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.

1. Bonus shake-up for asset managers 

In a bid to improve work culture within the investment industry, two of the UK’s top asset managers are re-evaluating bonus pay in their organisations.

Neil Woodford, head of investment at Woodford Investment Management, has announced that the 35 employees of Woodford Investment Management will not receive any further compensation above their fixed salary. Similarly, Daniel Godfrey, the former chief executive of the Investment Association, has plans to set up a new fund where the executives will not be paid bonuses.

These changes are rare to see in asset management, as it’s an industry that has always been well-known for paying out big bonuses to senior management. High performing fund managers and bosses are used to receiving millions of pounds each year in bonus pay. For example, Prudential fund manager Richard Woolnough has been paid over £30 million in bonuses over the last two years.

The financial sector has long struggled with short-termism, and many studies have found that performance-based pay has converse effect on their productivity and doesn’t foster the right long-term philosophy and employee motivation as it should.

CEO of Woodford Investment Management Craig Newman said “drawing on our experience of various bonus-led remuneration models, we concluded that bonuses are largely ineffective in influencing the right behaviours.’ Instead, Newman will increase their fixed salaries in order to compensate for bonuses. He argues that bonuses cannot act as a motivator and the expectation is already built in. Instead, they prove rather counter-productive, by encouraging opportunistic and selfish behaviour.

Fund manager pay has become increasingly criticised recently and the largest asset management houses are being accused of offering excessive windfalls. Not only has this been branded ineffective in improving performance, but a shift in investor mentality from active fund management to passive fund management indicates that institutions will be less likely to pay out such larges bonuses, as this form of compensation isn’t as common with passive fund managers.

A report by PricewaterhouseCoopers also claims that the pay of asset managers will come under further scrutiny as the industry grows and faces increased regulatory pressures. It expects that compensation will drop as a percentage of revenues from 45% in 2010 to 35% in 2020. The report also states that remuneration represents 60% of asset management’s total costs, which may be unsustainable should the industry face any future challenges, such as the potential fallout from Brexit.

2. Another magic circle firm to break lockstep for US hire 

Last week, magic circle firm Allen & Overy (A&O) decided to break its lockstep to hire New York star performers. This takes place one year after the firm launched a discretionary bonus pool, and has created a trend amongst those entering the US marketplace.

It hasn’t been released for whom the lockstep was broken, but last month A&O carried out a five partner strong leveraged finance team hire in Manhattan, comprising of NY heavyweight Scott Zemser, who joined from White & Case; fellow W&C partners Alan Rockwell and Judah Frogel; Rajani Gupta from Proskauer Rose, and Todd Koretzky who was brought on board from Milbank, Tweed, Hadley & McCloy.

Last year, Freshfields Bruckhaus Deringer made the same decision to break their lockstep when hiring US high-yield partner Ward McKimm from Kirkland & Ellis. You could argue that Freshfields have been the most aggressive in their efforts to compete with leading US firms, but with A&O’s changes to their remuneration model, it’s clear that the firm are also serious about building a formidable US offering.

There have been a number of changes to partner remuneration models over the last few years, as UK firms have had to adjust locksteps, introduce ‘superpoints’ and provide discretionary bonus pools in order to compete with the profitability of US firms. However, when it comes to launching offices on the ground in the US, the home of the world’s elite and most profitable, firms have needed to make much more drastic changes to their business model if they expect to attract leading talent.

Linklaters and Clifford Chance have considered minor changes to their partner remuneration systems, with Linklaters proposing new gates to equity and Clifford Chance introducing ‘superpoints’, however, these additions are certainly not great enough to compete with the level of profitability they face in the US.

To read further on changes to partner remuneration models, take a look at our blog “Changing Lockstep: A review of partner remuneration in the UK”

Movers & Shakers of the week 

Appointments

A&O appoint new head of Asia practice
Stephen Miller is relocating from Allen & Overy’s London office to lead the firm’s Asia practice in Hong Kong

Moves

Dentons hires fifth Irwin Mitchell partner 
Former Irwin Mitchell partner Simon Tweedle joins Dentons’ banking and finance practice in London, becoming the fifth Irwin Mitchell partner to leave the firm for Dentons in the last two weeks

Proskauer bolsters City finance offering with Reed Smith hire
Proskauer Rose has hired leveraged finance partner Ben Davis from Reed Smith in London

Mergers & Alliances

Addleshaw Goddard and Hunton & Williams stall merger talks due to political uncertainty 

Clifford Chance sets up new association in Saudi Arabia 

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.

