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 Services pricing firm launches new AI-based tool
Specialist legal consultancy and pricing firm Validatum this week launched a new AI-based pricing platform to help law firms compile more accurate budget and price proposals, as well as comply with incoming SRA transparency regulations.
In collaboration with AI provider Neota Logic, the partnership launched its ‘Virtual Pricing Director’, which offers a set of predesigned and prepopulated templates stored in a secure cloud-based environment that will speed up lawyers drafting process of pricing proposals. Its modules are related to practice areas that include real estate, corporate, commercial, private practice, family and litigation.
The product also has benefits for clients too, explains Neota’s managing director for Europe, Rick Seabrook: “Virtual Pricing Director will give users a complete pricing summary, outlining not only the fee options but also an explanation of how they are calculated, making it easy for the client to select the right option for them.”
The product was the brainchild of Richard Burcher, a legal pricing specialist and former managing partner at New Zealand firm Kaimai Law. It was built using Neota Logic’s ‘drag and drop’ AI engine, which enables legal services professionals to create sophisticated technology applications.
The main value of the platform lies in its ability to incorporate behavioural economics strategies that consider the wider picture of a pricing effort, such as the amount of money involved, the urgency, the importance of the method to the client and the influence of regulatory changes. “What the software does is take all that richness and complexity in a very simple and intuitive interface, with a lot of recommendations and predictions that lawyers can choose to embed all the way through the final proposal drafting,” explains Rick.
The platform also helps law firms meet compliance requirements under the new SRA transparency regulations coming into effect in December. As part of the legislation, firms will be forced to publish price and service information on their websites and details of the professionals involved in this type of work.
2). Movers & Shakers
Panel Watch
Post Office delivers invitations to tender for new £39m legal panel
Adidas recruits former Bayer in-house leader as new general counsel
Legal & General makes two new additions to panel with core advisers reappointed
Ex-Taylor Wessing lawyer joins trade group as first GC
Five firms dropped from £100m NHS roster
Crown Commercial Service appoints over 40 firms to new panel
Appointments
DLA reappoints Simon Levine as international managing partner
Moves
Ex-Quinn partner Hastings finds new firm amid SRA investigation
Former Quinn Emanuel Urquhart & Sullivan London partner Mark Hastings, who was dismissed by the firm earlier this year after being accused of inappropriate behaviour, has resurfaced at a Mayfair boutique amid a Solicitors Regulation Authority (SRA) investigation into the allegations.
Greenberg City partner to reunite with former KWM colleagues at DLA
Greenberg Traurig City tax partner Clive Jones is set to join DLA Piper, in a move that will reunite him with several of his former colleagues at King & Wood Mallesons.
White & Case responds to Latham’s infra push with HSF hire
White & Case’s hiring spree in the City continues, with the US firm picking up Herbert Smith Freehills infrastructure finance partner Simon Caridia.
Mergers & Acquisitions
Knights makes latest post-IPO acquisition with second firm takeover
Office Openings & Closings
Dentons launches in Duesseldorf with Taylor Wessing partner duo
Financials
Weil boosts London profits by 40% as LLPs show £1.2m pay for top earner
Reed Smith’s highest-paid picks up £2.5m in latest accounts
Inclusion & Diversity
Burford creates $50m fund for female-led litigation in effort to help close gender gap
Report into Bakers sexual misconduct claim finds ‘shortcomings’ in firm’s handling of incident
Firms announce new initiatives for World Mental Health Day
Innovation & Technology
Allen & Overy to host Bank of England and FCA tech pilot in innovation hub
New intelligent pricing platform launched by Validatum in collaboration with Neota Logic
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). Those from lower socio-economic backgrounds more likely to leave firms despite being higher performers, new report finds
Despite encouraging efforts by law firms to increase the diversity of those entering the profession, less attention has been paid to who stays on, gets ahead and how according to a joint study into the social mobility of early career lawyers released this week by The Bridge Group in collaboration with eight leading law firms and UK social mobility foundation The Sutton Trust.
The first study of its kind, the report examines the correlation between background characteristics and early career progression in the legal sector and is based on survey data from over 2,800 early-career professionals, as well as interviews with current and former employees, senior partners and law firm leaders.
The eight firms involved in the study included Allen & Overy, Bryan Cave Leighton Paisner, Clifford Chance, Dentons, Hogan Lovells, HFW, Linklaters and Pinsent Masons.
The report found that the population of trainees and associates across the eight participating firms was deeply unrepresentative of the eligible candidate pool, with 46% of early career solicitors having attended an independent school, compared to 18% nationally. 28% of those in the study were also the first generation in their family to study at university.
More concerning was the fact that, despite those from lower socio-economic backgrounds more likely to be the highest performers in their firm (14% received the highest performance ratings, compared to 8% of independently educated trainees) they appear on average less likely to progress within their institutions.
The research finds that the proportion of first-generation early-career solicitors falls from 30% of trainees to 27% of associates, while state school-educated trainees comprise 55% of trainee leavers, compared to 57% of associate leavers.
Reasons cited for this include micro-aggressions lawyers from lower socio-economic backgrounds face within law firms, as well as the way in which firms define talent and what makes a lawyer successful.
Junior lawyers from lower socioeconomic backgrounds are under “intense pressure to fit and assimilate into the dominant culture”. This is in the face of micro-aggressions – defined as “everyday words or acts that communicate denigrating messages to certain groups who are perceived as different” – from their peers and management. Whilst there is often no overt intention to offend, the existence of such micro-aggressions makes individuals from minority groups feel inferior or excluded.
Interviews for the study also suggest that there is a perceived tendency to recruit and progress solicitors who share similar traits to those who currently dominate the profession. Such characteristics include lawyers being “confident”, “charismatic”, “driven”, “ambitious”, having “gravitas” and being good “self-promoters” – although such traits have little correlation with work performance. As such, it is made easier for solicitors from higher socio-economic backgrounds to progress, as mechanisms associated with how experience is gained and work allocated is based on an outdated and misinformed perception of talent.
Interviewees describe the pressure to fit in as “exhausting”, “tricky”, and “worrying”, and cite actions such as toning down their accents, adjusting their speech, avoiding certain conversation topics and feigning interest in others as strategies to cope. “For trainees joining as part of an intake, the result will be that they start to feel that they don’t ‘fit’ very quickly” states Linklaters diversity and wellbeing adviser Jenny Lloyd.
