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This week:
1. Law firms criticised for making ‘painfully slow’ progress on gender diversity, as SRA launches wide-raging consultation to clarify the reporting of misconduct
MPs have criticised law firms for making ‘painfully slow’ progress on gender diversity, in a report by the Business, Energy and Industrial Strategy Committee released on Thursday.
The report, which evaluated the effectiveness of the first year of gender pay gap reporting, described the exclusion of partners from last year’s reporting as making ‘a nonsense’ of efforts to tackle the pay gap.
As well as calling for the compulsory inclusion of partner remuneration figures, the committee also called for last year’s threshold for inclusion of 250 UK employees to be reduced to 50, meaning that smaller UK and US firms could be obliged to report from 2019.
“Whilst this approach might limit comparability with the first year of data and require some swift consultation, there is benefit in establishing reliable figures which can hopefully form a consistent database for years to come,” the report states.
Whilst the committee acknowledged the challenges to implement changes to the requirements in time for next year’s gender pay reporting, it asks for the UK Government to make it clear how partner pay should be calculated and included in time for the deadline next year.
The report also issues renewed criticism of Allen & Overy’s (A&O) handling of its gender pay gap reporting, after the firm refused to give up its partner figures when called upon to do so by the government earlier this year. A&O was the only magic circle firm that did not provide its 2016-17 partnership gender pay gap figures to the committee after it wrote to all five firms to request the data.
“We recognise that there are different ways of calculating figures for partners, but this is no excuse for failing to publish any figures at all”, the report noted.
In line with the report, the Government Equalities Office launched guidance on research-backed ways that firms can reduce their gender pay gap. This includes having multiple women on shortlists for recruitment and promotion, using skill-based assessments and structured interviews, introducing transparency to promotion, pay and reward processes and appointing diversity task managers and/or task forces.
At the same time, the Solicitors Regulation Authority (SRA) has launched a wide-ranging consultation on the reporting of misconduct, aimed to clarify when law firms should report inappropriate behaviour, and what kind of behaviour they are mandated to report.
In particular, the consultation hopes to clear up when firms are required to report a potential breach – in the earliest stages of a complaint, or after it has been determined that a regulatory breech has occurred – with the core objective being to establish a set of rules and guidance that firms can adhere to.
The updated guidance would also look to address the widespread use of NDAs to prevent the reporting of professional misconduct within their own businesses.
2. Legal & General compliance failings reported to FCA
Whistleblowers at Legal & General Investment Management (LGIM) have reported the asset manager to the Financial Conduct Authority (FCA), attesting multiple risk and compliance failures, as well as a ‘toxic’ company culture.
The Financial Times first reported on the potential misconduct this week, having gained access to the original whistleblower report.
At least three employees have been expected to appear in the report, raising a number of concerns around the nature of LGIM’s risk and compliance procedures, and alleging that the company’s attitude towards conduct needs to be drastically improved.
The document highlighted a specific failure in reporting trading errors, which may have led to discrepancies in certain client transactions, likely resulting in a loss of money for the client.
In terms of the company culture, it appears to be the biggest risk for LGIM, with one employee declaring: “I feel obligated to report these issues now because I feel the risk culture of LGIM has become so toxic that it is reaching a crisis level.”
The lax approach to governance combined with the pressurised conditions for staff can create a hostile environment in which employees are not comfortable questioning bad practice.
These issues have already been investigated internally within the asset management arm, after being flagged through internal whistleblowing procedures. However, it is speculated that this process was badly managed, and one complainant’s identity was poorly protected, with LGIM not adhering to the confidentiality standards put in place.
The fund manager has undergone a major growth phase over the last five years, securing its spot as 11th largest global asset manager (based on AUM in December 2017).
With senior management concentrating all its efforts on continuing on this upward trajectory and entering new markets, it seems the company’s internal culture has suffered.
As LGIM’s chief exec Mark Zinkula prepares to depart his role in 2019, and FCA begins to probe into the real nature of the fund manager’s internal procedures, the UK insurer’s $1tn asset management arm is certainly in its least stable position in the last few years.
Movers & Shakers of the week
Appointments
Hoping to “grow the London practice and further deepen client relationships”.
Paul Hastings has appointed its London head Ronan O’Sullivan as global co-managing partner
The firm has also appointed newly hired private equity partner Anu Balasubramanian as global vice-chair of private equity.
Moves
TLT has appoints Leeanne Armstrong as a legal director in its Belfast office.
Armstrong was previously an associate in Pinsent Masons’ office in the Northern Irish capital, where she advised private and public sector clients on a variety of employment issues.
White & Case has hires M&A partner Tommaso Tosi to its Milan office.
Tosi was previously a counsel at Shearman & Sterling, and his areas of expertise include capital markets, particularly high yield, private equity and general corporate law.
Santiago joins from Allen & Overy’s Luxembourg office, while Dascotte was formerly managing partner of Brussels-based boutique tax firm Tiberghien Luxembourg.
Fried, Frank, Harris, Shriver & Jacobson adds to its London asset management practice.
The firm has hired Simpson Thacher & Bartlett private and investment funds counsel Sam Wilson
Travers Smith has hired Oliver Bethell as the firm’s first chief technology officer.
Oliver will join the firm in September from Freshfields Bruckhaus Deringer where he led the team responsible for technology strategy and underlying IT architecture.
Moritz Keller was previously at Freshfields Bruckhaus Deringer. Keller specialises in international commercial and investment arbitration.