1. Lawyers sweat over Government proposed fines for Tax advisers 

Proposals released by HM Revenue & Customs (HMRC) to strengthen tax avoidance sanctions and deterrents have been met with criticism by City partners.

Aimed to target the “enablers” of tax avoidance, such as bankers, accountants and lawyers, the proposals suggest up to a 100 per cent fine of the amount of tax avoided for those professionally involved in any tax avoidance scheme later defeated by HMRC in court. The document also suggests reversing the burden of proof that currently rests with HMRC to make it easier to gather evidence when prosecuting tax avoidance schemes.

With tax avoidance costing the UK public an estimated £2.7bn annually, the consultation aims to extend the risk from tax avoiders themselves (who already face significant financial costs) to those who advise on or facilitate the avoidance, who will also face being named to “alert and protect taxpayers.”

However, with a full framework of tax avoidance sanctions expected to be developed in the next stage of the consultation, current proposals have been criticised for their lack of clarity in several areas, including what constitutes “defeat” and the question of how HMRC would distinguish between tax avoidance and routine tax planning carried out by mainstream accountancy and law firms.

Whilst acknowledging that the proposals would act as a deterrent, Richard Woolich UK head of tax at DLA Piper highlighted the risk that insurance companies would up premiums for professional indemnity insurance for Private Client and Tax partners doing this type of work.

On the other hand, head of tax investigations at Pinsent Masons Fiona Fernie flagged concerns that the definitions in the proposals were “too broad” and that there was nothing in the document to stop the sanctions being applied retrospectively.

There is also the question as to what happens when a client decides to participate in a tax avoidance scheme despite of the risks involved, and whether the adviser would be liable to any fines in this instance.

This marks the latest attempt by HMRC to make life more uncomfortable for those who use or market tax avoidance schemes following Prime Minister’s Theresa May’s pledge to clamp down on corporate tax avoidance last month.

With a number of UK law firms being implicated with the fall out of the Panama Papers detailing the avoidance of Tax from Panamanian law firm Mossack Fonseca, HMRC’s new proposals show how the focus on the implication of tax avoidance is shifting from banks to law firms and accountants.

2. Are clearing houses a “new source of too-big-to-fail risk”? 

Global regulators have raised their concerns regarding derivatives clearing houses by publishing a discussion note this week, claiming there may be failings in their risk-management and recovery practices.

The Financial Stability Board (FSB) – joining forces with the Basel Committee on Banking Supervision, the Committee on Payments and Market Infrastructures, and the International Organization of Securities Commissions – coordinated a plan to reassess whether central counterparties (CCPs), or clearing houses, could withstand the stresses of another financial crash.

Authorities are trying to shift a lot of the risk management involved in over-the-counter derivatives transactions from banks to clearing houses, which will make them a much more dependent part of transactions process. The FSB are addressing a number of concerns over resolution planning, such as when authorities should step in to take control and how resources should be allocated during the resolution process. They are primarily gauging if widespread market failings were to occur, would they be resilient enough to withstand this and if they have sufficient safeguards in place.

One aspect the regulators are examining is the liquidity reserves held by clearing houses. The discussion notes highlight the importance of retaining sufficient resources to “absorb losses and to replenish the CCP’s…financial resources”. It is now critical to hold these capital buffers, with CCPs sitting more centric in the new financial services infrastructure – if a major clearing house were to default in the future, it would likely lead to systemic damage to the global financial system.

The FSB, chaired by Bank of England governor Mark Carney, are also developing a common system to stress-test CCPs, ensuring clearing houses aren’t effectively carrying out their resolution strategies.

The discussion note has asked for comments on these queries by market participants, requesting all comments to be delivered by 17th October. The FSB will subsequently propose further guidance on resolution planning in early 2017.

Movers & Shakers of the week 

Appointments

New GC for African Development Bank 
The African Development Bank has named N’Garnim-Ganga as its next general counsel, leaving her current position as representative of the bank in Mali

Moves

Irwin Mitchell loses five partners in London 
Irwin Mitchell’s London real estate head Rob Thompson and fellow real estate partners Lewis Myers, Rupert Dowdell and Jayne Schnider all join Dentons’ real estate practice, whilst London planning and infrastructure head Martha Grekos moves to Howard Kennedy.