As such, the report accuses some law firm leaders of “complacency” for not calling out such behaviour and, as a result, contributing to environments in which individuals can feel isolated and struggle to progress. It argues that although encouraging efforts have been made by law firms to improve diversity in their recruitment processes, much less attention has been paid to tracking how trainees progress, and how that correlates to their socioeconomic background.
The study also recommends a number of short and long-term actions that law firms can take to reduce the effects of socio-economic background on retention. These include:
It also suggests that law firms should submit detailed workforce diversity data – including information on pay – to a “trusted third party” to benchmark data anonymously across the sector, a task it proposes be carried out by the PRIME programme, a social mobility initiative launched by a number of major law firms in 2011.
If you are interested in this subject, please see information for our upcoming event on how technology can be used to mitigate bias and micro-aggressions within law firms. Click HERE to find out more and reserve your spot.
2). FCA imposes its first ever bank fine for a cyber related incident
Tesco Bank has been fined £16.4m by the Financial Conduct Authority (FCA) for what they deemed “a largely avoidable incident” concerning a cyber attack in November 2016.
Over the course of 48 hours, hackers were able to steal £2.26m in funds, due to a series of failings carried out by the retail bank. Originally laid out as a £33.6m fine, the UK’s financial watchdog agreed to a lower penalty as Tesco Bank agreed to settle the charges and had already compensated it’s out of pocket customers.
Summarising its investigation, the FCA has relayed a full account of the incident as well as the bank’s disregard on multiple occasions for a need to perform stringent cybersecurity procedures. Below is a review of Tesco Bank’s shortcomings.
Delayed response
A lack of urgency in the bank’s protocols meant that the response to the attack was too delayed. It took 21 hours for the operations team to initially report the issue to its fraud strategy department, and a further day for senior management to be notified.
With the attack taking place on the 5th November, and the issue finally being resolved on the 7th November, the fraudsters were given an excessive amount of time to execute their attack.
Poorly designed debit cards
The bank’s debit cards had been issued with sequential PAN numbers i.e. the long number on the front of debit card. This made it overly simple for hackers to guess customer PAN numbers and was seen as an avoidable oversight from the bank’s financial crime operations team.
Furthermore, Tesco’s authorisation system only checked whether the expiry date entered was a date in the future, rather than the exact month and year for which it had been issued. This acted as another means of entry for the attackers in passing the debit card authentication process.
Failure to follow procedures
Ignoring procedures put in place for this form of attack, Tesco Bank’s Financial Crime Operations team elected to send an email rather than a phonecall to declare the incident. Having disregarded the instruction to directly phone the on-call fraud analyst, it led to the 21 hour-long delay in reporting the cyber attack, leaving the hackers with almost double the amount of time to steal customer money.
Once the vulnerability was located and a fix was put in place to block the fraudulent transactions, this was not monitored. It transpired that the fix was in fact ineffective and the number of attempted fraudulent transactions was increasing.
Ignored previous warnings
A year earlier, Visa warned its members about certain fraudulent transactions occurring in Brazil and the US. However, Tesco Bank decided to take action to thwart these transactions on its credit cards, and failed to implement the same defences on its debit cards.
Commenting on the overall handling of the situation, Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said:
“The attack was the subject of a very specific warning that Tesco Bank did not properly address until after the attack started. This was too little, too late. Customers should not have been exposed to the risk at all.”
He also noted the FCA’s requirements for banks’ financial crime systems when it comes to online banking: “The standard is one of resilience, reducing the risk of a successful cyber attack occurring in the first place, not only reacting to an attack.”
Tesco Bank’s chief exec Gerry Mellon has apologised to its customers and confirmed it has enhanced security measures, with the aim to prevent a similar incident in the future.
3). Movers & Shakers
Panel Watch
Magic circle duo win panel places for National Grid spin-off
Appointments
Macfarlanes extends managing partner’s term by two years
Five partners in race to become next Clifford Chance senior partner
Travis Perkins brings in new GC from Dairy Crest
Paul Hastings revamps City management after O’Sullivan’s global promotion
Moves
A&O German disputes head to launch boutique as firm makes London hire
Allen & Overy German dispute resolution head Daniel Busse has left to launch his own boutique, while the firm has boosted its London practice with a partner hire from public international law specialist Volterra Fietta.
Kirkland ramps up New York recruitment with Davis Polk hire
Kirkland & Ellis has recruited corporate rising star Sophia Hudson in New York, luring her from fellow US firm Davis Polk & Wardwell.
Office Openings & Closings
HFW launches Abu Dhabi office with Reed Smith duo
Partner Promotions
Kirkland makes up 10 City partners in largest-ever global promotions round
Financials
Linklaters matches magic circle rivals with trainee pay bump
Innovation and Technology
Clifford Chance and Latham among 12 firms backing new “one-stop” tech solution
HFW launches consultancy venture as firm targets new international business
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 Ince & Co and Gordon Dadds merger talks: What you need to know
Yesterday the news broke that Ince & Co were in advanced merger talks with listed firm Gordon Dadds, sending shockwaves through the legal market. If the talks are successful, the two firms will merge under the name of Ince Gordon Dadds and will become the largest listed UK firm to date with combined revenues of around £114m.
Whilst the emergence of Gordon Dadds as a potential merger partner may have been surprising for some – with revenues just over £30m is around one-third the size of Ince – many in the market view it as a move of necessity.
Ince has been looking for a merger for some time and has taken drastic measures to secure financial stability, including a partnership restructuring, a redundancy round and a change in management earlier this year.
Gordon Dadds, in contrast, has grown rapidly in recent years, and become the second-ever listed UK law firm last year by way of a reverse takeover, earning an £18.75m valuation.
It also has a reputation for acquiring distressed firms and making them work under their business model. In 2014 it acquired administration-bound Davenport Lyons, and a year later Jeffrey Green Russell, as well as smaller regional practices such as Cardiff’s Thomas Simon and Bristol’s Metcalfes.
Whilst the acquisition of Ince’s name, brand recognition and international reach will serve to boost Gordon Dadds’ market position, the firms’ management credentials –particularly in the context of unsettled leadership at Ince following senior partner Jan Heuvels’ early resignation this summer – are also seen as a motivating factor behind the merger.
One source who has tracked the tie-up closely says: “Ince management will have concluded they need strong businessmen at the helm to make the difficult decisions. Gordon Dadds’ management team are businessmen. They view law firms as a commodity, and they’ll remove people they see to be underperforming.”
