophy towards growth and the implementation of it, Allen & Overy simply provide an example that through their performance and numbers, seems to be working.
3). Movers & Shakers
Panel Watch
Eversheds wins sole adviser appointment for Turkish Airlines
Lloyds banking group kicks off review of customer pay panel
Unilever delays panel review until 2018
Appointments
AB InBev GC steps down following SABMiller mega merger
Uber UK legal boss takes on EMEA role
Burford Capital hires former UBS in-house lawyer as GC
Partner Moves
White & Case hires two Private Equity Partners in Stockholm
Jan Jensen and Shoan Panahi join White & Case from Nordic firm Hannes Snellman.
Berwin Leighton Paisner seals triple disputes hire including Freshfields veteran
BLP has strengthened its City practice with the hire of Freshfields Bruckhaus Deringer’s former Asia disputes head, Richard Chalk, and Vinson & Elkins arbitration partner George Burn. Meanwhile, Herbert Smith Freehills’ Thailand head of dispute resolution Gavin Margetson has joined the firms’ Singapore office.
Bird & Bird builds equity capital markets practice with Charles Russell Speechlys hires
Partners Clive Hopewell and Adam Carling have joined the team
Office openings & Closings
Gide launches Iran offering through Gibson Dunn hire
Mergers and Alliances
CMS boosts Middle East presence via exclusive Saudi association with former Trowers alliance firm
Pinsent Masons calls time on six-year alliance with Chinese construction firm
Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
Tweet us @Fides_Search to let us know your thoughts.
This week:
1. Demands grow for full report into RBS misconduct allegations
The Treasury Select Committee is urging the Financial Conduct Authority (FCA) to publish a leaked report indicating serious poor treatment of clients by the Royal Bank of Scotland.
Findings from a report commissioned by the FCA linked to an ongoing investigation into RBS’ Global Restructuring Group (GRG) have been leaked to the BBC. They show that 92 per cent of GRG’s business customers experienced “inappropriate action” and only 10 per cent of struggling companies managed to emerge from the group.
The state-owned bank’s now defunct Global Restructuring Group ran from 2005 to 2013 with the purpose of helping recover troubled small businesses. However, details from the report carried out by Promontory Financial Group have been reported to suggest that there was evidence of systemically poor treatment of small business customers, and led to speculation that the bank was artificially defaulting small businesses to agree new loans with higher interest rates.
Chair of the Treasury select committee Nicky Morgan had written to the regulator’s chief exec Andrew Bailey, arguing that since the report has been leaked, and is also in the hands of a number of third parties, it must be made available to the public. Morgan writes: “The FCA now has no control over the timing or content of further public disclosures from it. The balance has tipped firmly in favour of full publication. I have written to Mr Bailey to urge him to secure the approval of RBS to do so, without delay.”
In November last year the FCA produced a summary of findings from the report and have initiated a leak inquiry into the disclosure of the S166 report on RBS GRG to the BBC.
2. Lessons from the All Blacks: Culture Change in Organisations
Yesterday saw the release of The Respect and Responsibility Review, a report commissioned by New Zealand Rugby (NZR) investigating misconduct and providing recommendations as how to bring about culture change in the organisation.
Headed by NZ Law Society President Kathryn Beck, with a panel of individuals drawn from outside New Zealand Rugby, the task force reviewed 36 investigations into misconduct and outlined six key changes to be implemented over the next two years.
Whilst the legal sector may be a step removed from the drug and alcohol offences, violent and inappropriate sexual behaviour reported by the world’s best rugby players, the six goals determined by the NZR review panel are transferable to any organisation which aims to improve its inclusivity and foster an environment which builds and develops its people.
This article takes the six recommendations given to NZ rugby, and assesses the extent to which they have been embraced by the legal sector.
Goal 1: Inclusive Leadership
Training leaders to become more inclusive is arguably the best thing law firms can do to increase the representation of minority groups within their organisations. By making leaders aware of their unconscious biases, and how this impacts the decisions they make regarding people similar or different to them, this ties together progress forged by other diversity and inclusion initiatives (i.e. mentoring & sponsorship, affinity groups) to make a difference at the individual level.