HSF strengthens Düsseldorf office with magic circle hire 
Corporate partner Christoph Nawroth departs Freshfields Bruckhaus Deringer, where he served as co-head of the sub-sector global power and utilities group, and infrastructure funds group. He joins Herbert Smith Freehills’ Düsseldorf office.

Datalogic secure new GC
Data business Datalogic has hired Raffaele Zucca as its new global general counsel. He previously worked at technology company Denso as its Europe GC

Eversheds loses COO and finance director 
Kathyrn Fleming, COO and finance director at Eversheds, will be leaving the firm next year, with her next steps unknown

Dechert hires finance partner duo from DLA
Finance partners Philip Butler and David Miles leave DLA Piper to join Dechert in London

Office Openings & Closings

White & Cases closes its offices in Turkey and Kazakhstan

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.

1. CMA announces findings into Banking Probe

Recommendations of the UK’s Competition and Markets Authority (CMA) two-year investigation into high street banking were met with criticism upon their release on Tuesday.

Intended to kick-start competition in the sector, where only 3% of personal and 4% of business customers switch to a different bank each year, many hoped the inquiry would break the stranglehold of the ‘Big Four’ on high street banking, who continue to control 77% of the current account market and more than 80% of small business accounts.

Short of this move, the core recommendations of the CMA centred on the use of technology to enable customers to see hidden charges applied to their accounts, making it easier to compare financial products and shop around for the best deal. Dubbed the ‘Open Banking Regime’, the CMA want banks to set common standards for the exchange of product and customer data so that third-party developers can create apps in which customers can see all their financial products regardless of provider.

The recommendations also addressed the £1.2 billion banks make per year in unarranged overdraft charges by making banks set a monthly cap on such charges and sending alerts when customers become overdrawn.

However, criticism has been levied at the CMA for not going far enough in its duty to protect consumers, especially in relation to the unauthorised overdraft limits banks can levy. By leaving this amount to the banks discretion (rather than setting an industry standard) and continuing to allow banks to charge large fees for unauthorised overdrafts, the CMA is arguably neglecting the consumers that need help from them the most.

The report has also drawn heavy criticism from challenger banks for failing to ease capital requirements for these institutions and not forcing banks to publish the charges associated with “free-when-in-credit” accounts. Even the banking lobby group, the BBA, while welcoming much of the report, questioned whether it had done enough for these institutions.

Finally, many challenge the core precedent of the regulator’s findings that new technology will prompt greater competition. The fact that bank’s often struggle to keep their own systems running, let alone make data accessible to third parties, have led many to suggest a ‘technological smokescreen’ has been deployed by the CMA to distract from its failure to back a break-up of the Big Four.

The eleventh inquiry launched into the British banking system in the past 17 years, it is hard to see how the CMA’s recommendations will bring about wholescale change and greater competition to the sector in this instance. The onus will still very much be on “challenger banks” to devise new and innovative ways to draw customer’s way from the traditional Big 4, however, with many of the challengers already having technology at the centre of their organisations they perhaps may be better placed to deliver change.

2. Brexit Aftermath: All attention on Ireland

Following on from the June 23^rd decision to leave the European Union, all attention was on Ireland this week as Legal Business revealed high numbers of applications to the Irish bar continued, with Freshfields and Eversheds making up the bulk of admissions.

The total number of admissions to the Irish Law Society currently stands at 319 for 2016, already trebling last year’s total of 101, with the body receiving approximately 30 queries a day from UK solicitors since the referendum. Of this, Freshfields has registered approximately 130 lawyers so far this year, whilst Eversheds has had about 100 lawyers admitted.

Many of the top UK and international firms with strong EU and Competition law practices have rushed to admit their UK qualified solicitors in Ireland in order to maintain their legal privilege to argue before EU tribunals by ensuring their qualification in a member state.

However, it is also understood that a number of UK firms are considering a Dublin base following Britain’s decision to leave the EU, with financial services and funds being two areas becoming especially lucrative following the Brexit vote.

Yesterday saw the announcement that Pinsent Masons were on the hunt for office space in Dublin to complement its existing offering in Belfast and provide a full UK and Ireland presence for the firm. This is likely to be achieved through a targeted greenfield site as opposed to a formal merger, with Pinsents already having referral relationships with a number of firms in Dublin.

Eversheds meanwhile, who already have a full-service offering in Dublin, announced the expansion of its consulting business in Ireland to allow continued service to EU clients.

