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) Is a compliance cool down on the cards?
As financial penalties finally begin to subside for global banks, and a digitalisation of processes floods middle and back office operations, many are forecasting a drop in compliance hiring, with news of job cuts already surfacing.
Bloomberg published an article this week exploring discussions in the market that compliance staff are reducing. In total, banks have paid $321 billion worth of penalties globally since 2008. Now these figures are levelling out and the regulator is shifting its attention to the asset management industry, compliance is no longer immune to the cost pressures and restructuring plans banks are facing.
Automation is also taking a toll on compliance headcount, particularly for monitoring and surveillance operations, a function in which technology has the potential to replace the majority of jobs. Royal Bank of Scotland is the most recent bank to begin swapping out staff for digital processes, as it prepares to axe up to 2,000 jobs checking new customers for suspicious traits.
Meanwhile, the same hiring trends seem to be hitting the US banking sector, the FT posted. Wall Street has witnessed a slight slowdown in the compliance hiring surge, although this is expected to increase dramatically with the President Donald Trump’s strong views on deregulating the industry. Last week Trump’s elected individual to lead the Commodity Futures Trading Commission (CFTC) J. Christopher Giancarlo was appointed permanent chief of the organisation. Giancarlo, who has declared that his aim is to “reinterpret [the CFTC’s] regulatory mission”, plans to focus on fostering economic growth, enhancing U.S. markets, and “right-sizing” its regulatory footprint. With these new objectives dominating the US securities market, we expect a much further decline to for US compliance headcount.
Talks of a slowdown in compliance come as no surprise to the industry. A correction to the frenzy hiring in this space was expected as banks cannot continue to support cost centres such as compliance. However, the areas of compliance in which we are seeing job losses largely consist of low-level remedial responsibilities, such as KYC. These positions were initially created by banks in order to satisfy the regulator after the crash, and these are also the positions most affected by incoming technology.
Taking a look at demand for top level compliance professionals, we have seen no evidence of change, with front-office advisory positions particularly unaffected.
Although financial regulation may no longer be as high on bank agendas, it is unlikely regulators will become any less stringent in the forthcoming years, leaving the need for compliance officers as necessary as ever.
If you would like to discuss this topic in more detail, please contact Consultants Barrie Lee or Max Alfano.
2) Lloyds Banking Group cuts 22 legal roles as part of ongoing restructuring
Lloyds Banking Group is to cut a further 22 legal roles as part of a further restructure of the bank’s legal team, announced group GC Kate Cheetham on Tuesday.
It is not known whether particular areas of the legal team will be affected, or if the cuts will be spread among Lloyds’ various legal departments, consisting of up to 150 lawyers.
In addition, a total of c.5.5 full-time equivalent (FTE) roles will be created to ensure the legal team has the right skills to support the Group deliver its strategy.
The bank was understood to be assessing up to 80 legal roles in total, with the 22 redundancies announced due to be completed in May.
The role reductions are part of the bank’s strategic review which was announced in October 2014. This included the cutting of 9,000 jobs and the closure of 200 branches over a three year period.
However, in relation to the legal function, the overall goal is to enable people to work on big projects and reduce bureaucracy.
These cuts follow on from a restructuring 12 months ago which led to job losses for junior lawyers at the bank’s London headquarters, and 25 mid-level legal redundancies from its litigation team in April 2015.
Like Barclays and HSBC, Lloyds also completed a panel review at the end of last year, cutting a number of firms from its UK legal panel in attempt to streamline costs, with DLA Piper and Norton Rose Fulbright both missing out.
3) Movers & Shakers
Appointments
Stephenson Harwood hands CEO two-year extension with senior partner re-elected for new term
Chief executive Sharon White reappointed for a further two years, with senior partner Roland Foord re-elected for a second three-year term.
Moves
Nine-strong trademarks and disputes team leaves BLP for Bristows
Head of IP Simon Clark and trade mark attorney Ian Gruselle join Bristows with seven other lawyers and support staff as BLP refines their strategy
KWM New York co-founder quits for Reed Smith
New York-based international funds partner Parik Dasgupta joins the corporate practice of Reed Smith.
Office Openings & Closings
Denton’s takes over DLA’s office in Georgia
Partner Promotions
Linklaters makes up 26 in largest promotion round since 2008
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. FCA’s Bailey on how to tackle cultural change in Banks
FCA chief executive Andrew Bailey has called on firms to focus on pay and incentive structures, alongside broader governance and risk management practices, in order to effect cultural change in banks.
The comments were made in a keynote speech at the HKMA’s Annual Conference for Independent Non-Executive directors, which looked to tackle cultural change, considered to be “one of the major root causes of conduct failures” in recent years.
Entitled the ‘Culture in financial institutions: it’s everywhere and nowhere’, the speech built on the fact that cultural outcomes are a product of a wide range of contributory forces, most prominently the structure and effectiveness of management and governance – the ‘tone from the top’ – and the willingness of people throughout the organisation to wholeheartedly adopt and adhere to this.
Banker’s remuneration and incentive structures are a good example of where practices such as performance management intersect with an institution’s culture, with a firm’s approach towards remuneration ‘no doubt’ having a heavy influence on both culture and conduct.
As such, Bailey advocated that it is critical for boards and regulators to understand how incentives work, and for firms to think through the consequences of such structures and incentives on culture. This has been done by the FCA to date through the enhanced focus on deferring variable remuneration, which recognises how the risks and returns of activities can evolve over a considerable time.
However, for this to be effective it needs to sit within a broader framework of enhanced governance and responsibility, argued Bailey. This has been achieved in the UK through the introduction of the Senior Managers and Certification Regime, which ensures that senior managers know what they are responsible for, and that these individuals are approved by the regulators as fit and proper to carry out the responsibilities of their role.
Bailey also discussed the impact of greater public interest on the conduct of financial institutions since the financial crisis, how this has increased scrutiny on firm culture, and why now it is more important than ever for regulators to think through the likely consequences of their intended actions to understand the effects.
In conclusion, because of its multifaceted nature – being both ‘everywhere and nowhere’ – Bailey concedes that culture is remarkably resilient in the face of change. As such, “The answer is not to try to tackle the culture” Bailey argues, “But to act on the many things that determine it, of which governance and remuneration are important.”
2. Addleshaws is the latest firm to target fintech startups
As part of a scheme to get to grips with the burgeoning fintech movement, Addleshaw Goddard has selected seven startups to join its programme and receive free legal advice and mentoring from the firms fintech lawyers.
Labelled AG Elevate, the scheme is directed at both early stage startups with less than £1m investment, and the more established companies with over £1m. The mentors that will take part in advising the new companies will be a collection of partners, legal directors and associates, including the firm’s head of fintech Fiona Ghosh.
As reported by Legal Week, the compliance technology company Comply Advantage; money management service Mobillity; online savings and credit company Moneyfellows; startup banking company Penta; currency conversion payments service Valoot; Pace Invoice, described as “a multi-currency invoicing platform”; and Delio – “a white label platform solution for private assets”.
Launching such a programme will not only support fintech companies looking to reach the next stage in their businesses, but can also help Addleshaws learn more about the fintech industry, gain a thorough understanding of how best to advise fintech companies and, in turn, better service their financial institutions clients who are currently investing in this space.