However, other corners of the market see the proposed deal as a sound commercial move for both parties. The two firms will likely maintain separate businesses that don’t compete, and there will be opportunities to make productivity gains through back-office synergies and cheap and easy access to capital.
Some even suggest that a conglomerate of firms may want to get in on the deal, as Gordon Dadds offers is an ability to incentivise staff on share capital rather than the distance hope of partnership.
Whatever the outcome of the partnership vote, we continue to observe with interest what will happen with these unlikely partners.
2). Danske Bank whistleblower revealed as UK authorities crack down on LLP’s involved
Howard Wilkinson, head of trading at Danske Markets in the Baltics from 2007 to 2014, has been revealed as the whistleblower who uncovered Europe’s biggest money laundering scandal.
Wilson agreed to come forward and confirm his identity according to Berlingske, the Danish newspaper that first reported allegations, and is now aiding investigations from the FCA, NCA and Danish authorities into the bank’s practices.
Mr Wilkinson was employed at Danske until April 2014, which is four months after he provided his first whistle-blower report to the bank’s top management.
In the release of its internal report last week, Denmark’s biggest bank admitted that a large part of about $235 billion that flowed through an Estonian unit between 2007 and 2015 may have been laundered. This amounts to 10 times the current gross domestic product of the Baltic state, and when the scandal hit its peak in 2013 accounted for almost half of all cross-border currency flows.
The non-resident customers came from countries including Russia, the UK and the British Virgin Islands, but the bank said it could not yet estimate how much of the total was illicit from overseas transactions.
According to Danske’s internal report, UK limited liability partnerships and Scottish limited partnerships (SLPs) were “the preferred vehicle for non-resident clients”, with the UK’s National Crime Agency now investigating suspicious entities with ties to the Estonia unit.
The bank’s Chief Executive Officer Thomas Borgen, who oversaw international banking from 2009 to 2012, resigned earlier this month facing allegations that he ignored warning signs of trouble. One of which came from Russia’s central bank in 2007, which stated that Danske customers “permanently participate in financial transactions of doubtful origin” estimated at billions of roubles monthly.
As well as the whistleblowing claims of Mr Wilkinson, both the bank’s internal auditors and Estonian regulators sounded the alarm to suspicious money laundering activity in 2014. Danske only began its own investigation last year.
3). Movers & Shakers
Panel Watch
Ten firms win roles on Lucozade’s inaugural panel
Appointments
Former RPC lawyer gets top legal job at Hargreaves Lansdown
SFO shakeups begin with first reshuffle of Osofsky’s reign
Moves
Arthur Cox hires Clifford Chance partner as project and infrastructure finance head
Clifford Chance banking and finance partner Matthew Dunn has joined Irish heavyweight Arthur Cox as head of its project and infrastructure finance group
Gide joins innovation push with triple hire for new tech-focused team
Gide Loyrette Nouel has created a new team, comprising both lawyers and non-lawyers, dedicated to advising clients on digital transformation from AMF, France’s stock market regulator
Pinsent Masons information law head makes move to Bristows
Pinsent Masons information law head Marc Dautlich has left the firm to join data protection team at Bristows
Freshfields corporate heavyweight leaves for leadership role at Fried Frank
Freshfields Bruckhaus Deringer has seen another senior partner departure, with corporate and capital markets partner Ashar Qureshi leaving to join Fried Frank’s London office as head of its EMEA transactions practice
SFO general counsel Alun Milford set to join Kingsley Napley
The Serious Fraud Office’s (SFO) general counsel Alun Milford is joining Kingsley Napley’s white-collar defence team in the latest exit from the regulator to a law firm
Slaughter and May corporate star Nigel Boardman to step down as partner
Slaughter and May corporate veteran Nigel Boardman will retire from the magic circle firm’s partnership next April, after 35 years at the firm
Mergers & Alliances
Bircham Dyson Bell and Pitmans to merge and transition to ABS structure
PwC seals major US firm alliance in next step up for Big Four’s ambitions in law
Fieldfisher enters Spain via local merger
Ince & Co in merger talks with listed law firm Gordon Dadds
Inclusion & Diversity
Addleshaws and Linklaters publish parental leave and pay policies to improve transparency
Innovation & Technology
BCLP puts together post-merger innovation team as firm combines US and UK resources
Clifford Chance and Pinsent Masons latest to join smart contracts initiative
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 sector resilient in the face of uncertainty
The UK’s largest law firms showed a strong performance in 2017-18 in the face of economic and political uncertainty, according to annual rankings published by Legal Week and Legal Business.
Legal Week’s annual ranking of the UK’s 50 largest commercial law firms shows combined revenue grew 12% year on year to a new high of £22.5bn in 2017-18, up from £20.1bn last year. Average profit per equity partner (PEP) across the group also surpassed £700,000 for the first time.
Even when growth from major law firms mergers was accounted for – including tie ups between Eversheds and Sutherland Asbill & Brennan, and CMS, Olswang and Nabarro – the group still performed strongly, with total revenue climbing 8%.
Legal Business reported similar results, showing revenue generation across the UK’s top 100 firms increasing 10% to £24.2bn.
Among the standout institutions were Simmons & Simmons, Osborne Clarke, Fieldfisher, Macfarlanes and Travers Smith, which all comfortably recorded double-digit revenue increases. There was also a notable hike in revenue at DWF, up 17% to £236m, as the firm enters preparations for the largest ever law firm float.
Average PEP across the top 50 also rose to new high of £719,000, up 5% from £682,600 last year. 10 UK top 50 firms now have PEP of at least £1m, with Hogan Lovells and Travers joining the seven-figure group this year.
However, despite this, 10 firms saw PEP fall on last year and 26 achieved lower PEP growth than revenue, highlighting the struggle some firms are facing to translate revenue gains into bottom-line increases. Eighteen firms saw PEP growth exceed their revenue gains.
In terms of headcount, total lawyer numbers across the UK top 50 broke the 50,000 mark – up 3% to 51,271, with total partners up 7% to 15,238. However, total equity partner numbers climbed by only 1.6%, in part highlighting the control firms are continuing to exert over their equity.
Stripping out growth from mergers, total lawyer and partner numbers across the group each increased less than 2%, with relatively few of the largest firms focusing on headcount growth.
As always, the strong average performances across the group mark significant disparities in individual results, with the best performers tending to be smaller, less internationally focused firms, such as Macfarlanes, Travers Smith and Fieldfisher.
