Hello and welcome to the Fides Weekly Update. Here you can find analysis of the week’s main new stories in legal and compliance. Don’t forget to check out our regular feature of Movers & Shakers of the week.
You can follow us on LinkedIn and Twitter for more regular updates in your industry
This week:
1. FCA confirms push for criminal prosecutions
Having pledged to gear up its enforcement team to serve up more criminal prosecutions, the Financial Conduct Authority has just appointed a criminal law heavyweight to its ranks as chief criminal counsel.
Vincent Coughlin QC will take over from Claire Lipworth in the top position, with Lipworth joining Hogan Lovells as a financial services litigation partner, the FT reports. His background spans a wide range of high-profile prosecutions, from violent crime cases to defending the Sun’s executive editor over allegedly improper payments.
Coughlin’s experience also includes white-collar crime matters better associated with the regulators line of work, where most recently he has been involved in a case brought by the Serious Fraud Office concerning bribery allegations against Rolls-Royce.
Back in 2012, Coughlin also spent a period advising the Financial Services Authority on its first major insider dealing prosecution, Operation Saturn, where they secured six convictions.
The hire is a definitive indicator confirming the FCA’s plans to rev up its enforcement action as they ready themselves to bring more criminal prosecutions for insider dealing and are expected to extend this further to money-laundering offences and wider financial crime claims. In its newly published business plan, the FCA has highlighted the extent to which corruption and money-laundering has permeated into the UK financial system and has committed to start bringing criminal action where necessary.
We saw the number of investigations opened by the FCA into insider trading reach its peak total of 70 last year. With the director of enforcement and market oversight Mark Steward claiming that “insider dealing is ever more detectable and provable”, it seems we should expect further convictions to continue in 2017.
2. Shearman hikes NQ salaries in London
In the latest turn in the NQ salary race, Shearman & Sterling announced that it was increasing pay for newly qualified (NQ) UK associates by 10.5% this week, taking starting salary from £95,000 to £105,000.
Lawyers in the firm’s mid-level associate band, which starts at 3.5 years post-qualification experience (PQE) will also see a 9.5% pay increase from £126,000 to £138,000. Meanwhile, UK senior associates at 6.5 years PQE and above will see their salaries increase by almost 6% to £165,000.
This follows last year’s rise in NQ pay by £7,000, and a rise of 8% on NQ salaries in 2015. Overall, the firm has seen a 33% increase in NQ pay since the £78,000 starting salary it was handing out in 2013. Mid-level and senior associates also received a salary bump by the firm last year, by £11,000 and £12,000 respectively on 2015 levels.
This comes after a raft of US firm’s hiked associate payscales last summer, following in the example of Cravath Swaine & Moore, which raised base pay for first-year associates by $20,000 (£14,000) to $180,000 (£124,000).
In a move that sent shockwaves through the London legal market, a handful of those firms subsequently decided to pay equivalent salaries to their lawyers in London, with some pegging them to the dollar to address plunging sterling exchange rates. As a result, London NQs at Kirkland & Ellis and Akin Gump are currently on around £125k, where those at Weil are paid £115k.
Despite this, NQ’s at Sherman & Sterling will now be paid £20k more than their equivalents at Freshfields and Clifford Chance, and £26.5k more than those at Allen & Overy, in the battle by London firms to retain top associate talent.
Last year, Shearman’s revenue rose by 6% to $912.5m (£731m), with London revenues increasing by 14% to $169.7m (£136m). Firmwide profits per equity partner shot up 18% to $2.165m (£1.74m). In spite of this, Sherman decided to cut its equity partnership in the second half of 2016 and did not hire any new partners in Europe last year.
Movers & Shakers of the week
Appointments
Nike appoints new European general counsel
Senior director of global brand protection Bill Berner has accepted the role of European general counsel as current GC Fabrizio Mecozzi is to take on a new US-based position at the company
Moves
Linklaters’ US banking practice faces blow with two partner exits
Linklaters’ former US banking head and US co-managing partner Jeff Norton is set to join Dechert in New York whilst fellow banking partner Sabrena Silver also departs, accepting a partner position with White & Case
London head of pensions for Ashurst Marcus Fink has joined PwC Legal
Linklaters bolsters Shanghai practice
Corporate partner Simon Meng and project development and finance partner Andrew Ruff both join Linklaters’ Shanghai office from King & Wood Mallesons and Shearman & Sterling, respectively.
Richard Given has left HSBC as deputy general counsel to become GC and company secretary of new fintech start-up 10x Banking
Gowling WLG loses innovation head
Head of innovation and technology for Gowling WLG Derek Southall steps down from his role to launch his own venture Hyperscale Group, but continues to work with the firm on a consultancy basis
Gibson Dunn makes third move for Latham partner in Germany
Dispute resolution and white-collar defence partner Finn Zeidler is the third partner to depart Latham & Watkins for Gibson Dunn in Germany, taking a partner role in the firm’s Frankfurt office
Two further partner departures for CMS ahead of merger
Corporate partner Peter Crichton and construction and energy lawyer both exit CMS to join McDermott Will & Emery and 39 Essex Chambers
Addleshaws builds out in London
Taylor Wessing’s Dubai head Habib Ullah leaves to join Addleshaw Goddard in its London banking practice
Quinn further expands City practice
Clifford Chance’s tax investigations and disputes head Liesl Fichardt has decided to join disputes specialists Quinn Emanuel Urquhart & Sullivan in its London office
Ashurst adds partner to Paris office
Ashurst has added to its shrinking Paris practice with leveraged finance lawyer Pierre Roux who joins from Linklaters as a partner
Office Openings & Closings
Osborne Clarke launches in Shanghai
Norton Rose sets up in Luxembourg marking eleventh European launch
Mergers & Alliances
CMS Cameron Mckenna, Nabarro and Olswang merger goes live under the CMS brand
Kennedys merges with 100-strong US insurance firm Carroll McNulty & Kull
Ashurst launches formal alliance with Singapore firm ADTLaw
Partner promotions
Dentons makes seven UK promotions in 54-stong global round
Weightmans triples promotions as Kingsley Napley makes women majority of partnership
RPC, DAC Beachcroft and Bond Dickinson unveil 2017 partner promotions
DLA halves London round as HFW makes up three
Simmons & Simmons promotes seven in the City in a 12-strong partnership round
Bird & Bird promotes 16 in global promotions 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.
Follow us on Twitter and LinkedIn for more market updates to let us know your thoughts.
This week:
1. Spring promotions 2017: The full breakdown
With May fast approaching, this week saw a number of the UK elite release their spring promotion rounds.
Clifford Chance
Clifford Chance was the first to announce a 24 strong global promotions round, matching the number of partner promotions made last year. The corporate and finance practice areas were the main beneficiaries at the magic circle firm, which saw 9 partner promotions in each, with six partners being made up in London overall.
This year’s round also saw the promotion of four women (16%), with CC’s overall female partnership rising from 15% to 19% over the last five years.
CMS
CMS were the next to announce, making up 48 into partnership in an increased global promotions round. This included 10 UK promotions, split evenly between their offices in London and Scotland, as well as four partner promotions from Nabarro and Olswang ahead of the firm’s three-way merger next week
Of the 48 new partners, 27% are female, down from 39% last year, when the firm made up 31 new partners.
Norton Rose Fulbright
Also on the verge of its merger with Chadbourne & Parke, Norton Rose Fulbright announced an equally sizable promotions round of 45 global partners, with eight lawyers making partnership in the London office. This is up from 2016 where 39 associates were promoted globally, with the Corporate, M&A and securities practice and dispute resolution practice both seeing 13 new partners each.
Eighteen female partners (40%) were also made up in this year’s promotion round, up from 31% in 2016.
Eversheds Sutherland
Eversheds too announced a 20-strong global promotions round, the first since its merger with US firm Sutherland Asbill & Brennan in February. This is slightly down on last year where 26 were made up, and does not include any legacy Sutherland lawyers due to the US and UK sides of the business remaining financially independent.