3. Movers & Shakers of the Week

Appointments

Burford Capital hires ex-Fried Frank competition head as new MDLitigation funder Burford Capital has hired former Fried Frank Harris Shriver & Jacobson competition head Craig Arnott as its new managing director.

Moves

Clyde & Co makes Trade Finance hire from Reed SmithPartner Robert Parson returns to Clyde & Co from Reed Smith to strengthen their trade finance practice

Squire Patton Boggs recruits Communications and Competition Law expertFrancesco Liberatore joins Squire Patton Boggs in London from Jones Day

Alternative legal services provider Halebury brings on three in-house lawyersJan Hawgood (Chevron), Katherine Kennedy (VocaLink) and Neeta Mashru (BBC) join Halebury’s 31-strong team

RPC recruits RBS consultant for general counsel consulting arm RPC PerformSpecialist in management consulting, Varun Srikumar joins RPC Perform to advise on strategy, external legal spend assessments, cost reduction programmes and legal technology.

Allen & Overy hires Simmons IP head in LondonHead of IP Marc Doering set to joins Allen & Overy, as the firm labels the practice a priority

Mergers & Alliances

Kennedys mergers with marine boutique Waltons & Morse

Japan’s MHM merges with Thai firm C&T in first international overseas merger of its kind

Office Openings

White & Case to launch in Australia

US firm Nixon Peabody launches in Singapore

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.

1. Retaining star performers: Ashurst approves new remuneration structure 

In a bid to steady a seemingly unsteady partnership, this week saw Ashurst vote in changes to its remuneration structure to better reward strong performers and encourage collaboration in a time of financial instability.

The changes add an extra 10 points (approx. £150,000) to the firm’s 25-65 point equity ladder and introduce a performance-based bonus pool to reward equity and non-equity partners. The firm will also award greater equity share to salaried partners, boosting the percentage of their pay that is linked to the firm’s profits (although the final ratio remains undisclosed).

This comes at a turbulent time for the firm, which in July announced a 19% plunge in PEP to reach an 11 year low to £603,000. The 2015-16 financial year also saw revenue drop for a second consecutive year following the firm’s merger with Blake Dawson, falling by £28m (10%) to £505m and the announcement that the firm is going to close its Rome and Stockholm offices.

It also follows a period of significant partner exits, with restructuring partner Diane Roberts leaving for Reed Smith, whilst Latham & Watkins hired financial regulation head Rob Moulton and restructuring partner Simon Baskerville. In April, financial regulatory partner James Perry left for Gibson Dunn & Crutcher (reuniting him with former Ashurst senior partner Charlie Geffen) with capital markets partner Jonathan Parry and London disputes head Mark Clarke moving to White & Case. Last week, CFO Brian Dunlop also resigned from his position following three years at the firm.

Changes to remuneration systems in order to better reward, retain and attract dealmakers has been utilised by many UK firms in recent years in order to compete with the aggressive growth strategies employed by US firms in London.

Last year saw Freshfields break its lockstep to bring Kirkland & Ellis high-yield star Ward McKimm to London, following tweaks passed in its remuneration in 2014 and 2012 to attract high performing partners in New York and Asia. Clifford Chance also voted through proposed changes to its lockstep, stretching the top of the ladder by 15-30 points in order to retain star performers.

Similar wars in pay have been seen more recently at the associate level in both London and New York following Cravath’s decision to increase first-year associate pay to $180,000 (£124,000) – a move adopted by many US firms for their UK associates also – with Allen & Overy, Clifford Chance, Freshfields and Linklaters raising associate salaries in New York whilst also increasing their associate compensation levels in London.

Questions remain as to whether these changes to remuneration will be effective in retaining and attracting the partners needed for Ashurst to recover its financial performance. Will increasing the equity ladder and introducing a bonus pool be enough to create the sufficient buy-in and collaboration from partners if the firm remains unprofitable compared to its US peers?

Whilst the tide of change in London’s legal market continues to rage with never-ending US raids on leading UK firms, and the added challenge of how Brexit will impact future business, the ability for firms such as Ashurst to recover their standing and reputation in London and adapt to the new European landscape will be vital if they are to continue to challenge at the highest level.

2. Och-Ziff face fourth largest ever FCPA settlement for bribery scandal

Och-Ziff are preparing for a hefty financial sanction by adding $214m to its reserve for a settlement with the Foreign Corrupt Practices Act (FCPA).