Despite what on the face of it appears to be a solid set of results for the last financial year, law firm leaders are heading into 2018/19 with mounting caution. Aside from concerns over the Brexit talks and the long-term outlook for the City, the profession is adapting to more demanding clients, and tech-assisted changes to working practices and business models.
2). A storm is brewing: Danske Bank investigation reopens following what the EU Commission labels “the biggest scandal” in Europe
A much anticipated report was released on Wednesday, which detailed an investigation into the suspicious activity of Danske Bank’s Estonia branch. It discloses that €234bn worth of non-resident funds flowed through Danske’s Baltic residence from 2007 to 2015, with as much as €30bn of transactions taking place in 2013 only. Věra Jourová, the European commissioner for justice is preparing to examine how such long-standing misconduct was able to occur, determining that “this is the biggest scandal which we have now in Europe”.
The 87-page report (which summarises the findings of two 300-page dossiers) conducted analysis into the 6,200 riskiest customers, ultimately citing that a significant amount of the transactions managed through the Estonian branch should have been flagged as suspicious.
It alleges the Danish bank’s senior management could have done more to avoid such a lacklustre attempt at anti-money laundering procedures, which has led to the resignation of Danske CEO Thomas Borgen. Borgen announced his resignation on Wednesday and will depart once a replacement is found. Chairman Ole Andersen has also hinted at stepping down, whilst compliance chief Anders Meinert Jørgensen left the bank in July this year.
The Financial Times reported that in 2015, Deutsche Bank ended its arrangement as a correspondent bank for US dollars with Danske in Estonia over concerns in relation to non-resident customers, whilst JP Morgan was the first correspondent bank for US dollars to terminate its relationship with Danske in Estonia in 2013.
Written by Danish law firm Bruun & Hjejle, the report insists the results are objective, however also states the findings can be regarded as neither “impartial” nor “independent” given its previous dealing with its client. It is likely that the lack of conviction in this report is what led to the Denmark Financial Supervisory Authority (FSA) reopening its enquiry into the bank’s Estonian activity.
Furthermore, during the period in which the FSA’s previous report into Danske was written and released, the Danish regulator was headed up by Henrik Ramlau-Hansen, who was also Danske’s chief financial officer from 2011 until 2016. Although Ramlau-Hansen recused himself from the Danske case, there are additional questions surrounding the actions of Denmark’s financial regulators at the time.
There is no doubt that other regulatory bodies are considering their involvement in this case. Jourová has announced her plans to collaborate with regulators in Estonia and Finland, meanwhile US financial watchdogs are assessing their strategy towards Danske Bank which, if an offensive position is taken by the SEC or DoJ, could result in much bigger consequences for the Danish bank.
Analysts surveyed by Bloomberg expect the bank’s total financial penalties to be valued around $800 million, placing it amongst some of the heftiest AML fines for the financial sector, which include HSBC’s $1.9bn in 2012 and Deutsche Bank’s nearly $700m in 2017.
3). Movers & Shakers
Panel Watch
Partners Group hands panel places to cohort of PE firms
Housebuilder Taylor Wimpey kicks off UK panel review
Appointments
KFC legal chief becomes WeWork’s first ever European GC
Mothercare scraps GC role as fifth in four years departs
Hogan Lovells appoints new German head as part of management reshuffle
21st Century Fox general counsel to return to private practice following Disney acquisition
Moves
Former SFO case controller resurfaces to launch US firm’s London white-collar crime team
The former Serious Fraud Office (SFO) case controller for its high-profile battle with the Eurasian Natural Resources Corporation (ENRC) has resurfaced as a partner at US firm Cohen & Gresser’s, which only launched in London earlier this year
Trio of law firms buck trend of Big Four threat with EY hires
Simmons & Simmons, Gowling WLG and Brodies have pushed back against the Big Four accountancy firms’ encroachment into the legal market, by making senior hires from EY. Simmons has launched a TMT VAT consultancy practice with the hire of EY director Joanna Crookshank, whilst Gowling WLG have appointed EY’s Brexit lead Ursula Johnston as its new director in customs and trade. Scottish firm Brodies has also turned to EY to enhance its corporate tax and incentives practice, bringing in new partner Karen Davidson.
Travers Smith makes rare lateral employment hire
Sebastian Reger joins pensions sector group from boutique Sackers & Partners
Slaughter’s Corporate partner Watkins to make a return to London
Slaughter and May corporate partner David Watkins has returned to London after a seven-year stint in Hong Kong, having overseen a period of growth for its Asian offering, with six new partners and practice expansion into North Asia.
RPC secures ‘major coup’ for regulatory team with hire of former colleague of new SFO director
RPC has made a senior addition to its regulatory team with the hire of Sam Tate, EMEA anti-corruption head at financial crime consultancy Exiger.
Office Openings & Closings
Simpson Thacher to pull out of Korea as Shearman prepares to launch Seoul base
Legal Technology and Innovation
Clyde & Co to support global banks-backed trading blockchain platform
CMS makes legal services and tech push with dedicated innovation team launch
Financials
Firms defy Brexit fears to push average PEP to new record high
DLA Piper raises NQ pay to £77,000 and boosts trainee salaries
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. Ropes & Gray downsizes in London
Four real estate and restructuring partners are understood to be leaving Ropes & Gray’s City office in the coming months, as management make the decision to better align London with its global client base.
Understood to be part of a strategic shift to re-focus these practices on the firms’ prized clients of asset managers, hedge funds, credit funds and direct investors, the partners were informed of the decision last week after they met with management who flew over from the US.
In addition to the managed exits, the head of the firm’s international real estate investments and transactions group Iain Morpeth will be retiring at the end of the year, in line with the firm’s retirement policy.
Despite this, such a move should not be seen as a sign of Ropes’ impending departure from the square mile. ‘No way is this a sign of retrenchment. Last year the firm overall had the best year ever. But when things are not working we need to fix them’ said London-based finance partner Mike Goetz.
The departures are also no reflection on the lawyers themselves, management insists.
The firm’s City branch has had a rocky time in recent months amid a number of partner exits and potential tensions arising from increased scrutiny from its US practice.
Having almost quadrupled the size of its London practice over the previous five years, last year saw Ropes’ City partnership shrink by 20% to 27 partners. Key departures include former London co-founder Maurice Allen, investment funds partners Monica Gogna and Anand Damodaran, who joined Dechert and Kirkland & Ellis respectively, and finance partners Mark Wesseldine and Fergus Wheeler to King & Spalding.