Of the new partners, half are based in the UK with only one in London, with the firm’s Birmingham, Leeds and Manchester offices seeing the bulk of the promotions. Regarding practice area, 14 of the global promotions are into the firm’s company commercial practice group with four in litigation and dispute management and two in real estate.
This promotion round also included six women (20%), down from 11 (42%) last year.
Ashurst
Finally, in an increased round, Ashurst also promoted 19 to partnership globally with these promotions distributed evenly across London and Australian offices. Banking and Corporate again featured heavily as the most prominent practice areas, both of which have received four new partners.
However, of this year’s cohort only four partners made up were women (21%), compared to the 33% female partnership rate achieved by the firm last year.
2. Top Deutsche compliance exec says 4,000 UK jobs at risk
As Brexit looms, banks are in the midst of deciding on possible plans for relocation, and Deutsche Bank have recently announced up to 4,000 UK jobs at risk as a result.
Sylvie Matherat, chief regulatory officer for Deutsche Bank, said on Wednesday that the potential shift could likely include 2,000 client-facing staff, as well as up to 2,000 additional members of staff supporting those teams, such as those in a risk management capacity, if regulators deem it necessary.
The German bank hasn’t yet stated where these positions will be redistributed, but Frankfurt and Berlin seem to be the two locations most likely to benefit from the move.
Deliberations are being made across the banking sector as to how best to relocate their offerings. HSBC have hinted at 1,000 investment banking jobs moving to Paris, UBS are considering shifting towards Frankfurt and Madrid, whilst J.P. Morgan are apparently in talks to buy office space in Dublin, with room for up to 1,000 employees.
Earlier this month, the Bank of England (BoE) set a deadline of 14 July for financial firms to deliver their contingency plans for the aftermath of Brexit. BoE governor Mark Carney has declared that firms must prepare for “the full range of possible scenarios”, including a hard Brexit.
Meanwhile, banks have released more optimistic news this week, with Barclays and Royal Bank of Scotland (RBS) both posting positive first quarter results for 2017. RBS saw profits of £259m in Q1 2017, compared to a £968m loss a year earlier, and Barclays surpassed analyst expectations with their pre-tax profit for Q1 doubling to £1.682bn. These results demonstrated strong performance from the core bank division, although the investment bank had a poor first quarter, with income falling by 4 per cent.
Movers & Shakers of the week
Appointments
Stuart Kelly has been promoted from deputy general counsel to group general counsel for Network Rail after former GC Suzanne Wise joined Japan Tobacco International last month
Moves
Fieldfisher strengthens structured finance capability with magic circle hire
Former Freshfields Paris finance head Dougall Molson will be joining Fieldfisher’s London office
Joining Mischon de Reya are restructuring and insolvency partner David Leibowitz and property litigator Joanna Lampert from Berwin Leighton Paisner, whilst US securities partner Bobby Schrader also leave the firm to join Barclays
Newly merged Ladbrokes Coral loses GC
Harry Willets has stepped down from his role as general counsel for Ladbrokes Coral, having acted as GC and company secretary for legacy Gala Coral since 2006
Morgan Lewis gains investigations duo
Chris Warren-Smith has left Norton Rose Fulbright as its global investigations head to join Morgan Lewis & Bockius, along with fellow partner Melanie Ryan
White & Case has hired finance partner Chris McGarry from Ropes & Gray to join their capital markets practice in London
Freshfields makes a three-partner team hire in US
Three restructuring partners from Arnold & Porter Kaye Scholer, including the firm’s US chair of bankruptcy and restructuring, will be joining the New York office of Freshfields Brukhaus Deringer. Mark Liscio, Madlyn Primoff and Scott Talmadge are all legacy Kaye Scholer partners.
Covington opens two new offices with partner hires from Chadbourne
Four partners at Chadbourne & Parke have announced their departure ahead of the upcoming merger with Norton Rose Fulbright. Dubai managing partner Jack Greenwald and project finance partner Richard Keenan will launch Covington & Burling’s Dubai branch, whilst Ben Donovan will lead the new Johannesburg office. Project finance partner Agnieszka Klich will be joining Covington’s London office
Office openings & closings
Clifford Chance closes its Bangkok office and ends Indonesian alliance
Mergers & Alliances
Linklaters set to practice under Chinese law by joining forces with local firm Zhao Sheng
Weightmans and Ward Hadaway call off merger talks
Partner Promotions
Please see above for analysis and a full breakdown of this week’s partner promotions
Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
Follow us on Twitter and LinkedIn to let us know your thoughts.
This week:
1. Linklaters hits refresh
This week has seen Magic Circle firm Linklaters dominate the legal press as details emerge of its ‘Strategy Refresh’, the outcome of a wide-ranging consultation of partners and clients led by global managing partner Gideon Moore.
Most notably, the firm is to phase out individual partner metrics and annual assessments in order to focus on broader measures of team and firm performance. As such, annual partner appraisals will be scrapped in favour of more regular feedback sessions for individual partners and teams.
This is a marked shift from the metric-based performance review system introduced by former managing partner Tony Angel, which focused on individual partner performance and billing targets, adopted widely throughout the legal market in the 2000s.
This new system of performance review aims to ensure assessments give added weight to practice performance as well as client-winning, business development, training and innovation to focus on the combined value that partners bring to the firm and spur entrepreneurialism.
Other new measures include the pilot of a fixed hour working week for associates in Germany, and an increased emphasis on agile working and alternative routes to partnership by management, both aimed to increase the retention of upcoming talent.
2. FCA Business Plan: What you need to know
This week saw the release of the Financial Conduct Authority’s (FCA) Business Plan for 2017/18, laying out what the UK regulator will be focusing on in the coming year.
Many of the themes come as expected, with PPI mis-selling complaints and firm culture and governance featuring as sector priorities, whilst also touching upon plans for Brexit, identifying it as a further key area of focus for the regulator.
Below we have outlined some of the most relevant aspects of this year’s Business Plan and the possible aftermath of these for financial institutions:
Brexit plans
As much of the current regulation is expected to remain the same post-Brexit, the plan admits to a lack of clarity surrounding Brexit negotiations, which “creates a number of uncertainties with the potential to affect the UK and European financial markets.”
The regulator has raised its fees for FCA authorised firms by 1.5 per cent, which will include an extra £2.5m within the budget for Brexit costs. The document relays hope that the solid relationships forged between UK and EU regulators will bring about smooth cooperation, highlighting that “a robust framework that provides for continued cooperation will be fundamental regardless of the outcomes of the negotiations.”
Consumer experience
Treating customers fairly remains a top priority for the UK watchdog and is being evaluated across all financial services sectors. From improving communications and treatment of legacy customers, to introducing healthier competition and transparency in the asset management industry, firms will have to refocus their efforts on improving services for customers and investors.
Having referenced the interim report of 2016’s Asset Management Market Study, the plan also reinforces a number of remedies expected to be enforced this year, including increased transparency and standardisation of costs and charges for institutional investors. It states that the final report will be published in Q2 2017.
Technology
The FCA has claimed it is taking a forward-looking approach with innovation in the financial services industry when it comes to assessing both potential growth and emerging harm. An existing concern the FCA is hoping to tackle is the lack of investment being made to legacy IT systems, which would obstruct the process of digitalisation and automation to financial markets. Updating current systems will pave the way for the new era of regtech and fintech movements, which will “play a key role in firms moving towards less capital-intensive business models” and render market activities, financial products and services to be faster, cheaper and better.
Cybercrime
Cyber resilience and financial crime controls must be placed under scrutiny as we enter a new age of innovation and see the appearance of greater opportunities for cybercrime. The regulator has committed to building its own expertise in resilience and cyber security to develop and evolve regulatory tools alongside advancements in financial technology.
In order to achieve this, the regulator has set up scenario-testing for operational resilience, which will “assess how well they respond to a range of situations that might cause a major operational disruption.” Using this data, they have constructed, with the help of the PRA and specialist cyber agencies, a cyber resilience toolkit which is expected to be rolled out to a large number of financial institutions over the course of 2017/18.