KWM bring in three new partners into its City base
Financial services regulatory partner Alix Prentice is joining from Withers, foreign investments specialist Mark Schaub and arbitration and white-collar partner Meg Utterback, who are both moving to the UK from KWM’s Shanghai office.
BLM appoints two new partners to its commercial advisory & private wealth team.
Jonathan Askin – a non-contentious commercial law specialist – joins from Weightmans, alongside Stowe Family Law partner Daniel Jones, who advises high-net-worth private clients.
Mergers & Alliances
O’Melveny management jets into London as Allen & Overy merger talks heat up.
Office Openings & Closings
Gordon Dadds has opened its first overseas office in Hong Kong.
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). Market volatility remains low even with fear of Trump sparking trade wars
US President Donald Trump’s trade conversations with the EU and China have kept tensions high for investors, however statistics show that this week has produced the lowest levels of volatility over the last month.
It was reported this week that Trump agreed with EU officials not to impose car tariffs, which eased the worry of a transatlantic trade war and brought a short respite to the US President’s recent hard stance on trade restrictions and retaliatory tariffs.
Dealings between the US and China, however, could still initiate a trade war, as tariffs remain in place on $200 billion of Chinese goods to take effect from September.
The International Monetary Fund (IMF) has voiced concerns over the disputes between the two major economies, estimating that “a sustained trade conflict could cost the global economy nearly $500 billion, knocking growth by half a percentage point by 2020”.
This only adds to the risk of unpredictable markets as we enter the August trading period, arguably the most volatile of the year, where lower amounts of trading can often exaggerate price swings.
Reuters reports “the prospect of a trade war does worry investors, who see it as the biggest risk to markets since the 2012 euro zone debt crisis”, although “even those particularly worried have done little to protect their portfolios.”
Overall there seems to be a sign of relief from investors, as talks of a trade war diminish. Whilst US tariffs remain in place for China, markets have not yet responded to this, with the bullish market outlook continuing for the foreseeable future.
2). City disputes market reaches record high
2017 represented a record high in terms of both fee income and headcount for London’s largest 50 litigation practices, according to research released this week by The Lawyer.
These practices generated $2.44bn (£1.86bn) in 2017, after an 11.2 per cent increase in litigation turnover growing from $2.19bn (£1.67bn) the previous year.
In terms of headcount, these practices boast more than 3,000 lawyers between them, the largest recorded in the market’s history. This had grown 6.1% from 2016’s total of 2,935, and 25% from the number of litigation lawyers in London in 2013.
Freshfields Bruckhaus Deringer remains the City’s largest litigation practice, generating $248m (£188m) in revenue, which represented an 11.8 per cent increase from the previous year’s $222m (£169m) at a revenue per partner of $5.2m (£4m).
The firm’s involvement in the £14bn MasterCard interchange class-action, as well as acting for embattled German car manufacturer VW throughout its emissions scandal both contributed to the firm’s strong performance last year.
Last year also saw some of the highest-profile US firms are adding considerably to their litigation headcount in London, with Kirkland & Ellis, Morgan Lewis & Bockius and Dechert all adding to their practices.
Indeed, earlier this week saw Mayer Brown bulk up its white-collar practice with a double hire from Norton Rose Fulbright.
The majority of litigation lawyers believe the market will remain stable, according to a London Solicitors Litigation Association (LSLA) survey. Factors cited for this include Brexit, with resulting currency fluctuations causing many international clients with cross-border contracts to seek advice on potential contractual disputes in London, as well as pre-existing disputes and a rise in investigations.
3). Movers & Shakers
Panel Watch
Freshfields, Pinsents and DLA among 27 to make the grade on Pearson’s new-look panel
Pearson’s new legal panel count with firms such as Freshfields Bruckhaus Deringer and Pinsent Masons.
Appointments
Max Hill QC to succeed Alison Saunders as director of public prosecutions
Head of Red Lion Chambers Max Hill QC has been promoted as the director of public prosecutors (DPP), position lead by Alison Saunders.
Moves
Reed Smith takes Pinsents Middle East chief in triple partner hire
Sachin Kerur, head of the Middle East for Pinsent Masons is leaving the firm to become the head of Dubai and Abu Dhabi bases for Reed Smith.
Facebook general counsel announces departure amid rising regulatory scrutiny
Colin Stretch, Facebook’s top lawyer since 2013, set to step down at end of year
Mayer Brown boosts London litigation group with Norton Rose partner duo
Sam Eastwood and Jason Hungerford set to join NRF’s city office next month
Office Openings & Closings
Hogan Lovells to close Rio office as firm concentrates Brazil focus on Sao Paulo
Deloitte follows Singapore moves by Big Four rivals with foreign law firm launch
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. GCHQ reports growing cyber threat to legal profession
A new report by the National Cyber Security Centre (part of GCHQ) has outlined some of the key cyber risks UK law firms are facing.
Citing phishing attacks, data breaches, ransomware attacks and a compromised supply chain as the main threats specific to the legal sector, the report provides practical guidance on how to mitigate these risks as well as highlights the areas that are most ripe for exploitation.
“There has been some growth in the hacktivist community targeting law firms to achieve political, economic or ideological ends.”
It highlights that threats to law firms no longer come from those looking for financial gain, but also span out to nation states, who are “likely to play an increasingly significant role in cyber attacks at a global level, to gain strategic and economic advantage.”
The Solicitor’s Regulation Authority (SRA) has been monitoring the levels of attacks in the legal sector, reporting that the amount stolen from law firms through phishing in the first quarter of 2017 was 300% higher than the previous year. Whilst many cyber attacks on law firms aren’t divulged to the SRA, the organisation has noted £11m worth of losses through reported cases from April 2016 to March 2017.