Whilst the majority of law firms have now invested in unconscious bias training for partners and key stakeholders, emphasis is on raising awareness of bias rather than how to lead inclusively.
Goal 2: Developing People
A highly competitive market, the battle is not won once law firms have attracted the best talent; they need to develop and retain them too. The more innovative firms have started to do this by introducing work allocation managers, who both manage the utilisation of associate work whilst at the same time matching it to individual career aspirations and areas of skill development.
A number of firms are also considering revisions to their performance management reviews, with Allen & Overy and Slaughter and May piloting changes to their associate appraisal processes.
Goal 3: Nurturing Wellbeing
Law firms have made proactive steps in the last few years to nurture wellbeing within their workforce by introducing flexible working, as well as affinity groups to support parents and carers live a more balanced lifestyle. Beyond this, we have seen a bigger push from firms focussing on mental health (see our guest blog on the subject HERE) with firms introducing initiatives such as mental health first aiders, staff and lawyers trained in spotting and engaging with individuals who appear to be stressed or overworked
Goal 4: Gender Equity
Gender equality is one of the areas in which law firms have given the biggest push to increase diversity and inclusion in recent years. Whilst strong progress was made by the sector through initiatives such as female partner targets, women’s leadership programmes as well as mentoring and sponsorship, the number of female partners has stagnated in recent years (particularly amongst the largest firms) whist the promotion rate of female senior associates has, on the whole, declined.
This situation needs to be monitored as so the progress made to date is not undone by market factors such as Brexit, the impact of which are yet to be seen.
Goal 5: Proactive Engagement
For any organisation to become more diverse and inclusive, the tone has to be set from the top. Progress will not be made on any of the themes already discussed unless key decision makers act as positive role models and inclusive leaders in enforcing behaviour change and ‘calling out’ what is unacceptable.
The participation of law firm leaders in mentoring and sponsorship programmes sends a strong message that management are engaged in the issue, and that the partnership of tomorrow will be expected to foster an inclusive environment.
Goal 6: Accountable and Independent
Following on, there is no point engaging individuals to become more inclusive without having the accountability mechanisms in place to support change. This needs to happen both at the individual level with the provision of unconscious bias and inclusive leadership training, alongside the implementation of systems and processes to root out bias and help create an inclusive company culture. Examples of this in law firms include the provision of ‘blind CV’s’ and structured interviews when recruiting, and balanced promotion and remuneration committees.
In conclusion, culture change is hard. In both elite sport as it is in corporate culture, changing individual behaviours to help create a more inclusive environment where all can thrive is extremely difficult. It is here where organisations need to step up and take a multi-pronged approach to both assess and change individual behaviour on the micro level, whilst making sure this is supported by firm-wide systems and processes to enforce accountability to change.
Although the legal sector has some way to go, law firms are making important introductory steps in the right direction. As with the All Blacks, it will be interesting to see the progress made in the next few years.
If you are interested in this, or any other of the themes addressed in this article, please contact eclews@fidesseatch.com
Movers & Shakers of the week
Panel Watch
Southwark Council begins tender process for it four year panel
Appointments
Hogan Lovells senior management retained for a further two years
CEO Steve Immelt and deputy CEO David Hudd will stay on as senior management for Hogan Lovells for an additional two years, having been elected in July 2014
HSF replaces Gilchrist as Australian head
Andrew Pike will replace Sue Gilchrist as the firm’s regional managing partner in Australia for Herbert Smith Freehills
Moves
Real estate investment fund hires first ever GC
Nick Russell moves to real estate investment fund Henderson Park as its first general counsel, joining from Goldman Sachs where he served as senior counsel
PwC assign a new head of regulations
Regulatory counsel for ETF securities Marco Boldini is set to join PwC in January 2018 as head of regulations, base in London
DWF hires DLA veteran as chairman
Sir Nigel Knowles will become chairman of DWF after retiring from DLA Piper as its chair last year, having spent over 40 years at the firm
EDF secures new nuclear business GC
Head of power and renewables for Herbert Smith Freehills Julia Pyke has left the firm to join key client EDF as general counsel for nuclear new build businesses
CC further bolsters US capability
Clifford Chance has continued its spate of US hiring, adding partners Joshua Berman and Glen Donath to its litigation team along with counsel Josua Fitzhugh.