The City-headquartered firm is the third law firm to launch a scheme providing free legal advice to fintech startups. Simmons & Simmons were the first to set up a legal advice fund for up to four fintech startups, followed by Slaughter and May who have chosen five companies to receive its free services.
As technology is being increasingly embraced by the legal sector, firms have also been introducing new innovative tools in their own industry. The rise of legal technology, or legaltech, seems to be following the curve of the fintech trend as more legaltech startups are working their way into the practices of some of the most traditional law firms.
To find out more about the rise of legal technology, take a look at our article written by Fides Research: “Crossing the Chasm: Establishing widespread use of legal technology in law firms”. To request a copy of our article, please contact research@fidessearch.com
Movers & Shakers of the week
Appointments
Simmons appoints assigns new heads of financial institutions and life sciences
Partner Charlotte Stalin will be leading the financial institutions teams, taking over from Jonathan Hammond, whilst Paris disputes partner Alexandre Reginault will take over from Jacques-Antoine Robert as the head of life sciences
Moves
Visa hires former Deutsche Bank global head
Visa has hired new European general counsel Emma Slatter. She previously held the role of global head of strategy at Deutsche Bank, and had worked at the bank for over 20 years.
Top gaming company loses chief legal officer to tech start up
Robert Millar has left his role as CLO and company secretary at King to join Improbable, which creates virtual reality simulations for online gaming.
Dentons launches a UK patents prosecution practice
An eight-strong patents team from Olswang will reunite with former Olswang patent prosecution co-head Justin Hill at Dentons
Davis Polk lose Hong Kong capital markets heavyweight
Capital markets partner Antony Dapiran, who was formerly Hong Kong managing partner for Freshfields Bruckhaus Deringer, is set to leave Davis Polk & Wardwell after the region experiences a dip in capital markets work. His next move is unknown.
Two weeks after former Yahoo general counsel Ronald Bell stepped down from his position, Arthur Chong has taken on the role. He previously acted as a GC for Broadcom as well as an outside legal adviser for Yahoo for the last five months
Kirkland attempts to restore Munich offering after seven partner loss
Private equity partner Volkmar Bruckner departs Weil, Gotshal & Manges to join Kirkland & Ellis in its Munich office. He will join their corporate team, which recently lost five partners to Sidle Austin last month
Freshfields drops aviation finance team in London
US firm Holland & Knight are taking on the City aviation finance team from Freshfields Bruckhaus Deringer. Global head of asset finance and co-head of the aviation sector group Rob Murphy has chosen to join CDB Aviation Lease Finance, whilst the five associates in his team will move to Holland & Knight’s London office
Boies Schiller’s corporate group finds new home
The corporate team of litigation specialists Boies Schiller Flexner in New York is departing for Paul Hastings. The team includes five partners and several associates
Office Openings & Closings
McDermott Will & Emery closes its office in Rome
Gowling WLG plans to open second German office in Stuttgart
Mergers & Alliances
Merger talks break down between disputes specialists Enyo Law and Stewarts Law
Partner Promotions
Gowling WLG promotes five, including four women
Farrer & Co appoints five to partnership, and 80% are female
Pinsent Masons promotes 16 to partnership, and surpasses its 25% female partnership targets
Freshfields makes up 18, six in the City
With International Women’s Day celebrated across the globe on Wednesday, the legal press has been awash with articles, interviews and opinion pieces about how gender equality can be increased in law.
The majority of these profiled the women who had made it to the top, as practice area leaders or managing partners, but did not address the things that are currently being done to move the needle on gender diversity.
Consistent with this year’s IWD theme, being Bold for Change, we consider how clients are making a stand for greater equality in the legal sector, and the actions they are taking to truly drive the greatest change for women – and other minority groups – in the firms that they instruct.
Legal supplier diversity: The approaches of Microsoft, HP and PayPal
Leading the charge in this respect is Microsoft with its Law Firm Diversity Program. Launched in 2008, the program allows Microsoft’s panel firms the opportunity to earn an annual bonus if they reach a quantifiable diversity goal in relation to the firm’s leadership.
This works by allotting ‘points’ to partner firms for progress in getting women or minority groups into law firm management, leading the firm’s relationship with Microsoft or leading work on Microsoft’s legal matters, and equate to a bonus of 0.5% to 2% on the work the firm had completed that year.
To date, this program has been a resounding success, with over 80% of the participating law firms earning their bonuses annually. Since the program was launched, the percentage of hours worked by diverse lawyers on Microsoft matters has increased from 33.6 percent to 48.2 percent, with Microsoft’s own legal department becoming more diverse over this time period.
There is also circumstantial proof that such an increase in supplier diversity has strengthened Microsoft’s track record, with its litigation teams winning 89 cases and losing only six in the past three years, reducing the corporation’s settlement costs and legal fees substantially.
On the other hand, HP has taken a different approach, announcing in February that it would withhold 10% of invoiced fees from firms who fail to meet or exceed diversity requirements.
The policy states that firms must field “at least one diverse firm relationship partner, regularly engaged with HP on billing and staffing issues” or “at least one woman and one racially/ethnically diverse attorney, each performing or managing at least 10% of the billable hours worked on HP matters”. This applies to all US-based law firms which HP works with, and is to be implemented from 2019 to give partner firms sufficient time to implement the necessary changes.
Finally, PayPal has conducted a wholescale review of the law firms it uses to gather information on the diversity of their workforce, with a particular focus on whether they are supporting up-and-coming female and minority lawyers.
Firms that are unable to show evidence of “meaningful progress in a reasonable time” will not be used by PayPal in future, according to General Counsel Louise Pentland, with the organisation committing to favour work with law firms who genuinely support and advocate diversity.
For PayPal, this review acts as a starting point in gauging whether their partner firms are willing to make changes, especially in ensuring a succession pipeline of women and people of different ethnicities.
What does this tell us?
From the above examples, there are a number of factors that remain consistent. Each policy looks to increase the representation of women within leadership and/or at relationship partner level, to create a sustainable pipeline of change within the law firms with which they operate.
Given the imbalance of diversity within law firm leadership ranks, compared with the composition of firms as a whole, these clients have recognised that change is unlikely to be homegrown and have endeavoured to incentivise it.
Although the success of the policies cannot be compared directly, with the initiatives at HP and PayPal still very much in their infancy, the overriding factor in the success at Microsoft can be attributed to time and commitment: policies such as these, very much like internal law firm diversity and inclusion initiatives, need time to take hold and be constantly monitored and reviewed to produce results.
Law firms ‘success’ in adhering to these policies also relies critically on measurement, and the ability for them to accurately measure the diversity demographics of their own staff. Encouragingly, the polices at Microsoft and PayPal look to assess firms relatively, and award firms for making improvements from a predetermined starting point, rather than set standard for everyone. This equally awards both firms with established D&I policies, as well as those more recently embarking out on them.
Conclusion
In short, it is imperative that law firms match the qualities and values of the clients that they are representing. In a competitive legal market, both in the US and UK, with no shortage of talent, when faced with two teams that produce equal quality of work, why wouldn’t GC’s choose to work with teams they feel represent them better and have been shown by research to be more effective?
With large corporate clients pushing the need for action, the gauntlet now lies with law firm management to be bold and ensure greater gender equality within their firms.
To learn more about our gender initiative at Fides Search, and receive a copy of our report A Path to Parity: Reassessing Gender Balance within UK Law Firms, please contact eclews@fidessearch.com.