Movers & Shakers of the week:
Panel watch:
SRA culls legal roster as it looks to appoint sole legal provider
Berwin Leighton Paisner awarded three year mandate as lead property adviser for Tesco
Appointments:
CC’s Simon Davis to become the next Law Society President
Cybersecurity partner Simpson named as Hunton & Williams new UK head
Moves:
Gibson Dunn makes play for four-partner HK team
Ropes & Gray has lost Hong Kong managing partner Paul Boltz, along with corporate partners Brian Schwarzwalder and Michael Nicklin and private equity partner Scott Jalowayski, who all join US rival Gibson Dunn & Crutcher
Weil Gotshal brings in Bakers infrastructure specialist
Weil, Gotshal & Manges has hired real estate finance partner Paul Hibbert in London from Baker Mckenzie
Freshfields looks to SFO to bulk up its corporate crime practice
The Serious Fraud Office’s joint-head of bribery and corruption Ben Morgan has joined Freshfields Bruckhaus Deringer as a partner in its corporate crime and global investigations practice in London
Office Openings & Closings:
Pinsent Masons to launch six-partner Madrid office with team hire from Spanish firm Ramon & Cajal
DWF closes Preston office to focus on Liverpool
Partner Promotions:
Allen & Overy makes 24 promotions, with only two women
Berwin Leighton Paisner makes up four in latest promotions round
Charles Russell Speechlys promotes six to partnership
Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
Check out our new “Panel Watch” feature in Movers & Shakers to stay up to date with the most recent panel shake-ups
Follow us on LinkedIn and Twitter for regular market updates
This week:
1. LITIGATION AGAINST GLOBAL BANKS RISES 37%
Litigation against the largest 50 global banks has increased 37% in 2016, according to research published this week by RPC.
The number of High Court cases in which banks were named as a defendant jumped from 115 to 157 last year, increasing consistently year-on-year since 2011. This was based on an analysis of court hearing lists, and covers allegations relating to Libor and the mis-selling of hedging products.
UK banks made up two thirds of the majority of the 784 High Court cases involving the top 50, with Barclays, HSBC, Lloyds and Royal Bank of Scotland (RBS) accounting for 67%, or 530, cases over the past 5 years. RBS was the defendant in the highest number of cases (118), with Barclays in a close second (106).
There have been several high profile cases involving these banks over the past few years, most notably the ongoing ‘rights issue’ case against RBS. Representing 27,000 shareholders, Signature Litigation have brought a £4bn group action against the bank who have claimed that they were misled into signing up for a £12bn rights issue in 2008. As reported this week, the cost estimate of legal fees paid by RBS to external counsel Herbert Smith Freehills to defend the bank in the dispute has now reached £125m.
The research attributed such a rise in litigation to the long term fallout of the financial crisis, together with a greater willingness of parties to contemplate litigation than was seen before the crash.
As the economy has recovered, many businesses have found themselves in a better financial position to launch a legal claim than they were in the immediate aftermath of the financial crisis. This, alongside the availability of third party litigation funding, where companies offer to foot the expensive legal costs of bringing a claim in return for a share of compensation awarded if the lawsuit is successful, has driven many cases.
Furthermore, claimants typically have six years to launch a claim before their time limit expires, which has meant that the last round of cases relating to the financial crisis were only brought to the High Court last year.
Whilst this shows a greater willingness by individuals and companies to litigate against the banks, the cases the banks have faced in the High Court are likely to be the tip of the iceberg, as many financial disputes are settled by banks before lawsuits are formally lodged.
As Simon Hart, Partner at RPC says: “Whilst the well-publicised systemic problems, like Libor or Forex manipulation may not be repeated in the near future, there is still a large number of disputes that pass across our desks every week relating to the investment banks.”
Nevertheless, this trend poses interesting questions for City law firms, many of whom are conflicted in acting against the UK’s largest banks, whilst further entrenching the dominance of litigation boutiques within this side of the market.
2. THE END OF THE LIBOR SCANDAL: BARCLAYS DUO ACQUITTED IN LIBOR RETRIAL
Two former traders at Barclays were cleared of any wrongdoing in connection with the rigging of benchmark rates by a jury at Southwark Crown Court on Thursday.
Having already stood trial last summer, Barclays traders Stylianos Contogoulas and Ryan Reich returned for a retrial after the jury was unable to reach a verdict on the conspiracy to defraud the Libor rate. The Serious Fraud Office (SFO) appealed for this retrial, claiming that the Barclays duo were plotting with fellow Barclays employees between June 2005 and September 2007 to rig Libor.
The FT reported that Emma Deacon QC, who was representing the SFO, argued that Mr Reich and Mr Contogoulas were “driven by money” to make more profit on their trading and saw “honesty and integrity” as “entirely expendable”.
Meanwhile, Roland Ellis, Senior Associate at criminal litigation and commercial disputes boutique Bivonas Law, was pleased with the verdict, which he believes was the end to a “trying ordeal for the past seven years”.
Mr Reich and Mr Contogoulas are only two of six total Barclays individuals initially prosecuted for rates manipulation. Jay Merchant was served a six-and-a-half year sentence, whilst Peter Johnson and Jonathan Mathew were each jailed for four years, and Alex Pabon was handed two years and nine months.
The re-trial brings to a close all Libor prosecutions brought by the Serious Fraud Office. It also marks the end one of the largest scandals the financial markets has seen in recent times, leading to the mass levels of regulatory change that we’re experiencing today.
Market manipulation, along with further misconduct issues, primarily triggered an overhaul of the Financial Services Authority, now split into the Financial Conduct Authority and the Prudential Regulation Authority, and further sparked the development of a substantial level of new regulation, affecting all areas of financial services. Having redefined the workings of the global banking system, the regulator has now turned its eye onto the asset management industry, conducting an in-depth review into the £7 trillion industry. The interim report from this review was published in November last year, and its findings imply that we should envisage a similar transformation descend upon the sector.
The SFO are currently in the process of bringing a prosecution of six individuals for manipulating Euribor, a global interest rate benchmark. The six are due to stand trial in September.
Movers & Shakers of the Week
Panel watch
FCA drops three City firms from its supervisory panel of advisers
BT appoints 37 UK and Ireland legal advisers into its legal network
TransferWise is electing a select group of firms as its preferred legal advisers on a loose roster
Government kicks off a review for a two-year ‘finance and highly complex transactions panel’
Appointments
Slaughters bulks out Brussels competition offering
Slaughter and May appoints six competition lawyers from its London to Brussels office in response to Brexit
Clifford Chance creates Australia managing partner role
Banking partner Richard Gordon is set to lead Clifford Chance’s Australia practice and Sydney office, whilst energy partner Paul Lingard shall become Perth managing partner
Moves
Fieldfisher appoints new head of Manchester office
Former managing partner for Halliwells Ian Austin will replace corporate Matt Fleetwood as Manchester head as Fleetwood exitswill fellow corporate partner Jim Truscott to set up a corporate boutique
Channel 4’s Prash Naik steps down after three years as general counsel
VW hires new chief compliance officer
Former associate general counsel for Daimler, Kurt Michels has joined Volkswagen Group in the role of chief compliance officer
Latham boosts London litigation capability
Ian Felstead leaves Olswang ahead of three-way merger to join Latham & Watkins’ litigation practice
Further European real estate hire in Paris
Hogan Lovells hires Michaël Lévy as a real estate partner in its Paris office from Bersay & Associés
Winckworth Sherwood further strengthen real estate offering
Head of real estate for Rosenblatt Solicitors Andrew Kinsey has decided to join Winckworth Sherwood’s 100-strong real estate team
Office Openings & Closings
KWM pulls out of Saudi by closing down Riyadh office
Shakespeare Martineau set to open tenth UK office in Manchester
US securities litigation specialist Pomerantz launches in Paris with in-house lawyer hire
Partner promotions
Addleshaw Goddard promotes five, with one female promotion
Hello and welcome to the Fides Weekly Update. Here we discuss some of the main new stories in legal and compliance. See below our regular feature of Movers & Shakers of the week.
Don’t forget to follow us on LinkedIn and Twitter to receive daily market updates.