Despite this, the firm said its London base enjoyed it best performance last year amid firm-wide revenues of nearly $1.6bn for 2017 – a 7.5% increase on the prior year. It also points to the recent hires of Goldman Sachs loan negotiation group managing director Carol Van Der Vorst and Clifford Chance white-collar crime partner Judith Seddon as signs to boost its strength in London.
2. Prospects rise for Investec after announcing divestment of its asset management arm
After completing a strategic review of the business, South African bank Investec has decided to publicly list its asset management business in London, with a secondary float expected on the South African stock exchange.
The asset management division of Investec, soon to be listed as IAM, accounts for one fifth of Investec’s total profits, which currently holds £109 billion worth of assets under custody.
Looking to simplify the group’s structure, the bank have decided to focus its attention on the development of its specialist investment banking and wealth management divisions.
News of the restructuring comes after a major reshuffle in senior management for the bank. The bank announced in February this year that Investec founders Stephen Koseff (CEO), Bernard Kantor (managing director) and Glynn Burger (risk and finance director) will be stepping down from their leadership positions after 40 years at the helm, although will continue to serve as non-executive directors.
Koseff’s role will be replaced by former Investec chairman Fani Titi and founding CEO of IAM Hendrik du Toit, who are set to become co-chief executives of Investec. The pair will move into the new leadership roles on October 1, with Fani Titi expected to take charge of Investec ‘group’ and Hendrik du Toit to lead the new IAM business.
It is not yet know whether the spin-off asset management business will remain under Investec branding, and the demerger is still awaiting regulatory and shareholder approval. JPMorgan Cazenove and Fenchurch Advisory Partners act as lead advisers, claiming that the process should be completed in the next 12 months.
Investec’s shares rose by 11 per cent following the announcement.
Movers & Shakers of the week
Appointments
BCLP appoints first ever London chief following spree of City exits
Bryan Cave Leighton Paisner has appointed banking disputes partner Segun Osuntokun as London managing partner – the first for the newly formed firm
Clifford Chance hires new tech CEO to fulfil innovation ambitions
Clifford Chance has lured back a former associate Jeroen Plink to spearhead its technology unit and creation of new digital products
Moves
Four partners to leave Ropes & Gray’s London office
In a move that will significantly cut back the firms real estate and restructuring team in the city, four partners are set to leave the firm after discussions with management last week
Freshfields QC quits for breakaway arbitration boutique in latest exit from magic circle firm
Freshfields litigation partner Reza Mohtashami QC has left the magic circle firm for litigation boutique Three Crowns, in a move that will reunite him with several former colleagues
Fieldfisher’s alternative legal solutions head to return to Ashurst
Ashurst has hired Chris Georgiou, the chief executive of Fieldfisher’s alternative legal services platform Condor, in a bid to expand its own offering
Osborne Clarke reaffirms global ambitions with eight-lawyer recruitment round
Osborne Clarke has added eight lawyers – including DWF head of employment Andrew Chamberlain – to its global network as part of a drive to strengthen its international bases
Ripple GC leaves blockchain network to join crypto-payments startup as legal chief
Brynly Llyr, the general counsel of prominent US blockchain network Ripple Labs has left the company to join cryptopayments company Celo
Former SFO director David Green joins Slaughter and May
Former Serious Fraud Office (SFO) director Sir David Green has joined Slaughter and May, following months of speculation over his move to private practice
Fieldfisher underscores Brexit preparation with hire of ex-Prime Minister’s former legal adviser
Fieldfisher has bolstered its regulatory practice ahead of Brexit by bringing in ex-UK Prime Minister David Cameron’s former legal adviser, Andrew Hood, from Dechert as a partner
Mergers & Alliances
Bircham Dyson Bell and Pitmans set to vote on £50m merger
Office Openings & Closings
Dentons completes China network with northwestern launch
Pillsbury shuts doors in Dubai after just one year
Ashurst capitalises on Glasgow growth with operations launch Down Under
Financials
Covington boosts NQ salaries to £100,000 and promises new trainee opportunities
Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
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1). Citigroup announces investment banking overhaul to employees
It has been reported by several news outlets today that Citigroup released an internal memo stating its intentions to merge the bank’s investment banking arm with its capital markets origination (CMO) unit.
The new setup will bring Citi in line with its rivals, most of whom have already integrated their investment banking and capital markets functions.
The new unit will be titled Banking, Capital Markets and Advisory, headed up by both Tyler Dickinson, who currently leads the CMO function from New York, and London-based Manolo Falco, EMEA head of Corporate and Investment Banking.
President of Citi and head of the Institutional Clients Group Jamie Forese spoke with the Financial Times, and says the new structure should create “a more comprehensive coverage model” by “aligning our capital raising and advisory products more seamlessly”.
The restructuring marks a fresh start for Citi, having declared the completion of Citi’s post-crisis efforts in streamlining its services in July last year. CEO Michael Corbat proclaimed the Wall Street bank had “crossed an inflection point” and was on the path to growth. It’s anticipated the new unit will increase Citi’s profitability and help reach its goal of becoming a top three operator in global investment banking.
Earlier this week, Citi announced internally the departures of three individuals in its senior ranks: chief financial officer John Gerspach, EMEA chief exec Jim Cowles, and Bill Mills, the North America chief.
2). SFO Overturned in landmark legal ruling case
In a highly anticipated judgment over legal professional privilege, the Court of Appeal has ruled against the Serious Fraud Office (SFO) and determined that documents shared between the Eurasian Natural Resources Corporation (ENRC) and former adviser Dechert should be protected.
This will have significant consequences for dispute lawyers across the UK, as it reassures both small and large businesses alike that they can obtain legal advice on sensitive matters without concerns over confidentiality.
The Court of Appeal judgement overturns a previous decision made in favour of the SFO in 2017, in which the regulator argued that the ENRC’s claims to privilege over documents containing notes on interviews with current and former employees taken as part of an internal corruption investigation were unfounded.
Hogan Lovells commercial litigation partner Michael Roberts, who represented ENRC, said of the decision: “This historic ruling by the Court of Appeal is significant not just for ENRC but for any company faced with undertaking an internal investigation in response to a whistleblower or other allegation of wrongdoing.
“It is critical that companies are not penalised for acting responsibly, and are able to instruct lawyers to conduct investigations without fear that the authorities will later be able to demand all of the lawyers’ work product. Following this ruling, it will remain for the company to decide whether, and to what extent, it is prepared to waive privilege.”