Along with guidelines of how to avoid common scams, the report details previous law firm attacks, using them as example case studies to show why each case was a target and how the attack took place.
The two most high-profile cyber attacks to be publicised the legal profession to date are the Panama Papers scandal and DLA Piper’s WannaCry attack, resulting in Panamanian law firm Mossack Fonseca eventually closing its doors, and DLA suffering a loss of its operations for nearly two weeks. As more firms begin to explore technological advancements such as AI, blockchain and remote working, they must be aware that these could not only help thwart such attacks in the future, but could be targeted by attackers for malicious purposes also.
Movers & Shakers of the week
Appointments
Moves
Dechert bolsters Dubai office with real estate duo
King & Spalding partner Stephen Kelly and of counsel Sarah-Jane Mahood, now a national partner, are set to join Dechert’s ranks in the Middle East, bringing the firm’s Dubai headcount up to 12 lawyers
Magic circle partner makes move to the Bar
Restructuring partner Nick Segal leaves Freshfields Bruckhaus Deringer to join Erskine Chambers as a barrister
AA secures new GC with telecoms hire
TalkTalk legal director Nadia Hoosen has joined breakdown cover provider AA as its new general counsel
DiAnna Thimjon has been hired to take over from Chris White as Clyde & Co’s global head of data and IT strategy
BCLP expands London corporate crime team
Bryan Cave Leighton Paisner has added Mukul Chawla QC to its partnership as head of the London corporate crime team
Partner promotions
Withers makes up 14 new partners, whilst voting CEO Margaret Robertson into her fourth term
Hello and welcome back to the Fides Weekly Update. Here is your weekly round up of news moves and developments in the legal sector.
This week:
Riverview Law grants AI technology to Legal Aid
Riverview Law has made its Artificial Intelligence tool KIM available for pro bono purposes through the Jeanie Project, a pilot that will apply the technology within a legal advice centre in Tower Hamlets.
The crowd-funded project, led by lawyers Lucy Scott-Moncrieff, Richard Miller and Martin Barnes, aims to test how the technology could support pro bono work and act as an example of how commercial law firms could offer technological solutions to solve problems faced in the legal aid sector.
KIM is Riverview’s ‘virtual assistant’ that it uses with commercial clients. It helps in-house legal teams ensure that the right work is being done by the right person, for the right price, by managing instructions coming into the function, triaging it to the appropriate individual, and automatically delivering real-time management information through the platform’s dashboard.
However, this technology is equally applicable to the legal aid space, where information can be quickly and efficiently gathered for vulnerable people in need of legal advice, and forwarded to a pro-bono lawyer for assessment and referral.
Lucy Scott-Moncrieff, one of the founders of the project, says implementing AI technology in this way has two benefits: “firstly, the people in need do not get referral fatigue from being passed around endless people only to be told no one can help them.” She says. “Secondly, the lawyers have more time to concentrate on cases, employing their specialist expertise rather than spending an initial two hours working out if they can help or not.”
The initial pilot will begin in September, with Toynbee Hall Legal Advice Centre in Tower Hamlets being used as the test centre. There are 16 different advice pathways the technology can handle, but the pilot will initially concentrate on immigration.
At larger commercial firms, The Jeanie Project should be able to assist more senior lawyers who want to do more pro bono work but who struggle with time constraints.
“The big thing is that is it enables people who are not experts to provide that initial client engagement, and collect the information that is needed in a structured way so that it can be easily passed on in a format that lawyers can deal with from the comfort of their desk or even their sofa,” Dr Simon Davey, who is project managing the pilot.
“One of the big barriers for pro bono support is around travel and capacity. If we can give lawyers all the information they need to solve a problem in 15 or 20 minutes without leaving their desk then – without wanting to underplay the complexity of some of these issues – it really offers them the chance to do ‘bite-size pro bono’.”
To learn more about The Jeanie Project click here.
And if you missed it, our latest piece of thought leadership Dissecting the Blockchain Revolution: A Lawyer Friendly Guide to Blockchain and Smart Contracts is now available to download here.
Movers & Shakers of the week
Morrisons completes phase one of new two-step panel review
Network Rail to appoint four firms to new ‘innovation driven’ legal panel
Appointments
ITV hunts for new GC as Garard steps down
Ex-Linklaters lawyer Raab gets Brexit secretary job
Paul Hastings ushers in City partner for global co-head role
DAC names first COO in five years
Moves
Freshfields high-yield heavyweight Ward McKimm leaves for Shearman
Freshfields Bruckhaus Deringer high-yield star Ward McKimm is leaving to return to Shearman & Sterling three years after he moved from Kirkland.
Kemp Little’s Privacy Head joins Hogan Lovells
Data protection and privacy head Nicola Fulford set to join the London privacy and cybersecurity practice of Hogan Lovells
Ashurst builds construction practice with Mayer Brown hire
Construction partner Tom Duncan joins Ashurst’s city office
White & Case hires private equity lawyer from Hudson Advisors
Shane McDonald set to join the City banking practice of White & Case as a partner
CMS bolsters financial services regulatory team with Norton Rose hire
NRF partner Elizabeth Brenner joins CMS
Mergers & Alliances
Mayer Brown calls time on Hong Kong association with China’s Jingtian & Gongcheng
Gateley seals deal for HR consultancy in fourth post-IPO acquisition
Office Openings & Closings
Kirkland plots Texas expansion with six-partner raid
Financials
Linklaters hits £1.5bn revenue milestone but PEP stays flat
Mills & Reeve hands out £2m in bonuses after hitting record revenue high
Travers Smith rejoins £1m PEP club after 24 per cent spike
Addleshaws revenue rebounds as firm edges closer to £250m target
Clydes sees 10% uplift in profit while turnover breaks £550m
Bevan Brittan revenue reaches £40m in sixth consecutive year of growth
Macfarlanes’ PEP soars to record levels as revenue climbs 20%
Hello and welcome to the Fides Weekly Update. Take a look at this week’s top stories in legal and compliance, as well as a round up of this week’s Movers & Shakers in the legal market.