This week:
1. The exodus begins? The EBA, Lloyds of London and JP Morgan launch relocation plans
With Prime Minister Teresa May invoking Article 50 on Wednesday, and formally triggering the process for Britain to leave the EU, attention turned to the impact Brexit will have on the UK now that Britain has officially started the process to leave.
The first of these considerations was the new location of the London-based European Banking Authority (EBA), and future structure of the EU’s financial regulatory framework.
German officials are lobbying to have the EBA relocate to Frankfurt, and have the institution combine with the European Insurance and Occupational Pensions Authority (EIOPA). This model would emulate the ‘twin peaks’ structure seen in the UK, that if went ahead would likely transfer some of the consumer protection powers of the EBA to the Paris-based European Securities and Markets Authority (ESMA).
However, this suggestion has also stirred criticism from other EU nations who are also keen to host the agency and benefit from the jobs and prestige associated with hosting the EBA. Other likely locations for the EBA include Paris and Luxembourg, who on Thursday stated that they had the legal right to host the banking body.
Although a final timeline has yet to be set on the decision, the Commission’s Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) currently involved in discussions as to the new location, with any final decision having to be signed off by other member states in the European Parliament.
The second overarching concern is the location of global financial institutions outside of London once Britain exits the Union.
Yesterday, Lloyds of London announced that it will establish a new European subsidiary office in Brussels, which will likely affect 100 staff. This will allow the institution to continue underwriting insurance policies across all EU states after the UK leaves, with the company’s continental business generating 11% of its premiums.
J.P. Morgan on the other hand are considering a more wholescale move, with news emerging that the bank is in talks to secure an office in Dublin for more than 1,000 workers. Further fuelling concerns over exodus from the City following Brexit, a number of banks have already confirmed they could move staff, with Goldman Sachs looking to move hundreds of bankers to Frankfurt and Paris, while HSBC could switch 1,000 investment banking jobs from London to Paris.
With many things yet to be decided, such as whether the UK will still hold passporting rights, as well as the nature of the free trade agreement between the EU and UK once Britain leaves, for now these institutions are doing the same as any other – acquiring an option to help mitigate the risk Brexit brings to their business.
2. The new wave of modern law firms is here: Legalex 2017 showcases new innovations in the sector
We celebrated all things tech with law firms this week as the Legalex exhibition displayed some of the best tools out there specifically designed for the development of law firms and legal professionals.
Over 28th and 29th March, Legalex came to ExCeL London and hosted a floor of legal tech suppliers as well as numerous experts, presenting talks on different technologies and themes affecting law firms today. From gaining efficiencies to implementing an effective cyber security strategy, the event shared insight into all the hot topics we’re currently talking about in the legal sector.
Diversity leader Miranda Brawn kicked off the event, delivering a keynote speech on the benefits and importance of introducing diversity and inclusion into field of legal tech. Brawn claimed that legal tech companies must be more culturally diverse as the demographic of those using technology is more diverse: “Can you effectively serve a demographic not represented at the senior levels of your organisation?”
Brawn went on to explain how a diverse senior workforce can be financially beneficial, enforce a more collaborative culture and improve a company’s ability to attract talent.
Also in attendance at the event was Artificial Intelligence software company Luminance Technologies. CEO Emily Foges spoke at the event, accompanied by Murray Cox, M&A partner at Slaughter and May, whose practice uses the AI tool and helped pilot the software.
Live since September 2016, Luminance is a pattern recognition software that can identify key anomalies and clauses, carrying out the contextual review of thousands of documents in a fraction of time it would take humans.
The talk dealt with some of the mysteries and questions surrounding AI, including how it would affect the need for lawyers. They explained that although technology can review large data sets in place of lawyers, there still needs to be someone to evaluate these findings and sort through the information gathered. Cox argued that it could in fact have a positive impact on the recruitment and retention of junior lawyers as it would enable them to carry out more complex work and spend less time on mundane tasks such as doc review.
“It may be that we see more of a diamond-shaped law firm structure as opposed to triangular”, says Foges. That is to say law firms would not need such a high intake of trainees and could focus more on the development of their lawyers.
To conclude the two-day exhibition, one of the final sessions was delivered by Peter Wright, managing director of data protection and cyber security specialists DigitalLawUK. Titled “Effective Cyber Security for Law Firms”, Wright’s talk touched on the number of different ways a law firm can be targeted and the measures they should take to limit their vulnerability to cyber attacks.
Wright highlighted the types of individuals that can be targeting your firm. Aside from the well-known cyber criminals and fraudsters who are looking for financial gain, threats can include state targets, who may be seeking information about deals and clients; hacktivists, those who want cause chaos and destruction for large organisations; and ex-employees, who might have left the firm unpleasantly and have an understanding of your IT systems and how to access confidential information.
Law firms are a prime target for cyber attacks at the moment. Even the largest law firms don’t have the same level of resourcing for cyber security as global banks do, something which attackers are aware of and have been exploiting, particularly through phishing attacks. Phishing attacks remain commonplace in law firms, with 73% of the UK top 100 being the target of attacks in 2015. With these figures continuing to rise, lawyers must become more attentive to the risks they face and detect possible attacks quickly and manage them effectively.
Part of our aims and objectives at Fides Search are to encourage and promote innovation in law. We understand the importance of driving change in the legal workplace, which in turn plays a great part in how we advise our clients and partner with them to foster innovative solutions. If you would like to discuss this topic further, feel free to get in touch and contact gopi@fidessearch.com
Our latest article on legal technology “Crossing the Chasm: Establishing widespread use of legal technology in law firms” is available to request now. Please contact research@fidessearch.com to find out more.
Movers & Shakers of the week:
Appointments
RSA promotes new legal head
Jonathan Cope has been promoted to Head of Legal, UK and International at insurance company RSA Group, where he was formerly Managing Counsel.
Fried Frank appoints London head
Corporate partner Mark Mifsud will head up Fried Frank Harris Shriver & Jacobson in the City, succeeding current head Graham White who has announced his retirement from the firm.
Moves
Superdry owners takes on new GC
Simon Callander, general counsel at Addleshaw Goddard, is set to leave the firm to head the legal team of fashion retailer SuperGroup, replacing former general counsel Lindsay Beardsell, who joined Ladbrokes Coral in November last year
Freshfields hires ex-European commissioner for the UK
Jonathan Hill, who was former Commissioner for Financial Stability, Financial Services and Capital Markets Union, has accepted a part-time role at Freshfields Bruckhaus Deringer advising on Brexit-related matters
Reed Smith builds out its Munich office
A team of three lawyers from Olswang, including German head of technology and data protection Andreas Splittgerber, are moving to Reed Smith’s Munich office where they will join the firms IP, information and innovation group.
Ashurst expands high yield practice
Ashurst’s London office will be joined by Allen & Overy senior associate Tamer Bahgat, who joins as a partner, along with A&O counsel Natalia Sokolova.
Dechert appoints second finance partner from Kirkland
Four months after hiring Kirkland & Ellis partner John Markland, banking and finance partner Rob Bradshaw will also be joining Dechert in its London office
Office openings
Mergers & Alliances
DLA Piper set to merge with Danish law firm LETT and become the largest firm in the Nordic region
Partner Promotions
Slaughter and May promotes seven to partner, including two rare European promotions
Macfarlanes promotions round makes up three, with one female promotion
Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
Tweet us @Fides_Search to let us know your thoughts.
This week:
1) Is a compliance cool down on the cards?
As financial penalties finally begin to subside for global banks, and a digitalisation of processes floods middle and back office operations, many are forecasting a drop in compliance hiring, with news of job cuts already surfacing.
Bloomberg published an article this week exploring discussions in the market that compliance staff are reducing. In total, banks have paid $321 billion worth of penalties globally since 2008. Now these figures are levelling out and the regulator is shifting its attention to the asset management industry, compliance is no longer immune to the cost pressures and restructuring plans banks are facing.
Automation is also taking a toll on compliance headcount, particularly for monitoring and surveillance operations, a function in which technology has the potential to replace the majority of jobs. Royal Bank of Scotland is the most recent bank to begin swapping out staff for digital processes, as it prepares to axe up to 2,000 jobs checking new customers for suspicious traits.