The controversy started in 2010, after whistleblower allegations of bribery and financial malpractice emerged at FTSE 100-listed ENRC, and its relationship with subsidiaries in Kazakhstan and Africa. The mining company sought counsel from US firm Dechert, which in 2011 took a lead role on the internal investigation, to be replaced in March 2013 by Signature after confidential information was leaked to the press. Hogan Lovells took up the mandate in March 2017.
Eversheds Sutherland represented the SFO with a team led by partner Peter Jones, who instructed Red Lion Chambers’ Jonathan Fisher QC and Blackstone Chambers’ Eesvan Krishnan and James Segan.
The original decision was significant for myriad reasons. Principally, that commentators from around the market thought that it could deter companies self-reporting when faced with these charges in the future.
However, while the Court of Appeal’s ruling reinforced privilege in relation to corporate investigations, it left open a broader issue of who, within a large organisation, is authorised to deal confidentially with a law firm, also known as legal advice privilege.
3). Movers & Shakers
Appointments
White & Case brings in GC to kickstart new corporate venture
Moves
Former Sidley Austin London head rejoins Baker McKenzie
Baker McKenzie has continued its City hiring spree with the addition of Sidley Austin London global finance co-head Matthew Dening, who returns to the international firm after 14 years
Russia sanctions climate forces high-billing Moscow team to leave Akin Gump
Akin Gump’s Russian operations are taking a major hit, with Moscow rainmaker Ilya Rybalkin leaving to form an independent 13-lawyer outfit in the city
White & Case continues City recruitment push with RBS head of investigations and litigation
White & Case has hired Royal Bank of Scotland’s (RBS) head of litigation and investigations Laura Durrant, in the latest boost to the US firm’s London office
Watson Farley rebuilds aviation finance after team with Bird & Bird partner hire
Watson Farley & Williams has taken a step to rebuild its aviation finance practice after several heavyweight departures earlier this year with the hire of Bird & Bird partner Jim Bell to its City base
From PSL to partner: Kirkland breaks new ground with Weil hire
In a rare move for a US firm in London, Kirkland & Ellis has hired a professional support lawyer Kate Stephenson as a partner to drive growth in its increasingly busy restructuring practice
Mergers & Alliances
DLA Piper adds 60-lawyer team in Denmark with takeover of local firm
Office Openings & Closings
BCLP gets green light for Hong Kong and Singapore combination after five-month delay
Inclusion & Diversity
A&O release 2018 gender pay gap figures
Six City firms unite in project to get career-break women back on partner track
Technology & Innovation
Legal artificial intelligence firm Kira raises $50m in first external funding round
China’s Zhong Lun gets behind new AI platform to boost trade
Clifford Chance invests in new tech platform to support deal teams
Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
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1. Inclusive company culture pays off as Fieldfisher reports record-breaking results
Fieldfisher cites its unique, people-focused strategy as the cause for its continued growth in the UK law firm market.
The firm posted top results this year, with a revenue increase of 24% to £207m. The firm’s PEP also grew by 17% to £750,000, whilst its top of equity surged from £2m to £3.2m, now sitting amongst the lockstep leaders at magic circle firms Allen & Overy and Freshfields Bruckhaus Deringer.
These profitable figures show a great year for Fieldfisher, although the firm have been quietly gaining market share for a number of years now, and the firm’s London office has almost doubled its revenues since 2014 from £104m that year to £207m in 2018.
In a recent piece by Legal Week, Fieldfisher managing partner Michael Chissick explains how a number of strategic decisions has resulted in the firm’s overall success.
Steer clear of big ticket mandates
“We’re trying to be a pacy, dynamic and fast-growing law firm. We’re not looking to be in the top 10 and we’re not looking to be Latham & Watkins’ size. We have to be realistic,” says Chissick.
“We are not trying to do global M&A, and we’re not chasing Freshfields’ big mandates, but we are chasing high-quality mandates, albeit not the biggest ticket stuff. And I think we can continue to grow and be more profitable.”
Be supportive of your people
The efforts made to create a unique, collaborative and fun internal culture can have a genuine effect on your bottom line.
“We want people with outside lives who value things like inclusion and looking after their people. It isn’t always about the number of hours you bill. US firms – like Latham or McDermott – are great firms with an amazing client base. Fieldfisher is something a bit different. It’s a different model here.”
The firm posted a 98% partner retention rate last year and over the last two years has retained 100% of its trainee cohorts.
Preserve a naturally differentiated practice
Diversifying its offering provides Fieldfisher with a low risk business strategy, allowing for any sudden market changes.
“We have a nice, naturally hedged business which isn’t dominated by any one particular sector,” he says. “We have a big practices in disputes, corporate, IP, tech and real estate. None of them account for more than 15% or 20% of our turnover. None over-dominates.”
It seems Fieldfisher has a real understanding of its business model and values, which has provided a clear and decisive strategy for all firm members to work towards, resulting in not only a profitable business, but also solid retention of talent.
Click here to read the full article.
2. Legg Mason draws line under Libyan bribery case with $34m SEC fine
Relating to a six year-long bribery scandal that involved two global financial institutions and Libyan officials, Legg Mason are the latest firm to receive a fine for its failure to comply with the Foreign Corrupt Practices Act (FCPA).
The Securities and Exchange Commission (SEC) announced that Legg Mason are due to pay over $34m in penalties, which is in addition to the $64m fine imposed by the Department of Justice (DoJ) in June this year.
From 2004 to 2010, former Legg Mason subsidiary, Permal Group Inc, partnered with Societe Generale to solicit business from state-owned financial institutions in Libya. The two businesses employed a Libyan middleman to pay bribes to Libyan government officials in order to secure investments.
Whilst Legg Mason are due pay a fine which, according to a Legg Mason spokesperson, doesn’t expect to “have any impact on future investment and operations”, French bank SocGen’s penalties for the bribery case was a lot more severe.
SocGen’s $585 million resolution awarded the bank a fifth place ranking on the FCPA’s list of the top ten enforcement actions of all time, based on penalty sizes. The bank now sits amongst the likes of Och-Ziff, who agreed to pay $412 million for its bribery practices in 2016, and BAE, who were sentenced to pay $400 million in 2010 for making false statements to U.S. investigators concerning its compliance with the Foreign Corrupt Practices Act.