Hello and welcome to the Fides Weekly Update. Read to learn more about the main legal and compliance news stories of the week and don’t forget to check out our Movers & Shakers of the week.
To celebrate International Women’s Day that took place this week, Researcher Emily Clews has written a blog that discusses this year’s Bold for Change theme, and the steps that corporate organisations have taken in improving gender equality in the workplace and what law firms can take from these approaches. Click here to take a look.
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This week:
1. Merger creates second largest European asset manager
A merger that will form the UK’s largest fund manager was announced on Monday, causing share prices to soar for the two companies and creating an outfit with £660bn assets under management (AUM).
After six weeks of discussions, Standard Life and Aberdeen Asset Management have agreed to join forces, with Standard Life investors expected to hold two-thirds of the group and Aberdeen Asset Management one-third. The deal as a whole is valued at £3.8bn.
Originally known as a life insurer, Standard Life has focused more of its efforts on asset management over the last few years. This deal will certainly help the company establish itself further as an asset manager and allow themselves to compete with the larger US outfits, such as BlackRock and Vanguard.
The deal comes at a crucial time for both companies, as Standard Life attempts to shake off poor outflows and a similarly weak performance of their market leading Gars (Global Absolute Return Strategies) product last year. Meanwhile Aberdeen have also been hard hit, seeing their 15th consecutive quarter of net outflows whilst their emerging markets-focused strategy strains with declining interest from investors.
It has been widely considered that this merger is a defensive move against an industry shift towards passive fund management. Active managers are facing high pressure competition from index-tracking passive funds, which run much lower cost bases and are currently proving more popular in the marketplace. With both Standard Life and Aberdeen operating as active fund managers, the deal will create one of the world’s largest active fund management firms and perhaps inject some disruption into market trends by delivering the size and scope to compete with the cheaper index-tracking rivals.
That being said, with mounting regulatory challenges and fee pressures, the asset management industry is in the midst of significant change, and the new entity has suggested major cost-cutting over the next few years. Job losses are expected at the two Scottish firms whilst overlaps from each of their central functions will need to be streamlined. Hargreaves Lansdown has also indicated that the main source of growth for the firm will come largely from cost savings.
Consolidation is a key trend for the industry at the moment, with one example being the recent merger between UK investment manager Henderson and US counterpart Janus Capital. This level of M&A activity is expected to rise as funds continue to struggle to compete with low fees and consistent returns. With an FCA crackdown of the asset management industry also on the horizon, firms are clearly gearing up for what could be defined as a turning point in the UK asset management industry.
Movers & Shakers of the week:
Appointments
Facebook hires Olswang partner as EMEA head of regulatory and litigation
City litigation partner Anna Caddick joins Olswang client Facebook to head up its regulatory and litigation teams in Europe.
Slaughters appoints three new leaders for key practice groups
Slaughters announce Sarah Lee, David Ives and Charles Cameron as the new practice heads for dispute resolution, IP/IT and pensions and employment.
Eversheds Sutherland appoints new leaders for corporate and human resources groups
Eversheds Sutherland has appointed new leadership for two of its practice groups, with corporate partner Keri Rees taking over as company commercial head from Keith Froud, and Diane Gilhooley replacing longstanding human resources head Martin Warren.
Linklaters promotes new global head of real estate
Head of UK real estate Andy Bruce has been appointed as Linklaters new global head of real estate to succeed Yves Moreau
Former Linklaters senior partners Elliott to chair Irish Bank
Robert Elliot has been appointed as the next chairman of Irish bank Permanent TSB Group Holdings.
Wells Fargo appoints top Cravath partner as new GC
Former Cravath Swaine & Moore presiding partner Allen Parker has been named as the next GC for Wells Fargo & Co.
RPC GC consulting head quits to join e-discovery firm
Former T-Mobile GC Julia Chain, and head of RPC’s in-house consultancy arm, is to leave the firm to join e-discovery and legal document services firm Millnet, alongside two other members of RPC’s consulting team.
Moves
Fourteen-lawyer London private client team leaves Gowling WLG for Forsters
Gowling WLG’s 14-lawyer City private client team is to join Forsters on the 1st May. The team includes four partners – Anthony Thompson, who heads Gowling WLG’s private client team, Catharine Bell, Nick Jacob and Daniel Ugur – as well as 10 solicitors and five other members of staff.
Boies Schiller hires HSF’s global head of public international law
US litigation firm Boies Schiller & Flexner has hired Herbert Smith Freehills global head of public international law Dominic Roughton for its London office.
Latham’s hires Linklaters financial regulatory partner
Partner Daniel Csefalvay joins Latham’s financial institutions group.
Kirkland & Ellis Hong Kong heavyweight Tsun resigns
Kirkland & Ellis equity capital markets partner Dominic Tsun has resigned from the firm’s Hong Kong office after almost six years at the firm.
Linklaters hires US Department of Justice heavyweight in Washington DC
Linklaters has strengthened its US disputes practice with the hire of Matt Axelrod, former principal associate deputy attorney general at the DoJ.
Office Openings & Closings
Ropes & Gray to spin off 100-strong patent prosecution team
Ropes & Gray is to spin-off its patent prosecution practice into a new firm – a move that will affect around 100 lawyers and staff.
PwC launches Hong Kong legal practice with KWM and O’Melveny partner hires
PwC has launched a Hong Kong legal practice with the hire of former KWM Beijing partner David Tiang, and O’Melveny & Myers counsel Joyce Tung. The firm is to be called Tiang & Co, which will enter into an association with PwC’s Singapore licensed foreign law practice, PwC Legal International.
DLA Piper combines with Portuguese alliance firm
DLA Piper has continued its European expansion by combining with its Portuguese alliance firm ABBC.
Welcome back to the Fides Weekly Update. Read on for our analysis of the top legal and compliance new stories of the week. You can also scroll down to see our regular feature: Movers & Shakers of the week.
Please follow us on Twitter and LinkedIin for daily market updates.
This week:
1) The price of misconduct: Global Bank’s fined $321 Billion since the financial crisis
A report released this week by the Boston Consulting Group found that banks have globally paid out $321 billion in fines since the financial crisis in 2008 – more than the GDP of Israel, South Africa and many European states. Banks paid $42 billion in fines in 2016 alone, a 68 percent rise on the previous year, the data showed.
Furthermore, this rate of regulation is unlikely to slow down, as European and Asian regulators look to match the regulatory enforcement of their US counterparts. For example, the number of individual regulatory changes that banks must track on a global scale has more than tripled since 2011, to an average of 200 revisions per day.
The study itself surveyed more than 300 retail, commercial, and investment banks, which represented more than 80% of all banking assets worldwide. Alongside regulatory trends, it examined the sector’s economic profit (EP) and future boardroom agenda for senior managers.
Regarding economic profitability, the banking industry still hasn’t completely recovered from the losses it suffered after the onset of the financial crisis, especially in Europe. Whilst U.S. firms have been in the black for the last three years, and banks in Asia-Pacific, South America and the Middle East and Africa have posted an economic profit year on year, European lenders are yet to post an annual economic profit since the crash
Because of this, coping with increased regulation must remain a priority argued the report, with the increasing costs of doing so putting pressure on banks to create more effective and efficient processes as well as harness technological innovation.