Meanwhile, the same hiring trends seem to be hitting the US banking sector, the FT posted. Wall Street has witnessed a slight slowdown in the compliance hiring surge, although this is expected to increase dramatically with the President Donald Trump’s strong views on deregulating the industry. Last week Trump’s elected individual to lead the Commodity Futures Trading Commission (CFTC) J. Christopher Giancarlo was appointed permanent chief of the organisation. Giancarlo, who has declared that his aim is to “reinterpret [the CFTC’s] regulatory mission”, plans to focus on fostering economic growth, enhancing U.S. markets, and “right-sizing” its regulatory footprint. With these new objectives dominating the US securities market, we expect a much further decline to for US compliance headcount.
Talks of a slowdown in compliance come as no surprise to the industry. A correction to the frenzy hiring in this space was expected as banks cannot continue to support cost centres such as compliance. However, the areas of compliance in which we are seeing job losses largely consist of low-level remedial responsibilities, such as KYC. These positions were initially created by banks in order to satisfy the regulator after the crash, and these are also the positions most affected by incoming technology.
Taking a look at demand for top level compliance professionals, we have seen no evidence of change, with front-office advisory positions particularly unaffected.
Although financial regulation may no longer be as high on bank agendas, it is unlikely regulators will become any less stringent in the forthcoming years, leaving the need for compliance officers as necessary as ever.
If you would like to discuss this topic in more detail, please contact Consultants Barrie Lee or Max Alfano.
2) Lloyds Banking Group cuts 22 legal roles as part of ongoing restructuring
Lloyds Banking Group is to cut a further 22 legal roles as part of a further restructure of the bank’s legal team, announced group GC Kate Cheetham on Tuesday.
It is not known whether particular areas of the legal team will be affected, or if the cuts will be spread among Lloyds’ various legal departments, consisting of up to 150 lawyers.
In addition, a total of c.5.5 full-time equivalent (FTE) roles will be created to ensure the legal team has the right skills to support the Group deliver its strategy.
The bank was understood to be assessing up to 80 legal roles in total, with the 22 redundancies announced due to be completed in May.
The role reductions are part of the bank’s strategic review which was announced in October 2014. This included the cutting of 9,000 jobs and the closure of 200 branches over a three year period.
However, in relation to the legal function, the overall goal is to enable people to work on big projects and reduce bureaucracy.
These cuts follow on from a restructuring 12 months ago which led to job losses for junior lawyers at the bank’s London headquarters, and 25 mid-level legal redundancies from its litigation team in April 2015.
Like Barclays and HSBC, Lloyds also completed a panel review at the end of last year, cutting a number of firms from its UK legal panel in attempt to streamline costs, with DLA Piper and Norton Rose Fulbright both missing out.
3) Movers & Shakers
Appointments
Stephenson Harwood hands CEO two-year extension with senior partner re-elected for new term
Chief executive Sharon White reappointed for a further two years, with senior partner Roland Foord re-elected for a second three-year term.
Moves
Nine-strong trademarks and disputes team leaves BLP for Bristows
Head of IP Simon Clark and trade mark attorney Ian Gruselle join Bristows with seven other lawyers and support staff as BLP refines their strategy
KWM New York co-founder quits for Reed Smith
New York-based international funds partner Parik Dasgupta joins the corporate practice of Reed Smith.
Office Openings & Closings
Denton’s takes over DLA’s office in Georgia
Partner Promotions
Linklaters makes up 26 in largest promotion round since 2008
Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
Tweet us @Fides_Search to let us know your thoughts.
This week:
1. FCA’s Bailey on how to tackle cultural change in Banks
FCA chief executive Andrew Bailey has called on firms to focus on pay and incentive structures, alongside broader governance and risk management practices, in order to effect cultural change in banks.
The comments were made in a keynote speech at the HKMA’s Annual Conference for Independent Non-Executive directors, which looked to tackle cultural change, considered to be “one of the major root causes of conduct failures” in recent years.
Entitled the ‘Culture in financial institutions: it’s everywhere and nowhere’, the speech built on the fact that cultural outcomes are a product of a wide range of contributory forces, most prominently the structure and effectiveness of management and governance – the ‘tone from the top’ – and the willingness of people throughout the organisation to wholeheartedly adopt and adhere to this.
Banker’s remuneration and incentive structures are a good example of where practices such as performance management intersect with an institution’s culture, with a firm’s approach towards remuneration ‘no doubt’ having a heavy influence on both culture and conduct.
As such, Bailey advocated that it is critical for boards and regulators to understand how incentives work, and for firms to think through the consequences of such structures and incentives on culture. This has been done by the FCA to date through the enhanced focus on deferring variable remuneration, which recognises how the risks and returns of activities can evolve over a considerable time.
However, for this to be effective it needs to sit within a broader framework of enhanced governance and responsibility, argued Bailey. This has been achieved in the UK through the introduction of the Senior Managers and Certification Regime, which ensures that senior managers know what they are responsible for, and that these individuals are approved by the regulators as fit and proper to carry out the responsibilities of their role.
Bailey also discussed the impact of greater public interest on the conduct of financial institutions since the financial crisis, how this has increased scrutiny on firm culture, and why now it is more important than ever for regulators to think through the likely consequences of their intended actions to understand the effects.
In conclusion, because of its multifaceted nature – being both ‘everywhere and nowhere’ – Bailey concedes that culture is remarkably resilient in the face of change. As such, “The answer is not to try to tackle the culture” Bailey argues, “But to act on the many things that determine it, of which governance and remuneration are important.”
2. Addleshaws is the latest firm to target fintech startups
As part of a scheme to get to grips with the burgeoning fintech movement, Addleshaw Goddard has selected seven startups to join its programme and receive free legal advice and mentoring from the firms fintech lawyers.
Labelled AG Elevate, the scheme is directed at both early stage startups with less than £1m investment, and the more established companies with over £1m. The mentors that will take part in advising the new companies will be a collection of partners, legal directors and associates, including the firm’s head of fintech Fiona Ghosh.
As reported by Legal Week, the compliance technology company Comply Advantage; money management service Mobillity; online savings and credit company Moneyfellows; startup banking company Penta; currency conversion payments service Valoot; Pace Invoice, described as “a multi-currency invoicing platform”; and Delio – “a white label platform solution for private assets”.
Launching such a programme will not only support fintech companies looking to reach the next stage in their businesses, but can also help Addleshaws learn more about the fintech industry, gain a thorough understanding of how best to advise fintech companies and, in turn, better service their financial institutions clients who are currently investing in this space.
The City-headquartered firm is the third law firm to launch a scheme providing free legal advice to fintech startups. Simmons & Simmons were the first to set up a legal advice fund for up to four fintech startups, followed by Slaughter and May who have chosen five companies to receive its free services.
As technology is being increasingly embraced by the legal sector, firms have also been introducing new innovative tools in their own industry. The rise of legal technology, or legaltech, seems to be following the curve of the fintech trend as more legaltech startups are working their way into the practices of some of the most traditional law firms.
To find out more about the rise of legal technology, take a look at our article written by Fides Research: “Crossing the Chasm: Establishing widespread use of legal technology in law firms”. To request a copy of our article, please contact research@fidessearch.com
Movers & Shakers of the week
Appointments
Simmons appoints assigns new heads of financial institutions and life sciences
Partner Charlotte Stalin will be leading the financial institutions teams, taking over from Jonathan Hammond, whilst Paris disputes partner Alexandre Reginault will take over from Jacques-Antoine Robert as the head of life sciences
Moves
Visa hires former Deutsche Bank global head
Visa has hired new European general counsel Emma Slatter. She previously held the role of global head of strategy at Deutsche Bank, and had worked at the bank for over 20 years.
Top gaming company loses chief legal officer to tech start up
Robert Millar has left his role as CLO and company secretary at King to join Improbable, which creates virtual reality simulations for online gaming.