Movers & Shakers of the week
Panel Watch
Moves
DLA adds former regulator to London partnership
DLA Piper has hired a former SFO division head Patrick Rappo as a partner in the firm’s corporate criminal investigations group in London
Premier Foods secures new GC from fellow FMCG company
Simon Rose departs biscuit, chocolate and confectionery company Pladis as head of corporate legal affairs to join Premier Foods as its new general counsel and company secretary
BCLP lose fourth London partner this month
International arbitration partner Ania Farren will leave Bryan Cave Leighton Paisner to join litigation funder Vannin Capital
CMS boosts contentious construction capability
Catherine Gelder leaves her role as partner at Bryan Cave Leighton Paisner to join CMS in London as a contentious construction and engineering partner
Rhonda Powell is set to become the next general counsel at Buzzfeed, joining from US-based media company Complex Media
Clifford Chance expands HK litigation team
Former director of Hong Kong’s financial regulatory authority Jimmy Chan has joined Clifford Chance as a partner in the firm’s local litigation and dispute resolution practice
Mergers & Alliances
Mayer Brown drops the iconic ‘JSM’ in the name of its Asian business
Office Openings & Closings
Weightmans shuts down two offices in South East England, leaving only one City base
Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
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This week:
1). ‘No-deal’ Brexit to cost UK legal sector £3bn finds Law Society study
The UK legal sector could suffer a £3bn revenue hit and lose 12,000 jobs by 2025 in the event of a ’no-deal’ Brexit, according to a new study released by the Law Society in collaboration with Thomson Reuters.
The study, which used data and macroeconomic forecasts from the National Institute of Economic and Social Research, the IMF World Economic Outlook and the Office of National Statistics to model potential Brexit outcomes, predicts growth in the sector could drop to as low as 1.1% per year (£30.86bn turnover by 2025) as opposed to steady growth of 2.1% in a ‘soft’ Brexit scenario (£33.83bn turnover).
Though the findings suggest a buoyant market until 2020 – due in large part to an increase in work flowing from post-Brexit regulatory changes – a no-deal scenario is likely to have a serious long-term impact on the legal sector.
A no-deal Brexit, the Law Society forecasts, would result in 12,000 job losses from the sector in 10 years. This is compared to 8,000-10,000 if the UK exits Europe through a soft or hard Brexit. The study does, however, suggest this will owe not just to Brexit, but also to the increasing adoption of new technology, which during a 20-year period could see the legal workforce shrink by as much as 20%.
The study also suggests that UK legal services exports are unlikely to benefit in the medium term from the weaker pound which, although in recent years has resulted in an uptick in net exports, has already produced benefits that are unlikely to reappear in the longer term.
City firms have in recent years hedged against the no-deal scenario by registering their lawyers in Belfast, with 1,644 England and Wales solicitors registering since 2016.
The UK is scheduled to exit the European Union on 29 March 2019; however, with just over six months to go it remains unclear under what terms Britain will leave.
2). JP Morgan plans asset management restructuring
Initially reported by the Wall St Journal on Wednesday, JP Morgan are expected to cut their asset management by 100 employees, according to sources at the bank.
Following an internal review, JP Morgan’s Wealth and Asset Management division (AWM) has been identified as an area of the business suitable for staffing adjustments.
Sources have confirmed that dismissals have already begun on fixed income, administration and sales teams, with cuts also planned for the equity group. These have taken place globally, across multiple JPM offices.
Although the total number of employees in the US bank’s asset management division are unknown, the layoffs will likely to amount to a 1% to 2% reduction in headcount. JP Morgan spokesperson Kristen Chambers confirms: “Any reductions will be relatively small and will not impact our continued investment in client coverage and our business.”
JPMorgan Asset Management has had a fruitful period, reporting a 2 per cent rise in revenue year over year, hitting $1.8bn in Q2 2018.
There has been a shift in focus towards exchange-traded funds for the US fund manager in 2018. Having launched fixed income ETF’s on the London Stock Exchange in January this year, the division has now expanded with five further ETF specialists hired across the European business in June.
3). Movers & Shakers of the week
Appointments
Former Pinsents partner named as Ofgem’s new legal head
Sidley Austin appoints new management for London office
National Grid UK GC takes up new role at utility giant
Moves
Sullivan & Cromwell takes M&A partner from Shearman in first City lateral in five years
Sullivan & Cromwell has recruited Shearman & Sterling M&A partner Jeremy Kutner for its City ranks, marking the elite US firm’s first London lateral hire in five years.
Herbert Smith Freehills corporate partner trio exit for Morgan Lewis
Morgan Lewis & Bockius has ramped up its London corporate team with a triple partner hire from Herbert Smith Freehils, including London private equity head Mark Geday. He is joined in the move to the US firm by corporate partners Nicholas Moore and Tomasz Wozniak.
Latham boosts German operations with new litigation hire
Latham & Watkins have made another European hire, bringing Baker McKenzie litigation partner Thomas Grützner on board in Munich.
O’Melveny China exits continues as Beijing partner leaves for White & Case
O’Melveny & Myers Beijing partner Bingna Guo has joined the white-collar practice of White & Case in the latest exit from the US firm’s China offices
Clifford Chance London partner Erasmus makes switch to Hong Kong blockchain company
Clifford Chance corporate finance partner Alex Erasmus is leaving the magic circle firm’s London office to become chief legal officer at Hong Kong-based blockchain developer Block.one.
Office Openings & Closings
Fieldfisher continues China expansion with Guangzhou office launch
Financials
Macfarlanes raises NQ salaries to £80,000
More top firms raise salaries for newly qualified associates
Dechert raises UK NQ pay by 16% as Dentons and Addleshaws boost starting salaries by £5,000
White & Case LLP accounts show 36% hike in operating profit for UK and Africa
Hello and welcome to the Fides Weekly Update.
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This week:
1). RBC comes under regulatory scrutiny for it’s treatment of Whistleblowers
The treatment of whistleblowers at the Royal Bank of Canada (RBC) has come under scrutiny from the Financial Conduct Authority (FCA), as reported today by the Financial Times.
Although the FCA have declined to comment over the extent of their investigation into RBC, the allegations arose after former head of emerging markets currency trading John Banerjee won his unfair dismissal case against the bank last month.
Since then, five more potentially similar cases have come to light of individuals who have been dismissed without due process after whistleblowing on various legal and compliance problems across the bank’s range of businesses in cases spanning several years.