Defining an efficient mode of interaction between banks and regulators will be a critical task, as with many of the major reform packages now in place, banks now face the challenge of implementing technical regulatory measures and responding to audits.
Bank steering functions too will need to become more involved and effective in overall cost management, whether this be through adjusting the organization and operating models to partnering with fintech and regtech startups to provide, for example, more flexible IT infrastructures that are based on advanced analytics and big data and on improvements in process efficiency and automation.
As such, the report advocates closer collaboration between banks risk and steering functions, and the more integrated management of banks’ P&L and balance sheets to successfully navigate the regulatory environment.
2) Changing landscape: Team hires flood the Paris market
In recent weeks, the Paris legal market has seen a flurry of high profile and team hires that have brought about a shift in certain practice areas. This week it was announced that Reed Smith added an eight-lawyer tax team to its ranks, whilst US firm Ogletree Deakins is continuing its European expansion plans with a further office opening in Paris.
Thursday saw US employment specialists Ogletree Deakins take on three of Olswang’s remaining Paris lawyers, including employment partner Karine Audouze, who will be leading the US firm’s new French base. Numerous Olswang Paris partners have already departed the firm ahead of the launch of the three-way merger after it was announced that Olswang’s Paris office would be shutting down as opposed to joining the ranks of CMS Cameron McKenna Nabarro Olswang. The office closed on the 28th February, as the three-way merger is expected go live in May.
Ogletree Deakins has also hired Hogan Lovells Jean-Marc Albiol ahead of its office opening, along with two associates. Following launches in Berlin and London, Paris will be the third European base for Ogletree, who also operate in 49 domestic outfits across the US.
Meanwhile, Reed Smith has bolstered its Paris tax offering with a team hire of three partners, three counsels and two associates from Winston & Strawn. The partners joining are Jean-Pierre Collet, Florence Bilger and David Colin, who will sit alongside the seven partners and 11 other lawyers the firm brought on from King & Wood Mallesons (KWM).
Reed Smith made the most of the fallout from KWM, confirming a 50-strong KWM team hire back in January across its London, Paris, Munich and Frankfurt practices. Such a mammoth hire has greatly altered Reed Smith’s European capability, increasing the firm’s total European headcount by 10%, whilst also marking the largest team hire as a result of KWM’s collapse.
One firm that has witnessed significant volatility with French headcount is Freshfields Bruckhaus Deringer. Last month Freshfields’ partnership voted to take on a five-partner private equity team from Ashurst, after the Paris arm took a corporate and finance hit last year, losing a four-partner team to Orrick, Herrington & Sutcliffe.
It subsequently suffered another loss, as Jones Day hired Freshfields Paris real estate head Erwan Le Douce-Bercot along with the rest of its real estate team.
It seems team hires have become a trend amongst Paris law firm offices over the last few months, and with the instability of various international offices currently set up in the French capital, namely Ashurst, King & Wood Mallesons and Olswang, partners are keeping their alliances intact and acting a little more cautiously regarding the health of their respective firms. As this would naturally bring more insecurity for a partner, with more individuals therefore taking advantage of new opportunities, lateral hires will undoubtedly continue to rise in Paris.
3) MOVERS & SHAKERS
Moves
A&O hires three-layer regulatory banking team from Mayer Brown in Frankfurt
The team, led by partner Alexander Behrens joins A&O in Germany
Clifford Chance disputes partner joins Dechert
Clifford Chance disputes partner Stephen Surgeoner has joined the London office of Dechert after 26 years at the magic circle firm.
Morgan Lewis expands Shanghai office with Simmons employment team
Morgan Lewis has bulked up its Shanghai office with a team of five lawyers from Simmons & Simmons, led by employment and investigations partner Lesli Ligorner.
Reed Smith hires eight-lawyer Paris tax team from Winston & Strawn
Partners Jean-Pierre Collet, Florence Bilger and David Colin have joined Reed Smith alongside a team of lawyers that also includes three counsel.
Cadwalader ex-City head joins Winston & Strawn
Winston & Strawn has hired Cadwalader Wickersham & Taft’s former London head Angus Duncan.
Goodwin hires two more litigators from Freshfields in New York
Litigation partner Gabrielle Gould has joined Goodwin as a partner in its financial industry practice group, moving with litigation senior associate Samuel Rubin, who will become a counsel.
DLA Piper Asia employment head leaves to launch Hong Kong office of Seyfarth Shaw
Employment head Julia Gorham is set to establish Seyfarth’s fourth Asia-Pacific office
Simmons & Simmons and Goodwin Procter make further hires from KWM
Simmons has hired former KWM corporate partner David Parkes for its London office, while Goodwin has recruited former Luxembourg office managing partner and private equity partner Alexandrine Armstrong-Cerfontaine as a consultant.
Appointments
A&O’s global dispute resolution head becomes new US and Latin America senior partner
Allen & Overy (A&O) global dispute resolution head Tim House is relocating to New York to take up the new role
Freshfields corporate partner Richards moves into Rio Tinto legal team
Philip Richards has been seconded to head up Rio Tinto’s legal team following the dismissal of legal and regulatory affairs group executive Debra Valentine
Former One Savings Bank GC joins Lloyds Bank
Former One Savings Bank general counsel Zoe Bucknell has taken on a new role at Lloyds Banking Group as deputy company secretary.
Anglo American hires Shearman mining co-head as new Group GC
Richard Price is set to replace longstanding group GC Ben Kiesler effective of the 1st May.
Latham appoints London capital markers partner as vice-chair
Richard Trobman joins Ora Fisher as the vice-chairs of Latham & Watkins
KWM appoints Hong Kong co-chief exec as new China chairman
Hong Kong co-chief executive Zhang Yi succeeds global chair Wang Junfeng as the firm’s new China chairman.
Office Openings & Closings
US firm Ogletree Deakins opens in Paris with three remaining Olswang lawyers
Mergers & Acquisitions
Dentons has secured its first base in the Netherlands via a merger with Dutch firm Boekel
Financial Results
King & Spalding turnover drops 8%, while Covington ups City revenue by 9%
Gibson Dunn posts rising revenues for 21st consecutive year
Slater and Gordon writes down value of UK business as half-year revenues fall 34%
Goodwin nears $1bn revenue mark after year of expansion across Europe
Welcome back to the Fides Weekly Update. Read on for our analysis of the top legal and compliance new stories of the week. You can also scroll down to see our regular feature: Movers & Shakers of the week.
Please follow us on Twitter and LinkedIin for daily market updates.
This week:
COMPLIANCE
Britain’s major banks were in the spotlight this week as they unveiled their full-year financial results. As such, this week we take a deep dive into the financial results of two of the UK’s Clearing banks, and what they reveal about the health of UK banking.
Lloyds Banking Group
The outlook was brighter at Lloyds Banking Group that doubled its pre-tax profits from 2015 and reported its highest annual profit in a decade. The banks’ pre-tax profits increased by 158% to £4.24bn, a level last seen in 2006 before the financial crisis.
Following the results, the government has since reduced its stake in the bank to 3.89%, down from an initial 43% following the bailout in 2008. At this current sell down rate, Lloyds should be fully returned to private ownership by May. Lloyds share price also rose by 3.6% on Wednesday, making the bank the biggest riser on the FTSE 100.