This week:
1. Allen & Overy Fuse start-up Bloomsbury sold to Facebook for $23m
One of the firms featured in Allen & Overy’s Fuse incubator, Bloomsbury AI, has this week been purchased by Facebook in a deal worth $23m to $30m.
The ‘acquire-hire’, which has seen Facebook purchase Bloomsbury and its 11-strong London team for their expertise in natural language processing, will see the social media platform put to use an AI tool that can read documents and answer questions about them.
It is thought Facebook will put Bloomsbury’s natural language processing AI to work to combat fake news stories on its platform.
Less known in legal tech circles, Bloomsbury AI joined A&O’s Fuse incubator as part of the second cohort in May. One of five successful companies from 80 applications, the start-up joined well-known names Kira Systems and Neota Logic, a machine learning technology provider for document review and analysis and AI-powered app development platform that allows the automation of legal processes respectively.
Other incubator firms include Fintech company Regnosys and fellow AI-powered intelligence firm Signal Media.
Incubators have become a popular method for law firms to showcase their efforts in innovation, with similar ventures deployed by Mishcon De Reya and Dentons, whilst earlier this year banking giant Barclays entered the legal tech space through its Eagle Labs programme.
A&O’s Fuse however, seems to house the firms making the greatest developments, not only due to Facebook’s purchase of Bloomsbury, but also the burgeoning success of fintech startup Nivaura. Its platform has created a lot of buzz in the financial sector recently, having performed a fully automated bond issuance using cyrptocurrency, which was all cleared, settled and registered on a public blockchain infrastructure.
The fact that the world’s largest tech companies are now looking at purchasing AI startups that have moved into the legal space is exciting news, and comes on the back of Slaughters recent announcement that it is to launch a second ‘legal tech focussed’ incubator to capitalise on the success of its Fintech fast forward incubator, which brought to the market Luminance, an AI platform initially backed by tech billionaire investor Mike Lynch.
Further underpinning the need for law firms to both embrace and upskill themselves in legal technology, Clifford Chance announced this week that it was partnering with a lawtech start-up Lexoo to offer technology vacation scheme placements to future trainees.
2. Blockchain edges closer to accessing financial markets
The Financial Conduct Authority (FCA) announced which firms are set to feature in its fourth regulatory sandbox, where they will be able to test their products in a live market environment.
Governed under the regulator’s Project Innovate initiative, 29 firms have joined cohort 4, and as with previous cohorts, they range from global players to niche start-ups. Launched in 2014, the initiative aims to help firms test their products and bring them to market, whilst also educating the regulator on what safeguards needs to be put in place with these new technologies.
Below is a breakdown of the types of firms participating and click here to see which firms made it on to the roster.
Retail banking, investment management and compliance seem to be the most popular areas for innovation, as the FCA focuses on facilitating the use of technology to provide a reduced cost to customers and better services for the public.
This round’s entrants seem to reflect the trend currently facing the financial services sector, with 40% of the new cohort utilising distributed ledger (DLT) or blockchain technology in their operations.
This will hopefully become a milestone in the market’s adoption of blockchain and smart contracts, as it looks to clarify questions around how the new technology could fit into our current regulatory regime, addressing any roadblocks brought by UK and EU regulation.
It will interesting to see how successful the development of DLT is in financial markets, as many of the sandbox firms look to apply their decentralised applications to securities transactions and settlements processes.
One firm in particular, Fineqia, offers a platform to both big and small crowd investors, which uses a distributed ledger to structure, execute and administer high-value debt and equity securities, often only available to large institutional investors.
Another platform hoping to transform the securitisation market is 20I30. Its objective is to tokenise shares and build a trading platform that will allow for tens of thousands of securities trades using crypto assets. The firm is preparing to conduct one of the UK’s fist equity-token offerings has already raised £1 million in seed capital.
Find out more about the FCA’s Project Innovate and its previous three cohorts of the regulatory sandbox.
Movers & Shakers of the week
Panel watch
Barclays heralds ‘new era’ with final panel review
Appointments
Drinks giant Pernod Ricard names new general counsel
LOD appoints former Olswang head of strategic development to lead managed services business
Moves
Hogan Lovells joins war for data privacy talent with new hire
Privacy partner Nicola Fulford joins the firm from Kemp Little
HFW boosts global disputes practice with Brussels and Dubai double hire
HFW has made a double hire for its global disputes practice, bringing in international disputes and litigation group head James Harbridge from Trowers & Hamlins, and Roger France from FieldFisher.
Dechert boosts City base with Sidley litigation partner
Dechert boosts London office with the hire Sidley Austin’s global litigation co-head Dorothy Cory-Wright.
White & Case signs up Macfarlanes partner as US firm continues London hiring spree
White & Case has recruited Macfarlanes private equity partner Emmie Jones as the US firm continues to build up its M&A capabilities in London.