Dentons launches a UK patents prosecution practice
An eight-strong patents team from Olswang will reunite with former Olswang patent prosecution co-head Justin Hill at Dentons
Davis Polk lose Hong Kong capital markets heavyweight
Capital markets partner Antony Dapiran, who was formerly Hong Kong managing partner for Freshfields Bruckhaus Deringer, is set to leave Davis Polk & Wardwell after the region experiences a dip in capital markets work. His next move is unknown.
Two weeks after former Yahoo general counsel Ronald Bell stepped down from his position, Arthur Chong has taken on the role. He previously acted as a GC for Broadcom as well as an outside legal adviser for Yahoo for the last five months
Kirkland attempts to restore Munich offering after seven partner loss
Private equity partner Volkmar Bruckner departs Weil, Gotshal & Manges to join Kirkland & Ellis in its Munich office. He will join their corporate team, which recently lost five partners to Sidle Austin last month
Freshfields drops aviation finance team in London
US firm Holland & Knight are taking on the City aviation finance team from Freshfields Bruckhaus Deringer. Global head of asset finance and co-head of the aviation sector group Rob Murphy has chosen to join CDB Aviation Lease Finance, whilst the five associates in his team will move to Holland & Knight’s London office
Boies Schiller’s corporate group finds new home
The corporate team of litigation specialists Boies Schiller Flexner in New York is departing for Paul Hastings. The team includes five partners and several associates
Office Openings & Closings
McDermott Will & Emery closes its office in Rome
Gowling WLG plans to open second German office in Stuttgart
Mergers & Alliances
Merger talks break down between disputes specialists Enyo Law and Stewarts Law
Partner Promotions
Gowling WLG promotes five, including four women
Farrer & Co appoints five to partnership, and 80% are female
Pinsent Masons promotes 16 to partnership, and surpasses its 25% female partnership targets
Freshfields makes up 18, six in the City
Hello and welcome to the Fides Weekly Update. Read to learn more about the main legal and compliance news stories of the week and don’t forget to check out our Movers & Shakers of the week.
To celebrate International Women’s Day that took place this week, Researcher Emily Clews has written a blog that discusses this year’s Bold for Change theme, and the steps that corporate organisations have taken in improving gender equality in the workplace and what law firms can take from these approaches. Click here to take a look.
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This week:
1. Merger creates second largest European asset manager
A merger that will form the UK’s largest fund manager was announced on Monday, causing share prices to soar for the two companies and creating an outfit with £660bn assets under management (AUM).
After six weeks of discussions, Standard Life and Aberdeen Asset Management have agreed to join forces, with Standard Life investors expected to hold two-thirds of the group and Aberdeen Asset Management one-third. The deal as a whole is valued at £3.8bn.
Originally known as a life insurer, Standard Life has focused more of its efforts on asset management over the last few years. This deal will certainly help the company establish itself further as an asset manager and allow themselves to compete with the larger US outfits, such as BlackRock and Vanguard.
The deal comes at a crucial time for both companies, as Standard Life attempts to shake off poor outflows and a similarly weak performance of their market leading Gars (Global Absolute Return Strategies) product last year. Meanwhile Aberdeen have also been hard hit, seeing their 15th consecutive quarter of net outflows whilst their emerging markets-focused strategy strains with declining interest from investors.
It has been widely considered that this merger is a defensive move against an industry shift towards passive fund management. Active managers are facing high pressure competition from index-tracking passive funds, which run much lower cost bases and are currently proving more popular in the marketplace. With both Standard Life and Aberdeen operating as active fund managers, the deal will create one of the world’s largest active fund management firms and perhaps inject some disruption into market trends by delivering the size and scope to compete with the cheaper index-tracking rivals.
That being said, with mounting regulatory challenges and fee pressures, the asset management industry is in the midst of significant change, and the new entity has suggested major cost-cutting over the next few years. Job losses are expected at the two Scottish firms whilst overlaps from each of their central functions will need to be streamlined. Hargreaves Lansdown has also indicated that the main source of growth for the firm will come largely from cost savings.
Consolidation is a key trend for the industry at the moment, with one example being the recent merger between UK investment manager Henderson and US counterpart Janus Capital. This level of M&A activity is expected to rise as funds continue to struggle to compete with low fees and consistent returns. With an FCA crackdown of the asset management industry also on the horizon, firms are clearly gearing up for what could be defined as a turning point in the UK asset management industry.
Movers & Shakers of the week:
Appointments
Facebook hires Olswang partner as EMEA head of regulatory and litigation
City litigation partner Anna Caddick joins Olswang client Facebook to head up its regulatory and litigation teams in Europe.
Slaughters appoints three new leaders for key practice groups
Slaughters announce Sarah Lee, David Ives and Charles Cameron as the new practice heads for dispute resolution, IP/IT and pensions and employment.
Eversheds Sutherland appoints new leaders for corporate and human resources groups
Eversheds Sutherland has appointed new leadership for two of its practice groups, with corporate partner Keri Rees taking over as company commercial head from Keith Froud, and Diane Gilhooley replacing longstanding human resources head Martin Warren.
Linklaters promotes new global head of real estate
Head of UK real estate Andy Bruce has been appointed as Linklaters new global head of real estate to succeed Yves Moreau
Former Linklaters senior partners Elliott to chair Irish Bank
Robert Elliot has been appointed as the next chairman of Irish bank Permanent TSB Group Holdings.
Wells Fargo appoints top Cravath partner as new GC
Former Cravath Swaine & Moore presiding partner Allen Parker has been named as the next GC for Wells Fargo & Co.
RPC GC consulting head quits to join e-discovery firm
Former T-Mobile GC Julia Chain, and head of RPC’s in-house consultancy arm, is to leave the firm to join e-discovery and legal document services firm Millnet, alongside two other members of RPC’s consulting team.
Moves
Fourteen-lawyer London private client team leaves Gowling WLG for Forsters
Gowling WLG’s 14-lawyer City private client team is to join Forsters on the 1st May. The team includes four partners – Anthony Thompson, who heads Gowling WLG’s private client team, Catharine Bell, Nick Jacob and Daniel Ugur – as well as 10 solicitors and five other members of staff.
Boies Schiller hires HSF’s global head of public international law
US litigation firm Boies Schiller & Flexner has hired Herbert Smith Freehills global head of public international law Dominic Roughton for its London office.
Latham’s hires Linklaters financial regulatory partner
Partner Daniel Csefalvay joins Latham’s financial institutions group.
Kirkland & Ellis Hong Kong heavyweight Tsun resigns
Kirkland & Ellis equity capital markets partner Dominic Tsun has resigned from the firm’s Hong Kong office after almost six years at the firm.
Linklaters hires US Department of Justice heavyweight in Washington DC
Linklaters has strengthened its US disputes practice with the hire of Matt Axelrod, former principal associate deputy attorney general at the DoJ.
Office Openings & Closings
Ropes & Gray to spin off 100-strong patent prosecution team
Ropes & Gray is to spin-off its patent prosecution practice into a new firm – a move that will affect around 100 lawyers and staff.
PwC launches Hong Kong legal practice with KWM and O’Melveny partner hires
PwC has launched a Hong Kong legal practice with the hire of former KWM Beijing partner David Tiang, and O’Melveny & Myers counsel Joyce Tung. The firm is to be called Tiang & Co, which will enter into an association with PwC’s Singapore licensed foreign law practice, PwC Legal International.
DLA Piper combines with Portuguese alliance firm
DLA Piper has continued its European expansion by combining with its Portuguese alliance firm ABBC.
Welcome back to the Fides Weekly Update. Read on for our analysis of the top legal and compliance new stories of the week. You can also scroll down to see our regular feature: Movers & Shakers of the week.
Please follow us on Twitter and LinkedIin for daily market updates.
This week:
1) The price of misconduct: Global Bank’s fined $321 Billion since the financial crisis
A report released this week by the Boston Consulting Group found that banks have globally paid out $321 billion in fines since the financial crisis in 2008 – more than the GDP of Israel, South Africa and many European states. Banks paid $42 billion in fines in 2016 alone, a 68 percent rise on the previous year, the data showed.