Greenberg makes play in Poland
An 11 lawyer real estate team hire has been made by Greenberg Traurig in Warsaw from Hogan Lovells, including local practice head Jolanta Nowakowska-Zimoch.
Dechert strengthens London finance practice
Partner Monica Gogna departs Ropes & Gray to join Dechert’s finance practice in London
HSF makes first NY corporate hire
Corporate partner James Robinson leaves Morrison & Foerster in Tokyo to rejoin Herbert Smith Freehills and transfer to the firms New York office.
Reed Smith makes addition to investment funds group
Kirkland & Ellis City funds partner Leith Moghli has left the firm to join Reed Smith’s private equity and investment funds practice in London.
Sidley boosts Brussels practice with privacy hire
Privacy and cybersecurity partner Wim Nauwelaerts has joined Sidley Austin from Hunton & Williams in Brussels
Bird & Bird makes hires in London and Paris
Capital markets partners Clive Hopewell and Adam Carling both join Bird & Bird in London from Charles Russell Speechlys, whilst Paris partner Jean-Jacques Essombe Moussio joins the firm from Orrick Herrington & Sutcliffe in Paris to lead its French banking & finance group.
Office Openings & Closings
Norton Rose expand legal process hub
Norton Rose Fulbright will create 100 new jobs in its Newcastle legal process hub, including both legal and non-legal positions.
Osborne Clarke targets Sweden
Osborne Clarke is opening an office in Stockholm, Sweden with the hire of Bird & Bird partner and head Swedish commercial group Henrik Bergstrom, and former founder of Stockholm boutique Baumgarten Bystroem Rooth & Partners Fredrik von Baumgarten. Also joining are three associates.
Eversheds make triple office launch
In Russia, Eversheds Sutherland will be launching two new offices in St Petersburg and Moscow and one office Luxembourg through the acquisition of Nordic firm Hannes Snellman’s entire Russian offering, along with two partners and five associates from Simmons & Simmons
Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
Follow us on Twitter and LinkedIn for regular market updates.
This week:
1. Six global banks edge closer towards launching their own digital currency
The world of digital currencies and blockchain is on the cusp of entering the mainstream financial market as a new digital currency is being developed by six of the largest banks.
The consortium, pioneered by UBS, which initially consisted of global banks Deutsche Bank, Santander, BNY Mellon, as well as broker ICAP, developed the “Utility Settlement Coin” (USC), a new digital currency that is able to use blockchain technology to clear and settle securities trades in financial markets.
After gaining significant momentum, the group has more recently seen six new banks entering the fold, including Barclays, Credit Suisse and HSBC.
The project has entered the next stage of development, as members begin in-depth discussions with central banks with the aim to secure and finalise data privacy and cyber security protections.
There have been a number of digital and virtual currencies entering the market since their inception, the most famous being Bitcoin introduced in 2009, but the issues surrounding price volatility and lack of confidence in the decentralised system (that is where no individual party oversees the transaction) has led to a number of obstacles for growth.
(For a more in-depth explanation of blockchain technology, please see this article by the Wall Street Journal)
However, USC concentrates more on the use of blockchain technology than it does acting as a widespread currency. It will be linked to global currencies and the central bank, which will provide stability for the digital currency unlike some others which are publicly issued, such as Bitcoin. The currency will be used to speed up transaction and clearing processes as cash from a trade will be converted into utility settlement coins, to then be placed on a distributed ledger (i.e. the blockchain) and immediately exchanged for the financial securities being traded. The ledger bypasses the need for third-party verification, and enables trades to be carried out in a matter of seconds as opposed to two or three days.