A reason for this boost in profitability is a decline in the amount the bank paid out for PPI provisions, from £4bn in 2015 to £1bn last year. Profits at the bank had been weighed down in recent years by the £50bn cost of bad lending at HBOS – the bank Lloyds took over during the 2008 financial crisis – and £17bn of charges to cover PPI compensation.
Despite this, the bank still set aside a further £1bn for conduct issues, which has affected underlying profits, which were down to £7.9bn from £8.1bn last year. Total income for the group also edged down to £17.5bn compared with £17.6bn the previous year, showing how difficult it is for banks to make money when interest rates are so low.
The overall picture however is one of robust recovery for Lloyds, whose share price has increased 21% over the past six months after plummeting to 48p following the referendum result. The bank also stands in stark contrast to fellow bailed out lender Royal Bank of Scotland, which on Friday is due to post its ninth consecutive annual loss, has not resumed dividend payments, and is still 72% owned by the taxpayer.
However, with 97% of business generated by the UK economy, the possible downturn resulting from Britain’s decision to leave the European Union is a predominant concern for Lloyds.
Barclays
On Thursday, Barclays also reported that its annual profits in 2016 had almost tripled, achieving 182% growth to reach a pre-tax profit of £3.2m.
This is the result of the bank’s strong progress on its restructuring and the run-down of non-core assets, which has included the sale of its Africa business, as well as the dramatic fall in the amount set aside to cover litigation costs from £4.3bn to £1.3bn after seeing more than 20 billion pounds of profit erased by fines and settlements in the previous five years.
In spite of this, the performance of core UK and international divisions was somewhat underwhelming, with underlying profits falling back slightly and revenue dropping three per cent to £21.5bn. Impairment charges for bad debts rose also 35% to £2.3bn.
There also remain some legacy litigation issues yet to be resolved, with the bank yet to settle with US authorities after rejecting an offer to settle a mis-selling claim for mortgage backed securities at the end of last year. Barclays are also awaiting the outcome of an investigation by the UK’s Serious Fraud Office into the way it raised funds during the height of the banking crisis.
Barclays also needs to better mitigate the risk of the UK’s exit from the EU, especially with the size of its investment bank. Whilst the majority of staff are expected to remain in London, changes to the bank’s legal structure, including making Dublin the headquarters of its European business, may be necessary in the coming year.
LEGAL
US law firms have continued to post strong financial results this week, with Latham & Watkins, Sidley Austin, Sherman and Sterling and Quinn Emmanuel all reporting strong financial performances in 2016.
Revenue at Latham & Watkins increased 6.5% to $2.823bn (£2.26bn), marking its seventh consecutive year of top line growth and the most revenue ever generated by a law firm in a single financial year.
Net profit also jumped 8% to $1.424bn (£1.14bn), with profit per equity partner rising 5.3% to break $3m for the first time in the firm’s history. Revenue per lawyer (RPL) also rose 1.9% last year to $1.238m (£990,000).
This comes in a period of meteoric growth for the firm, which despite the general contraction of the market for high-end legal services, has managed to increase its revenue by 55% over the last seven years. It is now the world’s largest law firm by revenue, overtaking both Baker McKenzie and DLA Piper, and looks likely to retain that title this year.
All of Latham’s practices and industry groups saw increased demand last year, especially litigation and disputes which equates to one third of the firm’s business, whilst the M&A and banking practices also grew their revenue by 15% respectively.
As a result, the firm has continued to expand aggressively, opening a new office in South Korea and making 26 lateral partner hires globally, 10 of which were in London.
Sidley Austin posted healthy gains in 2016, with revenue climbing 3.4% to $1.928bn (£1.55bn). Profits per equity partner rose to $2.13m (£1.71m), an increase of 3.1%, while revenue per lawyer held steady at $1.05m (£843,000).
Growth attributed to new offices and the performance of certain practice areas over the past few years, with the demand for litigation (5%) and transactional practices (3-4%) up, as the firm made investment into its private equity practice.
Sherman and Sterling also saw revenue rise 6% to $912.5m (£731m), boosted by strong performances in M&A, international arbitration, asset management, real estate and project finance. London revenues rose by 14% to $169.7m (£136m), a 63% increase in revenue since 2010.
Correspondingly, revenue per lawyer rose 5.9% to $1.085m (£870,000), as total headcount stayed steady at 840 lawyers last year, including 187 in London.
Meanwhile, the stunning leap in profits per equity partner (PEP), up 18% to $2.165m (£1.74m), came as the firm’s total equity partner ranks decreased by 22 to 140, its smallest number in recent years
Despite the jump in partner profits, net income rose just 1.5% to $302m (£242m) last year. Condon confirmed that increasing associate compensation was a factor in keeping net income growth down. “Rising associate salaries were unbudgeted by all law firms,” he noted.
And while Shearman has been frequently selected as litigation counsel for banking clients in recent years, he said, financial institutional litigation may begin to slow down. The firm is focusing on growing its docket of corporate client base litigation to counteract a decrease in litigation and investigations for financial institutions, said senior partner Creighton Condon.
The ever expanding Quinn Emanuel Urquhart & Sullivan saw a 21% spike in its London revenue for 2016 reaching £44.8m while London net profit sat at £32.8m.
The results come after the London office managed a 41% increase to £36.9m last year, up from a 33% increase in 2014 which saw City revenues sitting at £26.2m.
It’s been a busy year for Quinn which welcomed four new City based partners last year. The office launched both a long awaited corporate crime practice with Covington & Burling partner and former Serious Fraud Office prosecutor Robert Amaee and a UK construction disputes practice with Herbert Smith Freehills’ James Bremen.
However the firm lost partner Martin Davies to Latham & Watkins last month, the first lateral hire to leave the London office in around nine years.
MOVERS & SHAKERS
Moves
A&O takes three-partner Paul Hastings team finance team in New York
Allen & Overy (A&O) has continued its US hiring spree with the recruitment of a three-partner finance and securities team from Paul Hastings in New York, including former leveraged finance head Bill Schwitter.
DLA Piper loses two partners to boutique pensions firm
Kate Payne and Vikki Massarano are joining ARC Pensions Law to establish its first regional office in Leeds
Freshfields loses entire Paris real estate team to Jones Day
Real estate head Erwan Le Douce-Bercot leaves for Jones Day along with a three-lawyer team in Paris.
London Arbitration specialist Wendy Miles QC moves to US rival Debevoise & Plimpton
Two and a half years after joining the London office of Boies Schiller, Miles joins US rival Debevoise & Plimpton
Nine partner Norton Rose energy team leaves for Baker Botts in Houston
This includes David Peterman, the head of Norton Rose Fulbright’s US M&A and securities practice; Robert Phillpott, the former head of the firm’s US tax practice; and Efren Acosta, the former head of its Houston corporate, M&A and securities practices.
Orrick hires four-lawyer team from Clifford Chance in Paris
Orrick Herrington & Sutcliffe has hired four lawyers from Clifford Chance in Paris including local competition head Patrick Hubert.
Ashurst Hong Kong exits continue as project finance partner joins DLA Piper
Ashurst has seen another departure from its Hong Kong office, with project finance partner Matthias Schemuth leaving for DLA Piper.