Furthermore, this rate of regulation is unlikely to slow down, as European and Asian regulators look to match the regulatory enforcement of their US counterparts. For example, the number of individual regulatory changes that banks must track on a global scale has more than tripled since 2011, to an average of 200 revisions per day.
The study itself surveyed more than 300 retail, commercial, and investment banks, which represented more than 80% of all banking assets worldwide. Alongside regulatory trends, it examined the sector’s economic profit (EP) and future boardroom agenda for senior managers.
Regarding economic profitability, the banking industry still hasn’t completely recovered from the losses it suffered after the onset of the financial crisis, especially in Europe. Whilst U.S. firms have been in the black for the last three years, and banks in Asia-Pacific, South America and the Middle East and Africa have posted an economic profit year on year, European lenders are yet to post an annual economic profit since the crash
Because of this, coping with increased regulation must remain a priority argued the report, with the increasing costs of doing so putting pressure on banks to create more effective and efficient processes as well as harness technological innovation.
Defining an efficient mode of interaction between banks and regulators will be a critical task, as with many of the major reform packages now in place, banks now face the challenge of implementing technical regulatory measures and responding to audits.
Bank steering functions too will need to become more involved and effective in overall cost management, whether this be through adjusting the organization and operating models to partnering with fintech and regtech startups to provide, for example, more flexible IT infrastructures that are based on advanced analytics and big data and on improvements in process efficiency and automation.
As such, the report advocates closer collaboration between banks risk and steering functions, and the more integrated management of banks’ P&L and balance sheets to successfully navigate the regulatory environment.
2) Changing landscape: Team hires flood the Paris market
In recent weeks, the Paris legal market has seen a flurry of high profile and team hires that have brought about a shift in certain practice areas. This week it was announced that Reed Smith added an eight-lawyer tax team to its ranks, whilst US firm Ogletree Deakins is continuing its European expansion plans with a further office opening in Paris.
Thursday saw US employment specialists Ogletree Deakins take on three of Olswang’s remaining Paris lawyers, including employment partner Karine Audouze, who will be leading the US firm’s new French base. Numerous Olswang Paris partners have already departed the firm ahead of the launch of the three-way merger after it was announced that Olswang’s Paris office would be shutting down as opposed to joining the ranks of CMS Cameron McKenna Nabarro Olswang. The office closed on the 28th February, as the three-way merger is expected go live in May.
Ogletree Deakins has also hired Hogan Lovells Jean-Marc Albiol ahead of its office opening, along with two associates. Following launches in Berlin and London, Paris will be the third European base for Ogletree, who also operate in 49 domestic outfits across the US.
Meanwhile, Reed Smith has bolstered its Paris tax offering with a team hire of three partners, three counsels and two associates from Winston & Strawn. The partners joining are Jean-Pierre Collet, Florence Bilger and David Colin, who will sit alongside the seven partners and 11 other lawyers the firm brought on from King & Wood Mallesons (KWM).
Reed Smith made the most of the fallout from KWM, confirming a 50-strong KWM team hire back in January across its London, Paris, Munich and Frankfurt practices. Such a mammoth hire has greatly altered Reed Smith’s European capability, increasing the firm’s total European headcount by 10%, whilst also marking the largest team hire as a result of KWM’s collapse.
One firm that has witnessed significant volatility with French headcount is Freshfields Bruckhaus Deringer. Last month Freshfields’ partnership voted to take on a five-partner private equity team from Ashurst, after the Paris arm took a corporate and finance hit last year, losing a four-partner team to Orrick, Herrington & Sutcliffe.
It subsequently suffered another loss, as Jones Day hired Freshfields Paris real estate head Erwan Le Douce-Bercot along with the rest of its real estate team.
It seems team hires have become a trend amongst Paris law firm offices over the last few months, and with the instability of various international offices currently set up in the French capital, namely Ashurst, King & Wood Mallesons and Olswang, partners are keeping their alliances intact and acting a little more cautiously regarding the health of their respective firms. As this would naturally bring more insecurity for a partner, with more individuals therefore taking advantage of new opportunities, lateral hires will undoubtedly continue to rise in Paris.
3) MOVERS & SHAKERS
Moves
A&O hires three-layer regulatory banking team from Mayer Brown in Frankfurt
The team, led by partner Alexander Behrens joins A&O in Germany
Clifford Chance disputes partner joins Dechert
Clifford Chance disputes partner Stephen Surgeoner has joined the London office of Dechert after 26 years at the magic circle firm.
Morgan Lewis expands Shanghai office with Simmons employment team
Morgan Lewis has bulked up its Shanghai office with a team of five lawyers from Simmons & Simmons, led by employment and investigations partner Lesli Ligorner.
Reed Smith hires eight-lawyer Paris tax team from Winston & Strawn
Partners Jean-Pierre Collet, Florence Bilger and David Colin have joined Reed Smith alongside a team of lawyers that also includes three counsel.
Cadwalader ex-City head joins Winston & Strawn
Winston & Strawn has hired Cadwalader Wickersham & Taft’s former London head Angus Duncan.
Goodwin hires two more litigators from Freshfields in New York
Litigation partner Gabrielle Gould has joined Goodwin as a partner in its financial industry practice group, moving with litigation senior associate Samuel Rubin, who will become a counsel.
DLA Piper Asia employment head leaves to launch Hong Kong office of Seyfarth Shaw
Employment head Julia Gorham is set to establish Seyfarth’s fourth Asia-Pacific office
Simmons & Simmons and Goodwin Procter make further hires from KWM
Simmons has hired former KWM corporate partner David Parkes for its London office, while Goodwin has recruited former Luxembourg office managing partner and private equity partner Alexandrine Armstrong-Cerfontaine as a consultant.
Appointments
A&O’s global dispute resolution head becomes new US and Latin America senior partner
Allen & Overy (A&O) global dispute resolution head Tim House is relocating to New York to take up the new role
Freshfields corporate partner Richards moves into Rio Tinto legal team
Philip Richards has been seconded to head up Rio Tinto’s legal team following the dismissal of legal and regulatory affairs group executive Debra Valentine
Former One Savings Bank GC joins Lloyds Bank
Former One Savings Bank general counsel Zoe Bucknell has taken on a new role at Lloyds Banking Group as deputy company secretary.
Anglo American hires Shearman mining co-head as new Group GC
Richard Price is set to replace longstanding group GC Ben Kiesler effective of the 1st May.
Latham appoints London capital markers partner as vice-chair
Richard Trobman joins Ora Fisher as the vice-chairs of Latham & Watkins
KWM appoints Hong Kong co-chief exec as new China chairman
Hong Kong co-chief executive Zhang Yi succeeds global chair Wang Junfeng as the firm’s new China chairman.
Office Openings & Closings
US firm Ogletree Deakins opens in Paris with three remaining Olswang lawyers
Mergers & Acquisitions
Dentons has secured its first base in the Netherlands via a merger with Dutch firm Boekel
Financial Results
King & Spalding turnover drops 8%, while Covington ups City revenue by 9%
Gibson Dunn posts rising revenues for 21st consecutive year
Slater and Gordon writes down value of UK business as half-year revenues fall 34%
Goodwin nears $1bn revenue mark after year of expansion across Europe
Welcome back to the Fides Weekly Update. Read on for our analysis of the top legal and compliance new stories of the week. You can also scroll down to see our regular feature: Movers & Shakers of the week.
Please follow us on Twitter and LinkedIin for daily market updates.
This week:
COMPLIANCE
Britain’s major banks were in the spotlight this week as they unveiled their full-year financial results. As such, this week we take a deep dive into the financial results of two of the UK’s Clearing banks, and what they reveal about the health of UK banking.
Lloyds Banking Group
The outlook was brighter at Lloyds Banking Group that doubled its pre-tax profits from 2015 and reported its highest annual profit in a decade. The banks’ pre-tax profits increased by 158% to £4.24bn, a level last seen in 2006 before the financial crisis.
Following the results, the government has since reduced its stake in the bank to 3.89%, down from an initial 43% following the bailout in 2008. At this current sell down rate, Lloyds should be fully returned to private ownership by May. Lloyds share price also rose by 3.6% on Wednesday, making the bank the biggest riser on the FTSE 100.