Although rarely concerning itself with individual tribunal cases, concern over how whistleblowers are treated have reached the highest echelons of the FCA after the regulator imposed an unprecedented fine on Barclays chief executive Jes Staley after he tried to uncover the identity of a whistleblower in May. He became the only chief executive of a major financial institution to be fined by the FCA and keep his job.
The FCA still has some way to go to convince bystanders that it is tough on poor treatment of whistleblowers. Many criticised it for not banning Mr Staley over what was a test case of tough new rules that aim to hold top management accountable for failings on their watch.
According to its annual report published last month, the FCA received 1,106 whistleblowing reports in the 2017-2018 financial year. This is more than the 900 reports received the previous year, but well below the 1,340 recorded in 2015-2016. Of the 1,106 disclosures made in the last financial year, the FCA is taking further action in 121 cases and is assessing a further 128 disclosures.
“Whistleblowers play an important role in exposing poor practice in firms and they have in the past few years contributed intelligence crucial to action taken against firms and individuals,” said the FCA in a statement.
2). Eversheds and Freshfields register most Solicitors in Ireland
Eversheds Sutherland and Freshfields Bruckhaus Deringer topped the list of firms who have registered solicitors in Ireland, according to research published this week from Legal Week.
The firms have registered 132 and 131 solicitors to the Irish roll respectively, with a total of 1,644 England and Wales solicitors having been registered in Ireland since 2016. Of those registering, 586 have taken the further step of taking out an Irish practising certificate.
Registering lawyers in Ireland, as well as the opening of offices in the country, has been a precautionary measure taken by many firms against a possible no-deal Brexit ahead of the referendum in June 2016, amid fears that they may find it more difficult to practise EU law without lawyers registered in an EU country.
Concerns centre on the ability of UK-qualified lawyers to maintain legal professional privilege in disputes and competition matters once Brexit takes place in March 2019. This privilege allows client companies to withhold documentation from investigating authorities, such as the European Commission, on the grounds they pertain to litigation proceedings.
Firms have been shoring up their position by registering lawyers in Ireland in case non-EU-registered lawyers no longer maintain this privilege.
The magic circle accounts for 300 of the solicitor registrations, with Slaughter and May next behind Freshfields in registering 98 lawyers in Ireland. Allen & Overy, Linklaters and Clifford Chance have however taken a more cautious approach with 39, 31 and 25 registrations respectively.
Other firms that have taken this approach include Latham & Watkins, who have registered 80 lawyers – or 25% of its London headcount – in Ireland, Hogan Lovells, Herbert Smith Freehills and IP specialist Bristows.
Eversheds Sutherland has made clear its expansion plans in the country, with Ireland managing partner Alan Murphy planning to expand headcount in both Dublin and Belfast by 2020, with a focus on litigation, real estate, employment and banking.
3). Movers & Shakers
Appointments
Mozilla hires Twitter deputy general counsel as next top lawyer
Ince senior partner Heuvels steps down from firmwide leadership role early
Moves
Latham takes second magic circle partner this week with Allen & Overy hire
Infrastructure partner Conrad Andersen the second magic circle partner to make a move to Latham this week
Latham continues City recruitment spree with hire of Clifford Chance infrastructure M&A head
Brendan Moylan joins Latham’s city office, and specialises in domestic and cross-border M&A for private equity clients
Clifford Chance’s Perth head decamps for Norton Rose Fulbright
Paul Lingard, a partner in Clifford Chance’s mining group, is moving over to Norton Rose Fulbright, alongside Herbert Smith Freehills executive counsel Miriam D’Souza
Mergers & Alliances
DLA Piper finds ‘final piece’ in Latin America with new Argentine affiliation
Dentons continues breakneck global expansion with Chilean tie-up
Office Openings & Closings
Fieldfisher opens Belfast legal service centre
Financials
Allen & Overy raises London salaries lifting NQ rate to £83k
Innovation and Technology
Burges Salmon picks new tech providers after two-year innovation project
Firm subscribes to Luminance and eBrevia to boost document analytics, as well as hiring former senior associate Emma Sorrell as a legal innovation specialist and former integration specialist Ian Huddart as technology innovation specialist.
Fieldfisher launches “feedback app” to promote positive comments
Firm launches Bfrank app following its win at an app competition hosted internally by the firm
Last week EY announced its acquisition of leading managed services and technology solutions firm Riverview Law, a ground-breaking move in the market which will no doubt affect the alternative legal services marketplace as we know it.
Providing Riverview with not only the security of EY’s global brand and resources, but also access to its stellar global client base, this acquisition presents a prime opportunity to bring managed legal services further into the mainstream and provide clients with more efficient, faster and better automated services.
EY, although not acquiring much in terms of size and scope, has selected one of the first credible disruptors in the legal market, which launched in 2012 with backing from DLA Piper, who initially owned a 21% stake in Riverview’s parent company LawVest. Riverview has received reasonable praise since its inception, not to mention through the use of its virtual assistants technology from Kim Technologies. Although EY will not also be acquiring Kim, the accountancy giant will retain use of its software, having signed a 10 year, non-exclusive contract with the company.
Chris Price, EY’s global head of alliances (tax) is expected to take over as chief exec of Riverview once the deal has been completed, succeeding current CEO Karl Chapman. Price has already hinted at the growth expectations for its managed services arm, announcing that: “We plan to take the 100 people in Riverview and build that out into two to three thousand people over the next five to seven years.”
Although the fee was undisclosed for the EY’s purchase, Legal Business reports that: “Riverview’s turnover is believed to have risen to more than £10m since it launched in 2012, meaning the acquisition is expected to carry a hefty price tag.”
With such a high level of investment made by the Big Four firm, along with the ambitious growth plans hinted at by Price, it is clear that Riverview poses a lucrative new area of business for the firm. Cornelius Grossmann, global head of legal at EY, has confirmed its strategy for the new investment: “What we want to do with Riverview is enter this as a new business line. We’re not changing what our 2,200 lawyers are doing, and we’re going to invest in more legal advisory capacity.”
“We will hire into Riverview more people to scale up that business and scale up more support in our global delivery centres to support Riverview on the delivery of legal managed services.”
EY are likely the second major deal in terms of M&A in the New Law space. In May 2017, document management system iManage acquired AI specialist RAVN Systems, which marked a key indication of significant growth in the demand for new technology in legal services.
Moreover, the New Law market is beginning to attract external investors as it was also announced that UK private equity firm Bowmark Capital has purchased Bryan Cave Leighton Paisner’s stake in the contract lawyers business Lawyers On Demand (LOD).
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