DLA Piper adds six-strong Bakers financial services team to Antwerp office
DLA Piper has recruited a six-strong Baker McKenzie financial services and insurance team for its Antwerp office, headed up by partner Pierre Berger.
Jones Day London exits continue as sixth City partner leaves this year
Jones Day London disputes partner Lucas Moore joins private client specialist Payne Hicks Beach
Office Openings & Closings
Baker McKenzie to expand Belfast hub with 150 new roles
Taylor Wessing confirms location of new back office in Liverpool
Financials
Allen & Overy sees revenue and PEP tick upwards as firm restates US ambitions
Freshfields posts double-digit PEP hike as firm restarts revenue growth
HSF growth grinds to a halt as PEP reaches £852,000
Clifford Chance kicks off magic circle reporting season with 5% revenue rise and 16% PEP hike
Shoosmiths posts double-digit profit and revenue growth as PEP soars to record high
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). Deutsche Bank fails US stress test
This year’s two stage stress test run by the US Federal Reserve was tough all round, as Deutsche failed to pass the second round whilst Morgan Stanley and Goldman Sachs were awarded conditional approvals only.
All 35 of the largest banks in the US passed the first round of stress tests last week, including the US division of Deutsche Bank. However the second stage uncovered “material weaknesses” from the German lender, caused by critical deficiencies in its capital planning controls and infrastructure, particularly raising concern over the bank’s ability to “effectively determine its capital needs on a forward-looking basis,” stated the Fed.
Central bank stress tests have taken place since 2008 and were established in order to ensure the banking industry is better prepared with the effects of a recession.
Deutsche Bank passed the first hurdle measuring its capital levels against a severe recession. This week’s second test assessed whether the bank’s plan for that capital, such as dividend payouts and investments, could withstand such harsh scenarios.
Dividends for Deutsche’s shareholders are expected to still be paid, despite this week’s news, although the bank will need to make further improvements to its US operations, which could adversely affect the bank’s already suffering financial health.
Meanwhile, Goldman Sachs and Morgan Stanley will need to expand their capital buffers as the Fed restricts the amount each bank can return to shareholders. This is a result of the conditional passes awarded to the two US banks, as regulatory officials said they were affected by unusually large one-off tax bills, which doesn’t accurately reflect the banks’ performances.
It is reported that all other banks to undergo the stress tests held sufficient capital buffers to withstand another financial crisis.
Also featured in the news this week was the Bank of England’s announcement to introduce cyber stress tests for the UK financial sector, which will examine their security measures and test their abilities to endure and recover from a cyber attack.
2). CMS offers one month unpaid leave to staff in a bid to boost work-life balance
CMS UK have given staff the opportunity to take up to one month a year off work as unpaid leave with ‘no questions asked’.
In the latest initiative to improve work-life balance at the firm, CMS has made all employees, barring trainees, eligible to apply for a ‘time out break’ of up to a month’s unpaid leave each calendar year.
To be eligible for the scheme, employees must have been at the firm for at least 12 months, and coordinate with other members of their team before making a request. The final decision will then be made by their practice group leader or director.
Understood to be one of the first of its kind to be introduced into a UK law firm, CMS said that the idea had been put to the firm’s board by an associate who had heard about a similar initiative at Deloitte while attending one of the firm’s ‘Women in Business’ networking events.
“The thinking behind the scheme is the idea that the thing people lack most is time and it is about giving time back to people” said Co-practice leader for litigation, arbitration, insurance and employment Catherine Taylor.
The policy applies to the CMS UK partnership, which also includes a number of offices outside of the UK, including Bulgaria, the Czech Republic, Hungary, Russia, Turkey and the United Arab Emirates.
The firm has also updated a number of its other people policies following its three-way merger with Nabarro and Olswang last year, which added roughly 700 lawyers to the firm.
In September, CMS overhauled its parental leave package for UK staff and lawyers, to enable new parents to apply to stay at home with their child for several years before returning to the firm, rather than the standard 12 months.
The maternity leave policy also has no clawback provision, meaning the firm does not reclaim any enhanced pay from people who do not return after taking leave.
The ‘Time out break’ also follows other firms who have tried in innovate in the way that they address the issue of work-life balance.
Firms such as Fieldfisher and Simmons & Simmons have introduced cross-firm agile working policies to allow lawyers to work from home for up to one day per week, while last year a number Linklaters associates in Germany agreed a new 40-hour week fixed-hour contract on reduced pay.
At the beginning of April, Allen & Overy opened a remote hub pilot in Vauxhall in a bid to provide more flexible working opportunities for people that have to commute.
3). Movers & Shakers
Appointments
Bates Wells Braithwaite gains new COO from Linklaters
Clifford Chance reappoints global finance and capital markets heads for new terms
Clifford Chance rejigs corporate leadership with two new City heads
Moves
Hunton Andrews Kurth London disputes team makes post-merger move to US rival’s City base
The London office of US firm Haynes Boone has recruited a two-partner international disputes team from legacy Andrews Kurth Kenyon, following its April merger with Hunton & Williams. The four partner team led by Melanie Willems and Markus Esly joined on Monday.
Mergers & Alliances
Hogan Lovells seals new Saudi Arabian tie-up two years after previous deal dissolved
Office Openings & Closings
Japan’s largest law firm to open nine-lawyer base in New York
Ashurst targets funds and Brexit business with Luxembourg launch
A&O looks outside of legal with new regulatory business
Partner Promotions
Baker McKenzie promotes six London partners in 68 strong global round
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). Another fine hits global bank for forex manipulation
Deutsche Bank is the latest in a series of banks over the last few months to receive a financial penalty from US regulators.