A reason for this boost in profitability is a decline in the amount the bank paid out for PPI provisions, from £4bn in 2015 to £1bn last year. Profits at the bank had been weighed down in recent years by the £50bn cost of bad lending at HBOS – the bank Lloyds took over during the 2008 financial crisis – and £17bn of charges to cover PPI compensation.
Despite this, the bank still set aside a further £1bn for conduct issues, which has affected underlying profits, which were down to £7.9bn from £8.1bn last year. Total income for the group also edged down to £17.5bn compared with £17.6bn the previous year, showing how difficult it is for banks to make money when interest rates are so low.
The overall picture however is one of robust recovery for Lloyds, whose share price has increased 21% over the past six months after plummeting to 48p following the referendum result. The bank also stands in stark contrast to fellow bailed out lender Royal Bank of Scotland, which on Friday is due to post its ninth consecutive annual loss, has not resumed dividend payments, and is still 72% owned by the taxpayer.
However, with 97% of business generated by the UK economy, the possible downturn resulting from Britain’s decision to leave the European Union is a predominant concern for Lloyds.
Barclays
On Thursday, Barclays also reported that its annual profits in 2016 had almost tripled, achieving 182% growth to reach a pre-tax profit of £3.2m.
This is the result of the bank’s strong progress on its restructuring and the run-down of non-core assets, which has included the sale of its Africa business, as well as the dramatic fall in the amount set aside to cover litigation costs from £4.3bn to £1.3bn after seeing more than 20 billion pounds of profit erased by fines and settlements in the previous five years.
In spite of this, the performance of core UK and international divisions was somewhat underwhelming, with underlying profits falling back slightly and revenue dropping three per cent to £21.5bn. Impairment charges for bad debts rose also 35% to £2.3bn.
There also remain some legacy litigation issues yet to be resolved, with the bank yet to settle with US authorities after rejecting an offer to settle a mis-selling claim for mortgage backed securities at the end of last year. Barclays are also awaiting the outcome of an investigation by the UK’s Serious Fraud Office into the way it raised funds during the height of the banking crisis.
Barclays also needs to better mitigate the risk of the UK’s exit from the EU, especially with the size of its investment bank. Whilst the majority of staff are expected to remain in London, changes to the bank’s legal structure, including making Dublin the headquarters of its European business, may be necessary in the coming year.
LEGAL
US law firms have continued to post strong financial results this week, with Latham & Watkins, Sidley Austin, Sherman and Sterling and Quinn Emmanuel all reporting strong financial performances in 2016.
Revenue at Latham & Watkins increased 6.5% to $2.823bn (£2.26bn), marking its seventh consecutive year of top line growth and the most revenue ever generated by a law firm in a single financial year.
Net profit also jumped 8% to $1.424bn (£1.14bn), with profit per equity partner rising 5.3% to break $3m for the first time in the firm’s history. Revenue per lawyer (RPL) also rose 1.9% last year to $1.238m (£990,000).
This comes in a period of meteoric growth for the firm, which despite the general contraction of the market for high-end legal services, has managed to increase its revenue by 55% over the last seven years. It is now the world’s largest law firm by revenue, overtaking both Baker McKenzie and DLA Piper, and looks likely to retain that title this year.
All of Latham’s practices and industry groups saw increased demand last year, especially litigation and disputes which equates to one third of the firm’s business, whilst the M&A and banking practices also grew their revenue by 15% respectively.
As a result, the firm has continued to expand aggressively, opening a new office in South Korea and making 26 lateral partner hires globally, 10 of which were in London.
Sidley Austin posted healthy gains in 2016, with revenue climbing 3.4% to $1.928bn (£1.55bn). Profits per equity partner rose to $2.13m (£1.71m), an increase of 3.1%, while revenue per lawyer held steady at $1.05m (£843,000).
Growth attributed to new offices and the performance of certain practice areas over the past few years, with the demand for litigation (5%) and transactional practices (3-4%) up, as the firm made investment into its private equity practice.
Sherman and Sterling also saw revenue rise 6% to $912.5m (£731m), boosted by strong performances in M&A, international arbitration, asset management, real estate and project finance. London revenues rose by 14% to $169.7m (£136m), a 63% increase in revenue since 2010.
Correspondingly, revenue per lawyer rose 5.9% to $1.085m (£870,000), as total headcount stayed steady at 840 lawyers last year, including 187 in London.
Meanwhile, the stunning leap in profits per equity partner (PEP), up 18% to $2.165m (£1.74m), came as the firm’s total equity partner ranks decreased by 22 to 140, its smallest number in recent years
Despite the jump in partner profits, net income rose just 1.5% to $302m (£242m) last year. Condon confirmed that increasing associate compensation was a factor in keeping net income growth down. “Rising associate salaries were unbudgeted by all law firms,” he noted.
And while Shearman has been frequently selected as litigation counsel for banking clients in recent years, he said, financial institutional litigation may begin to slow down. The firm is focusing on growing its docket of corporate client base litigation to counteract a decrease in litigation and investigations for financial institutions, said senior partner Creighton Condon.
The ever expanding Quinn Emanuel Urquhart & Sullivan saw a 21% spike in its London revenue for 2016 reaching £44.8m while London net profit sat at £32.8m.
The results come after the London office managed a 41% increase to £36.9m last year, up from a 33% increase in 2014 which saw City revenues sitting at £26.2m.
It’s been a busy year for Quinn which welcomed four new City based partners last year. The office launched both a long awaited corporate crime practice with Covington & Burling partner and former Serious Fraud Office prosecutor Robert Amaee and a UK construction disputes practice with Herbert Smith Freehills’ James Bremen.
However the firm lost partner Martin Davies to Latham & Watkins last month, the first lateral hire to leave the London office in around nine years.
MOVERS & SHAKERS
Moves
A&O takes three-partner Paul Hastings team finance team in New York
Allen & Overy (A&O) has continued its US hiring spree with the recruitment of a three-partner finance and securities team from Paul Hastings in New York, including former leveraged finance head Bill Schwitter.
DLA Piper loses two partners to boutique pensions firm
Kate Payne and Vikki Massarano are joining ARC Pensions Law to establish its first regional office in Leeds
Freshfields loses entire Paris real estate team to Jones Day
Real estate head Erwan Le Douce-Bercot leaves for Jones Day along with a three-lawyer team in Paris.
London Arbitration specialist Wendy Miles QC moves to US rival Debevoise & Plimpton
Two and a half years after joining the London office of Boies Schiller, Miles joins US rival Debevoise & Plimpton
Nine partner Norton Rose energy team leaves for Baker Botts in Houston
This includes David Peterman, the head of Norton Rose Fulbright’s US M&A and securities practice; Robert Phillpott, the former head of the firm’s US tax practice; and Efren Acosta, the former head of its Houston corporate, M&A and securities practices.
Orrick hires four-lawyer team from Clifford Chance in Paris
Orrick Herrington & Sutcliffe has hired four lawyers from Clifford Chance in Paris including local competition head Patrick Hubert.
Ashurst Hong Kong exits continue as project finance partner joins DLA Piper
Ashurst has seen another departure from its Hong Kong office, with project finance partner Matthias Schemuth leaving for DLA Piper.
Appointments
Burges Salmon appoints new senior partner
Employment partner Chris Seaton has been employed as senior partner, taking over the role from Alan Barr, who has served as senior partner of the firm for the last six years
New Chairman appointed at Watson Farley Williams
Watson Farley has appointed London shipping partner Nigel Thomas as its new chairman, replacing Frank Dunne, who has held the role since 2004.
Office Openings & Closings
Allen & Overy and Baker McKenzie invest in Northern Ireland legal innovation centre
Fieldfisher opens five-partner Amsterdam office
Mergers & Acquisitions
Norton Rose Fulbright agrees combination with Chadbourne & Parke
Norton Rose Fulbright has confirmed that it is to merge with Chadbourne & Parke in a deal that creates a firm with combined revenues of just under $2bn (£1.61bn).
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