Appointments
Burges Salmon appoints new senior partner
Employment partner Chris Seaton has been employed as senior partner, taking over the role from Alan Barr, who has served as senior partner of the firm for the last six years
New Chairman appointed at Watson Farley Williams
Watson Farley has appointed London shipping partner Nigel Thomas as its new chairman, replacing Frank Dunne, who has held the role since 2004.
Office Openings & Closings
Allen & Overy and Baker McKenzie invest in Northern Ireland legal innovation centre
Fieldfisher opens five-partner Amsterdam office
Mergers & Acquisitions
Norton Rose Fulbright agrees combination with Chadbourne & Parke
Norton Rose Fulbright has confirmed that it is to merge with Chadbourne & Parke in a deal that creates a firm with combined revenues of just under $2bn (£1.61bn).
Welcome back to the Fides Weekly Update. Read on for our analysis of the top legal and compliance new stories of the week. You can also scroll down to see our regular feature: Movers & Shakers of the week.
Please follow us on Twitter and LinkedIin for daily market updates.
This week:
1) Middle East exits continue: Weil Gotshal announces Dubai office closure
Weil Gotshal has become the third major law firm to announce office closures in the Middle East this week with the decision to close its Dubai office, the US firm’s only outpost in the region.
This move is somewhat unusual as other firms have typically scaled back in secondary regional markets, evidenced by the decision of Clifford Chance and Herbert Smith Freehills to close their Qatar offices last week.
This follows a raft of further consolidation, with HSF also closing its office in Abu Dhabi in 2015, and US giant Latham & Watkins also following suit, shutting its operations in Doha and Abu Dhabi in the same year. Other international firms to scale back include Baker Botts and Simmons & Simmons who both closed their Abu Dhabi bases in 2015 and 2016 respectively.
The retrenchment in its international network comes despite an expansive 2016 for Weil, which posted a 9% income hike to push its revenues to $1.27bn. During the 2016 financial year, profit per equity partner (PEP) also rose more than 22% to $3.1m, following a prolonged period in which Weil had struggled to sustain growth and a 1% revenue rise in 2015.
For law firms operating in the region, the UAE market remains intensely competitive, with significant pressure on fees. The market is heavily saturated, with 45 international law firms in Dubai and 20 in Doha competing with local firms for work.
The intense competition for work is not the only challenge, with falling oil and gas prices in recent years also impacting work levels in other practice areas such as project finance.
Despite this, the Dubai International Financial Centre – the UAE federal financial free zone in Dubai – continues to attract business, with most law firms believing an office base there is a prerequisite of successful practice.
2) RBS accused of fraud and forgery
The Royal Bank of Scotland has been accused of systematically faking and manipulating documents to cover misconduct, according to a number business customers and a former bank employee.
This comes as the latest in a long line of accusations of wrongdoing by the bank, which was bailed out by the tax payer in 2008, that includes the of miselling financial products, money laundering and forex manipulation.
Mark Wright, a former manager at the bank, accused two former colleagues in the Group Compliance Unit of fabricating bogus complaints from five of his customers, who later submitted statements contrary to this affect.
He maintained that the matter was not suitably investigated after the individuals in question left the bank, and that the complaint negatively affected his career progression within RBS as they failed to accord him the status of a whistleblower. He left the bank in 2013 with mental health issues, eight years after his grievance was first recognised.
This concurs with the experiences of Andy Keats and Clive May, who are amongst 300 others in seeking legal representation against RBS for fraud. Mr Keats contends that the bank falsified documents that led to the insolvency of his security business, whilst Mr May claims that RBS defrauded himself and the government by selling him an Enterprise Finance Guarantee (EFG) when he was ineligible for this.
The justification for the bank to be acting in this way is to cover up wrongdoing, in particular the alleged defrauding of thousands of small businesses for billions of pounds of assets.
Internal emails handed to BuzzFeed News and the BBC in October 2016 show that the bank implemented a plan to squeeze customers facing financial difficulty and gave bonuses to staff for identifying struggling firms.
RBS then bought assets at rock-bottom prices once companies hit difficulties, often selling them at a profit. It also hit them with large fees, driving many into the ground and boosting its own bottom line, according to the documents.
This is also in line with the findings of the Tomlinson Report (2013) which found that RBS made huge profits by engineering the failure of business customers.
The question remains as to how high the knowledge of this fraud and document manipulation went, and the extent to which the institutional culture within RBS facilitated this. Will this be the next big regulatory fine for misconduct, or left on the backburner by the FCA? Whatever the outcome, in the words of Steve Middleton, head of the RGL Management group helping individuals seek legal representation against the bank;
“In most cases the end result of what the bank did to their people was the total destruction of their businesses and people’s lives. These people were intentionally financially and emotionally destroyed. Their only mistake was to trust the bank that they thought was there to help them succeed.”
3) Movers & Shakers
Moves
Slaughter and May makes second ever lateral partner hire with addition of HSF pensions head
Daniel Schaffer becomes Slaughters first ever lateral hire in London
Cleary’s London capital markers partner exits for Simmons
Simon Ovenden joins Simmons & Simmons in a rare departure from the US firm in London
Freshfields pick up five-partner private equity team from Ashurst Paris
Partners Guy Benda, Nicolas Barberis, Stephanie Corbiere, Yann Gozal and Laurent Mabilat are set to join the magic circle firm in Paris subject to a partner vote.
Kirkland & Ellis loose seven-partner team to Sidley Austin in Munich
Sidley raids Kirkland for the second time in a year for a private equity team led by Volker Kullmann, whilst also hiring Linklaters’ Frankfurt banking and finance partner Kolja von Bismarck.
Morgan Lewis turns to Orrick for four further partner hires to strengthen Hong Kong base
Four Orrick of counsel – Rosita Chu, Eli Gao, Yan Zeng and Roger Zhou – will are set to join Morgan Lewis as partners, following the hire of nine Orrick partners in Hong Kong, Beijing and Shanghai last month.
K&L Gates expands City finance practice with hire of aviation finance head from Arnold Porter
Head of aviation finance and ex London managing partner Philip Perrotta joins K&L Gates
Office Openings and Closings
Weil Gotshal to close Dubai base as Middle East cutbacks continue
Mergers & Acquisitions
Eversheds Sutherland follows transatlantic tie up with Singapore merger deal
Financials
Cooley’s London base nears $50m mark two years after launch
White & Case posts 3.6% London revenue rise as global growth outstrips UK performance
David Polk sees double-digit revenue and PEP rises for 2016 as partner profits hit $3.75m
Cadwalader revenue shrinks 2.5% following office closures and partner exits
Welcome back to the Fides Weekly Update. Read on for our analysis of the top legal and compliance new stories of the week.
Please follow us on Twitter and LinkedIin for daily market updates.
This week:
1.All you need to know about the cities Law firms (PEP & Financials)
In a week where multiple global law firms have announced their financials we are looking into their performance and which partners have experienced a happy or bleaker start to the year.
Hogan Lovells global performance and turnover (excluding the US) was up to £638m, this has brought PEP up overall to £879,000 from £698,000 an increase of 25%. These results surely help ease the burden of adding an additional £50m in capital, which was announced earlier this month.
Closer to home, Eversheds have consistently produced positive revenue results however have increased operating costs significantly, resulting in a drop in PEP from £410,000 to £386,000. The number of Partners at the firm grew from 296 to 323 while the number of legal advisers increased to 1,543 from 1,410 and administrative and support staff numbers rose to 1,097 from 941.