Reported on Wednesday, New York’s Department for Financial Services (DFS) has fined Deutsche Bank $205 million for the improper conduct of its foreign exchange trading business. Dating back to its practices from 2007 to 2013, the regulator’s probe discovered that certain traders and salespersons within the bank are guilty of presenting “improper, unsafe, and unsound conduct” by coordinating trading activity through online chat rooms, sharing confidential customer information and trading aggressively to manipulate currency rates.
Deutsche Bank was, at this point in time, the world’s largest forex dealer. However, the total amount in penalties awarded to the bank for forex manipulation sits at $357 million – certainly not the most severe the industry has seen when compared to other global banks, some of whom have received fines of over $1 billion in relation to this type of market manipulation.
Nevertheless, the German lender, whose investment bank has notoriously been shrinking over the last few years, is still in the sights of multiple global regulatory bodies. Investigations are largely ongoing in the US, where Deutsche’s investment banking arm has focused most of its restructuring plans.
This fine draws a line under all currency-rigging probes into Deutsche Bank, what remains however are a number of US probes, particularly from the nation’s Justice Department. These include a suspected violation of US sanctions against Iran pre-2008, and the practice of ‘mirror trades’ which unethically profited the bank’s Russian clients.
These will likely add to the $17 billion that German’s largest bank has already spent on legal costs over the last decade, as well as the significant investments that continue to be directed towards its governance, regulatory and compliance functions.
2). A&O refuse to submit updated gender pay data for partners
Allen & Overy have been slammed by the Business, Energy and Industrial Strategy committee (BEIS) for refusing to disclose its partner gender pay gap data.
The committee, which is investigating the compliance of businesses in reporting their gender pay gaps, requested that the magic circle firms restate their data to include partner compensation figures in their pay gap reporting.
Whilst Linklaters and Clifford Chance revised their original submissions in April to reflect this, Freshfields and Slaughter and May have submitted updated figures to the BEIS, which were published on Wednesday.
On the other hand, Allen & Overy refused to submit updated gender pay reporting information, stating that partnership data will be included in their next reporting round in April 2019.
In response to this, Committee chair Labour MP Rachel Reeves accused the firm of ‘dragging its feet’ on gender pay reporting regulation, and exploiting weaknesses in the reporting requirements in a statement.
“It will surprise no-one that including partners in reporting reveals a wider gender pay gap. The picture wasn’t a pretty one but the Big Four accountancy firms at least acknowledged the problem by including partner data, a social duty which somehow escaped, with some exceptions, the major law firms. Allen & Overy can’t even come clean on its partner data now. It’s easy to talk the talk on diversity and inclusion but if a business is dragging its feet on providing even basic information about its gender pay gap then it begs the question of how seriously it takes its responsibilities to valuing all its staff and how dedicated it is to committing to promote female associates to partner level.”
Since the gender pay reporting deadline in April, a number have firms have now posted their partner data. Reed Smith, Travers Smith and Pinsent Masons all included partnership data in their gender pay reporting calculations, but have done so in different ways with some firms choosing only to report the gender pay gap between partners, rather than incorporating these figures into their workplace data as a whole. With many other law firms choosing to stick with their employee-only figures, this has made it difficult to compare the gender pay gaps between firms.
Whilst the first round of gender pay reporting has done well to increase the transparency of the gender pay gap in law firms, and further highlight the problem that not enough women are making it to the senior ranks within firms, further clarification and guidance is needed on the reporting guidelines for partnerships, and how to take account of the pay of members of a firm who are not employees.
This has become all the more pertinent, as of this week women overtook men as the largest number of practising solicitors in England and Wales according to data from The Law Society.
For our special report on the outcome of gender pay reporting in leading UK law firms, please click HERE.
3) Movers & Shakers
Panel Watch
Barclays summons firms to ‘panel day’ ahead of final decision
Appointments
HMRC appoints interim GC after departure of Gill Aitken
Moves
White & Case ramps up City recruitment with in-house PE hire
Lone Star lawyer Shane McDonald to join the banking team of White & Case
Cleary regulatory partner Bob Penn set to rejoin Allen & Overy
Bob Penn to return to A&O less than two years after he quit for Cleary
Office Openings & Closings
Ashurst to open ninth European base with Luxembourg office launch
Deloitte becomes last of Big Four to receive ABS licence in move into legal services
US west coast tech leader Wilson Sonsini to launch in London
HFW expands Latin American presence with Brazilian firm association
Hogan Lovells cuts 54 London business services jobs following long-running consultation
Wildgen opens first international office with London launch
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). Revelation of ‘excessive further information’ to delay FCA investigation of HBOS
Evidence delaying the Financial Conduct Authority’s (FCA) investigation into the collapsed lender HBOS has been revealed, further stalling the regulator’s investigation into the firm and its senior management.
“We have had contact from a representative of a party to suggest that there may be extensive further information which had been privately held,” Andrew Bailey, the chief executive of the FCA, told the Treasury select committee on Wednesday.
This is despite a related police investigation into a fraud at the bank’s Reading branch that led to the conviction of six people, and a £500m shareholder lawsuit over the government-mandated takeover of HBOS by Lloyds Banking Group.
No further information was given about the nature of the evidence, or who had previously held it.
The FCA announced in early 2016 that it would launch a fresh investigation into the former senior management of HBOS, after a stinging review that criticised the previous regulatory response as inadequate. The watchdog is looking at the former executives’ role in the collapse, and also what they knew about the fraud in the Reading branch, which “ripped apart small businesses”.