They first announced the development of USC in September 2015 and have been testing the coin in a real market environment. The banks are hoping to launch the product in late 2018.
Regulation of fintech products such as digital currency and blockchain has been the largest question when implementing these new technologies in financial markets. Integrating digital currencies to current securities transactions may leave a number of grey areas that could cause failures if they were to be introduced too soon. Regulators need to be certain that the complex, sophisticated workings of blockchain technology will comply with rules already laid out, and if not, how regulation needs to be adapted in order to incorporate the potential risks involved.
The FCA is the leading regulator in Europe to focus on new technology and enabling start-up fintech businesses, as demonstrated by the revolutionary Project Innovate. It’s widely praised “Regulatory Sandbox”, which allows new technology and businesses to be tested in a live market under predetermined parameters, has allowed London to remain the fintech hub across Europe. It is key for the development of the banking system, which is still antiquated in its technology and speed of process that new digital currencies such as USC are allowed to develop whilst also being fit for purpose.
Financial crime is another crucial element to consider with digital currencies. Without full regulatory coverage, these currencies can become attractive for criminal activity, such as money laundering and terrorist financing. On the other hand, it has been said that the blockchain technology used to operate these currencies, if executed correctly, can in fact play a major role in the fight against financial crime. It would introduce complete transparency across all parts of a financial transaction, and in turn reduce fraud, by providing a common, visible platform for transactions.
If the Utility Settlement Coin does become an industry standard, used in transactions by all major banks and financial institutions, it could pave the way for further use of blockchain technology within financial services as well as other industry sectors generally.
2. Quinn focuses on retention through new ‘loyalty’ bonuses
A new bonus pool will be coming into play at Quinn Emanuel Urquhart & Sullivan, revealed in a memo by firm chairman John Quinn that presents an outside the box approach to retaining associates.
The new form of compensation, titled an “associate longevity bonus pool”, is additional to existing bonuses, and will only concern second through to six year associates. The amount will be based upon firm performance, with one percent of Quinn Emanuel’s total profit going towards the new bonus pool.
These earnings however, can only be reaped if associates remain at the firm for a further three years after they’re awarded. Published in Above the Law, the following excerpt from Quinn’s memo explains how the new bonuses will be paid out:
“A qualifying second year associate for 2017 will get a provisional award in March 2018. That award will be paid in March 2021 as long as the associate is still with the Firm at that time. The same associate will be eligible to receive an award in March 2019. That award would be paid in 2022. The same associate would also be eligible for an award in March 2020 which would be payable in March 2023, and so on until the associate’s 7th year at which point the associate is no longer eligible for new awards but can keep collecting old awards as long as the associate does not resign before an award is due to be paid.”
It certainly is a creative attempt to attract and retain associates, but begs the question of how Quinn’s current retention rate looks. With such an extensive length of time to wait before gaining access to this extra compensation, this proposal may well show signs of retention struggles amongst mid-level associates.
On the other hand, the firm has experienced rising revenues and solid profits, as it has previously shown with $35,000 signing bonuses for third-year law students and most notably a hike in last year’s PEP that surpassed $5 million. The significant growth of its London offering also shows no signs of abating, with last year’s profit increasing by 21% to £32.8m.
Nevertheless, for a US heavyweight with significant standing in the market to be introducing such a tool, it will be interesting to see whether UK firms, who increasingly experience associate departures to US firms with Quinn’s brand, will adopt the same approach.
Movers & Shakers of the week
Panel Watch
Moves
Pinsents gains capital markets duo
Capital markets partners Julian Stainer and Gareth Jones have both left Berwin Leighton Paisner to join Pinsent Masons in the firm’s London office
Ropes loses further partner in London to Kirkland
Anand Damodaran is set to join Kirkland & Ellis from Ropes & Gray as a partner in its Investment Funds group in London
Simpson Thacher hires from magic circle in Washington
Allen & Overy’s Washington office loses partner and co-head of global competition John Terzaken to Simpson Thacher & Bartlett
Office Openings
Stephenson Harwood opens six Asian office in Myanmar
Quinn Emanuel sets up in Stuttgart, marking its fourth German office
We are surprised not to have seen more of the news arising from India recently in our legal press. Although this lack of interest may be understandable, due to the number of ‘false dawns’ of the liberalisation of the Indian legal market, if news from India is to be believed (and our sources on the ground believe it is) the dawn of Indian legal market liberalisation is just about to break.