Dechert meanwhile also posted positive results with a 2.4% increase in revenue and 1.6% in PEP despite CEO Henry Nassau acknowledging the “challenges of 2016”. The real growth was the London office, despite the fluctuations in currency prices. Final PEP numbers came out at £2.03m despite other areas of the business suffering like non-equity partners and the US business remaining fairly flat.
Similarly to Hogan Lovells, Taylor Wessing Partners added a more modest £3.59m in capital this is in line with their move to become an all-equity Partnership. Turnover increased 5% to £126.65m whilst operating profit fell slightly from £49.99m to £49.85m whilst PEP increased slightly from £767,000 to £770,000.
Ashurst who experienced significant challenges within their partnership throughout 2016 whilst also investing heavily in their infrastructure, saw a significant drop in PEP to £567,000 representing a 24% decline. Despite this the firm grew from 2,651 to 2,722, although total fee earners fell from 1,399 to 1,368.
Weil Gotshal & Manges posted notable increases as revenue rose 9% while PEP jumped 22% to £2.5m. Lawyer headcount increased 1.8% to 1,083, while the number of equity partners at the firm dropped to from 164 to 161.
Despite the challenging environment for law firms globally these results provide some optimism for the year ahead as firms continue to develop their capabilities domestically and internationally, enabling their businesses to remain competitive and profitable in the current climate.
2. Trump considers Dodd-Frank repeal
Since his inauguration, Donald Trump has begun fulfilling many of his campaign promises. His administration is on a mission like no other before it, signing many executive orders, some controversial, as promised. Next on his agenda is one of the most significant pieces of regulation to be devised, the Dodd-Frank Wall Street Reform and Consumer Protection Act first implemented in 2010 in the aftermath of the 2008 financial crisis.
Trump is ordering a complete review, and has been contemplating since May 2016 that the act has been too severe on the banking sector, forcing banks to hold extraordinarily high cash reserves and stifling growth and innovation in an attempt to avoid another “too big to fail” scenario. As a successful businessman, who has relied heavily on many of these same banks to fund his vast and diverse portfolios of business, is it a surprise that he is considering repealing or even completely reforming the act?
The general consensus of the market is mixed, with most saying that Dodd-Frank has not fully achieved its original purpose, but on the other hand many would argue that it has been generally positive and certainly ‘done some good’. The opportunity for high risk strategies that could go wrong have been curbed and consumer protection has been tightened.
It’s also worth arguing that same lack of freedom for the banks has in some ways led to the exponential growth of the Fintech industry, which is now in itself a $7 billion sector. It has been able to capitalise on less regulatory supervision, low interest rates and the ability to utilise the latest technology to provide a level of service and efficiency traditional banks are unable to compete with.
Unsurprisingly, news of Trumps review caused shares to rally in London at a time when European banks are currently buckling under further regulatory pressures. Both administratively and economically MiFID II is causing headaches and is creating huge budget issues under strict timelines which are likely to be extended. Will the potential scaling back of regulation in the U.S force other regulators elsewhere to become more relaxed and stay competitive and if so would this lead us to be exposed in the future?
Where will this leave our compliance and regulatory industry? From our discussions, there is a mood that the size of these teams are bloated and of huge cost to the sector but have been necessary in protecting the banks from further failures. But these systemic risks have subsided as a positive compliance culture has been embraced.
The FCA’s approach since Martin Wheatley was forced to step down has been much more conservative but this is as much to do with the fact that the focus of the regulator has moved to the Asset Management sector and with MiFID II already delayed by a year the approach of Trump while radical could open up the opportunity for new ideas and regulatory strategy.
Welcome back to the Fides Weekly Update. Read on for our analysis of the top legal and compliance new stories of the week. You can also scroll down to see our regular feature: Movers & Shakers of the week.
Please follow us on Twitter and LinkedIin for daily market updates.
This week:
1. BofE Governor warns of fintech threats
There has been a lot of excitement in the financial services industry about the wave of new technology entering the market. However, along with all the innovation and new products comes a host of regulatory challenges that could pose a threat to the financial stability of our economy, Mark Carney has warned.
In a speech delivered by Governor of the Bank of England Mark Carney at a G20 conference on Thursday, we were made aware of the dangers that financial technology, including robo-advice, can have on financial markets.
Carney argues that the technology used by robo-adviser firms may result in a large number of clients all shifting towards certain assets at the same time. This process, which is defined as ‘herding’, creates market volatility in the short-term by artificially spiking the price of an asset through demand.
Such volatility could bring about systemic risk, as investors often make decisions based on the performance of the wider economy, which in turn would exaggerate the ups and downs. This cycle of fluctuations is termed ‘pro-cyclicality’.
Further to the systemic threat robo-advice presents, Carney also touched on the adaptation of cybersecurity frameworks for financial institutions. The success of fintech has led to a greater reliance and interconnectivity of IT systems, which naturally generates greater operational and cyber risks.
The Financial Stability Board, of which Mark Carney is Chair, has already begun to tackle this issue by carrying out a stock-take of existing cyber security regulation. The results of this investigation can be found here.
There is no doubt that the fundamental processes of financial institutions are changing. They are beginning to service clients better than ever and developing products that will permanently alter traditional banking activities. In his speech, Carney praised the Financial Conduct Authority for the efforts made so far in seeking more suitable methods of regulating fintech, with Project Innovate and the regulatory sandbox contributing to our objectives of attracting new businesses to UK and making London the fintech hub. But there remains numerous uncertainties when attempting to implement a risk framework that is fit for purpose and doesn’t leave an institution exposed to potential misconduct.
How easy it will be to regulate these new systems and to what extent they can be abused remains to be seen. Nevertheless, it’s encouraging that regulators and policymakers alike are attempting to stay ahead of the curve when it comes to technology, which is a positive sign that innovation is here to stay in the financial sector.
2. The aftermath of KWM: mass team hires the new normal
In the aftermath of KWM’s fall into administration last week, attention has shifted to the large team hires, where these teams went and what business this will provide to their new firms.
The discussion of this topic is contentious, with an interim report released this week to creditors by KWM’s administrators Quantuma citing that ‘Administration was the only resort’ following the amount of partner and staff exits in 2016, with all but 33 partners exiting the firm’s European business.
The motivation of the firms who made the largest team hires – Reed Smith and Greenberg Traurig – appears to be access to the KWM network.
According to Ashfords partner Sam Palmer, who as solicitor manager to Quantuma has been dealing with the transfer of client files since the practice went into administration, only around 5% of clients decide not to follow partners to their new firms and decide to take their work in progress elsewhere.
The administrator’s interim report seems to confirm this, noting that as of the 10th January the sales the administrators completed after their appointment included the work in progress (WIP) and accounts of six partners to Greenberg Traurig, seven to Goodwin Procter, eight to DLA Piper, 11 to KWM China and 12 to Reed Smith.
However, with the former partnership and KWM now so dispersed, it will be interesting to see which partners manage to retain their key client relationships.
Greenberg Traurig yesterday announced that it had gained 10 new clients from its hire of a six partner, 25-lawyer team from KWM in London.
The team – which includes real estate funds partners Steven Cowins and Marc Snell – has brought in the following private equity funds clients: Cain Hoy, CBRE Global Investment Partners, Europa Capital, M3 Capital Partners, Paloma Capital, Revcap, Brockton Capital and Rockspring, as well as retail giant Westfield and British Airways Pension Fund.