The National Crime Agency announced in April that it too would launch an investigation into related HBOS allegations, adding another probe to examine the circumstances of the lender’s £25bn collapse in 2008.
In another case looking at how small businesses were treated, the FCA expects to finish its investigation into Royal Bank of Scotland’s Global Restructuring Group (GRG) by the end of July. The GRG has been at the centre of public and political scandal following allegations of how it treated small-business customers in the wake of the financial crisis.
2). DWF prepares for largest law firm listing yet
Priming itself to be the sixth law firm to float, Manchester-headquartered DWF could mark history as it announces today the potential of a £1 billion valuation.
Law firm IPOs have certainly become a trend over the last few years, and DWF’s announcement considering the possibility of listing on the London Stock Exchange (LSE) confirms the benefits of the growing shift to alternative structures.
A practice made up of 1,200 lawyers, including 70 equity partners, and posting 2016/17 revenues of £199.3m, DWF would be the largest law firm to float by some distance. It would also be the most global, as the firm has recently focused on expansions into multiple geographies, including Europe, North America and Asia-Pacific.
Law firm IPO history
The first ever law firm listing took place in 2007 by Slater & Gordon, with Gateley floating on London AIM market in June 2015. In 2017, two further firms announced their intentions to go public, as Gordon Dadds and Keystone Law both joined the LSE on in August and November respectively. The most recent IPO was made by Rosenblatt, whose first day of trading began last month.
For firms sitting at a mid-market level, looking for innovative ways to differentiate themselves, IPOs could prove a lucrative option. We previously assessed both the benefits and risks of a law firm listing, click here to find out more.
3). Movers & Shakers
Appointments
Moves
DLA’s Manchester office secures key hire
Andy Philips departs his role as North West head of private equity at Eversheds Sutherlands to join DLA Piper in Manchester
Paul Hastings boots City regulatory practice
Paul Hastings has hired Arun Srivastava as a partner and head of the regulatory, fintech and payments practice in London. He joins from Baker McKenzie where he served as the firm’s head of financial services
Orrick targets Asia M&A expansion
Former head of Dentons’ Beijing office Sarah Zeng has left to join Orrick, Herrington & Sutcliffe in the firm’s Asia M&A and private equity practice
Mergers & Alliances
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. DoJ settles a number of investigations this week, with Credit Suisse, SocGen and Legg Mason facing consequences
Investigations into individual bribery offences from Credit Suisse and Société Générale came to an end this week, with each bank facing hefty settlement fees for their misconduct.
Following an investigation that kicked off in February this year, Credit Suisse is set to pay $47 million to the US Department of Justice (DoJ) for its questionable hiring practices in Asia.
The Swiss bank was accused of hiring individuals connected to powerful families in order to secure high-value deals and government contracts. The US assistant attorney general was blatant about the corruption that took place, stating that: “The so-called sons and daughters programme was nothing more than bribery by another name.”
Other banks have previously been noted to make hires against the Foreign Corrupt Practice Act (FCPA), including JP Morgan and BNY Mellon.
Meanwhile, SocGen has been fined $585 million in relation to bribery payments to officials in Libya. The penalties have been delivered by both US and French authorities, marking the first coordinated efforts acting on a foreign bribery case between these two nations.
In addition to this, a $475 million penalty has been agreed with the Commodities Futures and Trading Commission (CFTC), amounting the bank’s total fines in excess of $1 billion.
“For years, Société Générale undermined the integrity of global markets and foreign institutions by issuing false financial data and by fraudulently securing contracts through bribery,” said Acting Assistant Attorney General Cronan of the DoJ.
Also involved in the bribery scandal, which took place between 2004 and 2010, was Permal Group Ltd, a subsidiary of US-headquartered investment management firm Legg Mason. The firm has been charged $64.2 million for Permal’s actions, which involved partnering with SocGen to solicit business from state-owned financial institutions in Libya.
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.
2. Milbank boosts NQ salaries to record high
Milbank Tweed Hadley & McCloy has set a new bar for US associate salaries, increasing newly-qualified pay to a record high of $190,000.
Announced on Monday, the changes involve all of the firm’s 500 associates – including 100 in London – and will take place from the 1st July. This will see first, second and third year associates receive a rise of $10,000, where associates in their fourth through eighth years will receive a boost of $15,000.
Milbank associate payscale:
1 PQE: $190,000
2 PQE: $200,000
3 PQE: $220,000
4 PQE: $250,000
5 PQE: $275,000
6 PQE: $295,000
7 PQE: $315,000
8 PQE: $330,000
This intensifies pressure amongst the Wall Street elite to further boost their associate pay, after Cravath Swaine & Moore increased associate pay to $180,000 in 2016. With this being the first mass pay hike in New York since 2007, a number of firms immediately followed suit with Kirkland & Ellis, Latham & Watkins and Milbank all putting its associates on the new US pay scale.
In an interview, Milbank chairman Scott Edelman said, “What we’re trying to do is set fair, market-leading compensation for our associates. We’re not in a race with other firms, but at the same time, we thought this was an appropriate time for an increase, and we want our associates to know how much they’re valued.”
He said the firm wanted to recognize associates’ contribution to Milbank’s success and its ability to handle high-stakes, complex work. “Our people are our greatest assets. We’ve been working hard, we’ve been very busy,” he said. “We’re committed to offering compensation at the top of the market.”