In July, Indian Prime Minister Narendra Modi and his law minister Ravi Shankar Prasad called for the liberalisation of the legal market in India, specifically opening the market to international law firms. Whilst our contacts in Mumbai feel that there is more to these recent developments than there ever have been in previous liberalisation discussions, some from outside India still greet this news with a hint of sceptisim given that this is not the first time the matter has been raised.
Nevertheless, with executive committee member of the Indian National Bar Association Salman Waris telling the India Business Law Journal this week that the government are looking at a timeline of three to four months to liberalise the sector, there seems to be a growing consensus view within India, if not outside it, that this change is coming and it is coming soon.
Those we have spoken with on the ground in India have made it clear that for Prime Minister Modi, the liberalisation of the legal sector is a key step on his path to a more open and liberal country, and an ‘easy win’ compared to other sectors.
The first phase of the liberalisation programme is likely to be allowing international firms to set up offices in Special Economic Zones ‘where their lawyers could advise domestic and foreign clients on non-Indian laws’. If this does take place, it is highly likely that we will see a significant change in the approach and strategy of international law firms to the world’s 7th largest economy and what is a potentially powerful legal market.
An example of the activity that could follow in India is seen in the expansion of the South Korean legal market, which since liberalising in 2011/12 has had 28 foreign law firms open up offices there. With many firms already working with clients in India, wanting to invest in the region more or having India desks in different countries, it is highly likely that there will be a surge of international firms hungry to get their feet on the ground in Mumbai or wherever they are permitted.
With many international firms looking for their version of global domination, a new and enticing market such as India offers further opportunity to offer clients the desired geographical coverage and crudely adds another pin in their global map. For the Indian market however there is more at stake, with the move being welcomed by local firms and lawyers as progress within the market, offering the potential to open up the Indian economy further to international investors.
There will likely be failures by some overzealous international firms wanting to ‘land grab’, and it is expected that those who take a more considered and strategic approach to the market will fare better.
For the time being, whilst these events unfold, we will have to keep a close eye on the developments coming from the legal ministry in India, and how international firms greet this news. As part of our continued interest in these developments, we will be writing a more in depth piece on the Indian legal market including the outlook from clients and those on the ground to keep our readers up to date with what could be an exciting event later this year.
Tom Spence is a Director at Fides Search. If you have any questions or would like to discuss the issue further, please contact him at tspence@fidesearch.com
Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
Tweet us @Fides_Search to let us know your thoughts.
This week:
1.) Amsterdam enters the running for next major financial district post Brexit fallout
Amsterdam has seen a flurry of activity over the last month, with various financial institutions choosing to shift their bases over to the Netherlands rather than the anticipated districts, such as Frankfurt and Dublin. This month it was announced that two leading FX traders, MarketAxess and Tradeweb, will be setting up in Amsterdam, whilst NatWest Markets Division and Japan’s largest bank Mitsubishi UFJ Financial Group are also planning to house their investment operations there.
This week we have taken a look at some of the reasons why this trend is beginning to emerge and what makes Amsterdam such an attractive option.
Regulation
For traders, Amsterdam poses a viable option for a European hub. The experience built up by the Netherlands Authority for Financial Markets (AFM) offers a regulatory incentive for trading firms as the Dutch licence is essentially tailor-made for markets activity.
Due to the lengthy history of trading in the Dutch financial district as well as its openness towards derivatives, the AFM expresses a more liberal outlook on these products compared to other regulators.
A major incentive specifically for proprietary trading firms is the rare ability to trade directly with big pension funds and insurance companies without considering them clients, something which massively reduces their legal and regulatory burden and is uncommon in other EU locations.