Despite being known for its real estate offering in the US, this builds Greenberg’s practice in London, which has done little private equity and real estate work to date and no work with funds. This also follows failed merger talks last year with Berwin Leighton Paisner over differences in culture.
Much has also been made of the 50 lawyer team hire to Reed Smith – the largest team move from KWM – to strengthen its financial services regulatory, corporate and private equity practices in the UK, France and Germany.
At the core of this hire was the acquisition of a four partner financial services regulatory team under Tamasin Little, and the addition of four corporate partners to specialise on Private Equity and Funds.
Building out the corporate practice especially is understood to be a strategic goal of the firm, although it is questionable of the 17 partners that Reed Smith hired, how many of them were working with their own clients as opposed to serviced KWM clients.
As always, only time will tell if these large acquisitions are successful and integration into the acquiring firms client base and culture will be the determining factor. With the collapse of large elements of the KMW network, we are pleased to see that many lawyers have managed to secure their immediate future with moves and we hope the integration into their new firms is as seamless as possible.
Movers & Shakers of the Week
Appointments
Addleshaws re-elects managing partner
Managing partner John Joyce has been re-elected for a second term at Addleshaw Goddard
Moves
GC assigned to open banking group
The Open Banking Implementation Entity, funded by the UK’s nine biggest banks, hires former Lloyds and Halifax legal head as its first general counsel
Freshfields NY office loses top litigator
Securities and commercial litigation partner Marshall Fishman departs Freshfields Bruckhaus Deringer in New York to join Goodwin Procter as its head of New York commercial and financial litigation practice
A&O makes Asia IP hire
Allen & Overy has hired former China general counsel for pharmaceuticals giant AstraZeneca David Shen, who will join its global IP practice in Shanghai
Hogan Lovells boost FS practice with top lawyer from the regulator
Claire Lipworth is set to join Hogan Lovells in London as a financial services partner. Claire was previously chief criminal counsel at the Financial Conduct Authority for three years
Paul Hastings expand Paris offering with KWM real estate head
Former EUME real estate co-head Jean-Louis Martin is to join US firm Paul Hastings in its Paris office from King & Wood Mallesons, taking with him three fellow associates.
TPG hire new legal chief
Private equity firm TPG has hired Bradford Berenson in San Francisco as the new general counsel. He joins from GE where he served as its head of litigation and government investigations
KWM practice head to join Covington
Covington & Burling will hire European head of fraud and investigations Ian Hargreaves from King & Wood Mallesons, where he will be reunited with five other former KWM partners
EY bolsters Frankfurt office
EY Legal’s Frankfurt office gains KWM’s co-managing partner for Germany Stefan Krueger, who will sit in its TMT practice group
Office Openings & Closings
Morgan Lewis set to open Hong Kong office with nine partner-strong Orrick hire
Mergers & Alliances
DWF acquires claims management firm Triton, rescuing them from administration
Weightmans in merger talks with Newcastle law firm Ward Hadaway
Hello and welcome back to the Fides Weekly Update.
We’re back with the week’s trends, moves and developments in legal compliance. Scroll down to see our regular feature of Movers & Shakers of the week.
You can always follow us on LinkedIn and Twitter for regular market updates
This week:
1. SFO agrees settlement with Rolls-Royce on largest DPA since UK inception
Rolls-Royce will receive penalties of £671m in the largest Deferred Prosecution Agreement (DPA) to be approved by English courts, following a five year-long investigation into allegations of bribery by the luxury British car manufacturer.
Claims of malpractice began in 2012, after which regulators across the globe teamed up to carry out investigations exploring whether Rolls-Royce paid bribes to win export contracts in several countries, including Brazil, India and China. In 2016, the Guardian published the results of an independent investigation which found that ‘commercial agents’ had been hired in 12 different countries to help Rolls-Royce secure export contracts. The settlement reached involves a pay out to both Brazilian and US regulators, as well as to the Serious Fraud Office (SFO).
The courts approved the DPA on Tuesday (17 January) and it marks the third and largest ever DPA in English law. A DPA is an arrangement between the prosecution and an organisation used in connection with fraud, bribery or other economic crime to suspend investigations in return for a fine. If the organisation committed further wrongdoing during the defined period, which in Rolls-Royce’s case is five years, it could trigger reactivation of prosecution. The previous two companies to have arranged DPAs with the SFO are ICBC Standard Bank and an anonymous UK SME.
For this probe, Rolls-Royce initially instructed Debevoise & Plimpton back in 2012 to conduct an internal investigation after the SFO requested company information, and later brought in Slaughter & May as advisers in late 2013. Slaughter & May has a long running history of defending global corporations on corruption scandals, having advised GlaxoSmithKline in 2007 during an investigation into bribery allegations in Iraq during Saddam Hussein’s regime.
The rise in DPAs in the English legal system highlights a real step up in the SFO’s action against bribery and corruption, with Robert Amaee, a former head of anti-corruption at the SFO and partner at Quinn Emanuel Urquhart & Sullivan claiming that “The SFO is now playing in the big leagues.” Alongside the DPA, the SFO continues to investigate into individuals involved in the bribery scandal, which further demonstrates its stronger stance on such misconduct.
We expect to more outcomes such as this in the coming year, both from the SFO and US regulators. The FCPA released its Corporate Investigations List this month, which details all companies that remain subjected to ongoing and unresolved FCPA-related investigations. You can find the list here.
Movers & Shakers of the week:
Appointments:
Kennedys senior partner re-elected
Senior partner Nick Thomas has been re-elected to serve a fifth term at Kennedys, which will run for a further four years
Moves:
Simmons hires A&O capital markets partner
Jonathan Mellor joins Simmons & Simmons as a capital markets partners, leaving Allen & Overy after 30 years at the firm
Squire Patton Boggs former managing partner returns to fee-earning role
Former Europe and Middle East managing partner at Squire Patton Boggs Peter Crossley has decided to take back his previous position as a litigation partner in the firm’s international disputes practice in London
Leicester City FC appoints a GC
Caroline McGrory has joined Leicester City Football Club as its first general counsel, having previously worked in Mercedes-Benz’s Grand Prix team as director of legal and commercial affairs
Paris managing partner departs from Olswang
Ahead of the three-way merger, Paris managing partner Guillaume Kessler has moved to the French corporate practice of Orrick, Herrington & Sutcliffe
K&L Gates expands City disputes practice
Disputes partner Clarissa Coleman joins K&L Gates in London, and denotes the fifth London disputes partner to exit Addleshaw Goddard over 2016/17
Gibson Dunn gains four lawyer technology team from magic circle firm
Gibson Dunn & Crutcher has hired Allen & Overy’s group head of TMT Ahmed Baladi, who brings with him Counsel Vera Lukic and associates Emmanuelle Bartoli and Adelaide Cassanet to join the US firm’s Paris office
Philip Crump leaves Gibson Dunn & Crutcher’s finance practice, having joined from Kirkland & Ellis in August 2015. His next steps are unknown
John Berriman, who previously sat as a board member at PwC, has joined the board at Norton Rose Fulbright and will serve as their global chief operating officer
Office Openings & Closings:
Pillsbury Winthrop Shaw Pittman set to open an office in Dubai
Mergers & Alliances:
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