When asked about the impact of the pay rise on the firm’s profits, Edelman said the change would not have “a material effect on firm finances,” adding that he didn’t expect partner capital contributions to change.
The 690-lawyer firm’s 2017 financial results mark its fifth straight year of solid growth, according to ALM’s reporting. Milbank saw its profits per equity partner rise nearly 11 percent last year to $3.46 million, while its gross revenue rose 7.1 percent to $916.54 million. Revenue per lawyer increased 3 percent to $1.33 million.
Response from the market has been muted, with many commentators expecting rival firms to match Milbank’s pay increase, but in fewer numbers than those who raised their salaries in 2016. So far only Simpson, Thatcher and Bartlett have announced that they are to match Milbank’s associate pay, along with the distribution of generous summer bonuses.
The associate pay rise in particular puts increasing pressure on the London market, as it widens the gulf between pay at magic circle firms and that of their US competitors.
For example, Allen & Overy and Clifford Chance both increased their bands for junior lawyers by 3% in 2017, with newly-qualified (NQ) solicitors earning £81,000 at A&O and £87,300 at CC. Linklaters on the other hand pays its first-year lawyers in London around £90,000 when salary and bonus are combined, with Slaughter and May paying first-year associates in London a basic salary of £80,000 with a potential performance bonus of nine to 16 per cent.
Furthermore, the London-headquartered magic circle firms typically pay their US-based associates on the same scale as the leading US firms and will now be under pressure to match Milbank’s pay rise.
Milbank’s move comes as law firms are heavily competing to attract and retain talented associates—a crucial element in building a large firm’s profits and the next generation of lawyers. Last week, Weil, Gotshal & Manges told associates it will shorten the path to partnership by two years in order to retain more talented associates.
However, many legal observers consider Milbank’s move to finally lead to a differentiation among firms in associate pay.
“The economy is going to cool. Demand will decrease for many firms, firms will have overcapacity issues,” leading to a burst bubble that could result in layoffs or other consequences, said New York management consultant Kent Zimmermann.
“Most firms around the country, with the exception of the super elite, are facing pressure to reduce rates,” agrees Dan Binstock, a partner and recruiter at Garrison & Sisson. The demand for legal services hasn’t been increasing at such a level that would justify a number of firms increasing associate pay, he said, whilst also pointing to the fact that a rise in associate pay leads to more pressure on associates to make billable-hour targets and less flexibility for underperforming.
Movers & Shakers of the week
Panel Watch
RBS puts firms on notice for panel review as Freshfields advises on £2.5bn share sale
Appointments
Lisa Osofsky confirmed as next director of the Serious Fraud Office
Ashurst chairman Ben Tidswell re-elected for second term
Slaughters’ move for ex-SFO chief David Green hits watchdog’s review
Moves
Fried Frank City finance head set to join Mayer Brown
Mayer Brown hires Simon Brinkworth to join City office
DLA bolsters London office with hire of Freshfields infrastructure heavyweight
Firm recruits Freshfields’ former global co-head of transport and infrastructure Martin Nelson-Jones
White & Case City hires continue with Addleshaws FCA investigations and enforcement chief
Former Lloyds regulatory head Chris Brennan joins White & Case after six years at Addleshaws
Mergers & Alliances
Mayer Brown expands Middle East presence via tie-up with former Hogan Lovells alliance firm
Other
DLA Piper advising as Knights confirms plans to become fifth UK firm to float
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.) Clifford Chance likely to come under SRA investigation after clearing RBS of fraud
Clifford Chance is to face possible questions from the Solicitors Regulation Authority (SRA) for allegedly overlooking allegations of fraud during its investigation into Royal Bank of Scotland’s treatment of small companies in financial difficulties.
The firm was accused by a small business owner of failing to act upon evidence of mistreatment by the bank’s Global Restructuring Group (GSR), which Clifford Chance cleared of fraud allegations four years ago.
In 2014 RBS commissioned Clifford Chance to prepare an independent report on allegations made by Lawrence Tomlinson, entrepreneur in residence at the former department for Business, Innovation & Skills, who claimed that the bank deliberately misinformed viable businesses in order to pick up their assets cheaply.
Although the report concluded that there was no evidence to support these claims, critics argued that CC’s investigation did not go far enough.
In 2015, the Financial Conduct Authority (FCA) undertook its own review which found the bank guilty of ‘systemic mistreatment’ of distressed small businesses, but cleared the lender of the most serious allegation that it forced businesses to default for its own benefit.
The SRA is now reviewing the evidence presented by Clive May, one of the small business owners interviewed by Clifford Chance as part of the 2014 report, to decide whether a formal investigation will be necessary.
2). Movers & Shakers
Panel Watch
BNP Paribas completes global panel review
Bidding opens on UK government’s reshaped £320m public sector legal panel
Appointments
Ex-Slaughters litigation head tipped for Financial Reporting Council role
Taylor Wessing names new managing partner
Moves
Freshfields wades into IP battleground with Arnold & Porter team hire
Patent litigation partner Christopher Stothers is joining A&O with a team of four lawyers made up of counsel Laura Whiting and associates Paul Abbott and Ammina Rao.
White & Case continues litigation push with Addleshaws hire
City partner Chris Brennan to join the regulatory team at White & Case
Ashurst expands UK finance practice with Bakers hire
Global securitisation head Jonathan Walsh to join the firm next week
White & Case relocates City PE partner to Dubai office
Partner Marcus Booth is moving over to lead the firm’s private equity practice in the Middle East with a small team of London associates
Mergers & Alliances
BCLP sells stake in Lawyers on Demand
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