High frequency trading
It can’t be denied that Amsterdam presents essential benefits for high frequency traders. The city operates on some the world’s fastest data links, a fundamental aspect to the operation of HFTs.
Good data connectivity will further benefit businesses in the foreign exchange industry, for whom speed is also vital. However, due to the existing high-speed sub-Atlantic cables between London and New York, primary bases for these institutions may well remain in London.
After the financial crisis in 2008, Amsterdam suffered a blow to its financial services economy, leading to cap on bonuses for individuals working in this sector. For prop traders however, they remain unaffected by the bonus cap as they don’t use depositors’ money and therefore wouldn’t ever require a taxpayer bailout. Although this barrier would deter the larger banks from settling in the city, traders can enjoy the logistical and regulatory benefits without the financial downfall.
Technology
It’s no surprise given Amsterdam’s setup as the ideal hub for high frequency trading, but the Dutch have also fostered a burgeoning fintech movement across all areas of banking and finance, which is driven by their appetite for lean efficiencies and advancements in technology. The AFM is one of the most forward-thinking regulators in catering for innovation in financial markets and those choosing the Dutch city as its new base will likely benefit from this when it comes to staying ahead of the curve and integrating fintech as part of its offering.
Overall, there is a clear incentive for traders to move to the Netherlands, however, due to disproportion in advantages for traders compared to major banks, it could bring about a fragmentation of the financial services sector. As the trading community mulls over a move to the Netherlands; retail banks consider a shift to Dublin; many firms likely to remain in London, and various larger players moving to Frankfurt – it looks like everyone could win a piece of the pie.
If you would like to talk further about opportunities in the Dutch market, please get in touch with Directors Tom Spence (tspence@fidessearch.com / 0203 642 1871) and Phil Burdon (pburdon@fidessearch.com / 0203 642 1873) who lead our Amsterdam offering and have an extensive network in the local market which they have built over a number of years working in the region
2.) Movers & Shakers
PANEL WATCH
Simmons wins spot on new government finance panel
APPOINTMENTS
Former Channel 4 GC to join London media law boutique
DLA Piper shakes up Asia leadership with new managing and senior partners
PARTNER MOVES
Ashurst hires Bakers finance trio in Germany
German banking and finance head Martin Kaiser moves to Ashurst with Associates Sahra Demirbilek and Stephan Lehnen.
DLA recruits Kirkland and ex-Gibson Dunn partners in double leveraged finance hire
Former Gibson Dunn & Crutcher partner Philip Crump joins DLA in London, alongside Kirkland & Ellis partner Doug Murning in Hong Kong.
Dentons makes four-strong team hire from Baker McKenzie to launch new Netherlands practice
Partners Jurjen Bevers, Heico Reinoud, Paul Halprin and Marnix Veldhuijzenjoin become the first to join specialist Tax practice Dentons Bokel.
Kirkland takes five-partner Ropes enforcement team in the US, London and Hong Kong
Kirkland & Ellis has recruited a five-partner investigations and government enforcement team from Ropes & Gray, including Chicago managing partner and global anti-corruption and international risks co-chair Asheesh Goel, New York securities and futures enforcement co-head Zachary Brez, alongside three other government enforcement partners – Kim Nemirow in Chicago, Marcus Thompson in London and Cori Lable in Hong Kong.
Latham hires Linklaters M&A partner in Duesseldorf
Latham & Watkins has recruited Linklaters M&A partner Nikolaos Paschos in Duesseldorf.
Norton Rose disputes partner exits to lead Pillsbury global arbitration practice
US firm Pillsbury Winthrop Shaw Pittman has taken on international disputes lawyer Deborah Ruff from Norton Rose Fulbright to launch a London dispute practice
MERGERS & ALLIANCES
Browne Jacobson and Beale & Co end merger talks
OFFICE OPENINGS AND CLOSINGS
Hill Dickinson opens fifth UK office with Leeds launch
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