Och-Ziff, one of the world’s largest hedge funds, has been under investigation by the US Department of Justice (DoJ) and US Securities and Exchange Commission (SEC) since 2011 for possible violations of the FCPA, the most widely enforced anti-corruption law. The investigation is exploring alleged bribery of Libyan and other African government officials in exchange for investment in Libya’s sovereign wealth fund.

The $214m added reserves for a settlement brings the total to $414.3m which, if enforcement action was indeed taken, would make it the fourth largest penalty in history by the FCPA and the second largest imposed on a US company.

The hedge fund has incurred some serious consequences as a result of the scandal, posting a second-quarter loss this week of $184.3m and, once again, failing to pay out a dividend to investors. News that the investigation may be coming to a close has, however, caused Och-Ziff’s share price to rise by up to 15 per cent.

Goldman Sachs announced this week plans to liquidate their Och-Ziff run multi-strategy fund, which will amount to a $350m loss of investment for the hedge fund. Och-Ziff head Daniel Och spent a decade at Goldman Sachs, after which he retained a long-standing relationship with the bank, bringing them in as one of the hedge-funds biggest clients. Losing this investment is just further cause for concern for Och-Ziff, as clients have withdrawn $3.1bn worth of investment from their funds in the last 12 months.

During the investigation, the DoJ and SEC have been particularly focused on former London-based head of European investing Michael Cohen, who also managed Och-Ziff’s African investments. Cohen oversaw a fee paid to a London middleman, who had close ties with Gadhafi’s spy chief and subsequently passed on some of the fee to a Tunisian broker connected to Gadhafi’s son Seif al-Islam. Och-Ziff has commented that they were unaware of parts of the fee being passed on to anyone else.

Last year DoJ and SEC, along with the FBI, voiced their plans to increase enforcement in foreign corruption and bribery, with the Wall Street Journal reporting 10 new hires into the FCPA unit of the DoJ.

This could be one of the first of many cases within the funds space as we see the regulatory and financial crime microscope slowly shift from banks to funds. Investment banks have significantly bolstered their anti-bribery & corruption teams in recent years and continue to do so amid increased scrutiny and high fines. Moreover, when the FCA release their findings from the asset management review at the end of 2016, it will be interesting to see which areas are most exposed to future financial crime failures and how this will affect the need for extra resource.

Appointments

Freshfields appoints global head of finance
Real estate finance partner Simon Johnson will become the next global head of finance at Freshfields Bruckhaus Deringer as David Trott leaves this post in September

New London managing partner at Bakers
Baker & McKenzie has elected tax partner Alex Chadwick as the next managing partner for their London office, replacing Paul Rawlinson who will become global chairman of the firm

Moves

KWM makes real estate hire in Paris
White & Case senior associate Guilain Hippolyte joins King & Wood Mallesons’ Paris office to sit in their real estate practice as a partner

Lathams gains finance partner from Slaughters
Latham & Watkins has made a City hire with Sanjev Warna-kula-suriya, a structured finance partner from Slaughter and May.

Quinn Emanuel sets up London white collar practice
Robert Amaee exits Covington & Burling, moving to Quinn Emanuel Urquhart & Sullivan to head up their new white-collar and corporate investigations practice in London

A&O expands IP practice
Allen & Overy has brought in Simmons & Simmons head of intellectual property Marc Doering in London

Olswang loses telecoms head
Head of telecommunications at Olswang in London Purvi Parekh leaves the firm, with her next move unknown

Mergers & Alliances

Osborne Clarke launches Singapore offering through association with local firm Queen Street Legal

Welcome back to the Fides Weekly Update. Here we provide you with analysis of the week’s biggest news stories in legal and compliance. Scroll down to see our regular Movers & Shakers of the week.

This week:

1. KWM bailed out by partners with £14m cash injection

Yesterday saw the announcement that King & Wood Mallesons (KWM) will receive a major boost in capital as partners vote to inject £14m into the firm.

With 98% of the legacy SJ Berwin partnership voting in favour of the move, this comes as the third stage of the firms’ strategy to strengthen its business in Europe and the Middle East. This included a strategy overhaul in which the firms’ 17 practice areas were streamlined into three core divisions and a partnership review due to axe 15% of the European partners.

To recapitalise the firm, KWM’s partners have been asked to pay in an extra £4,000 per point they have on the 20-60 point remuneration ladder, doubling each partners’ total capital contribution to the business from £4,000 to £8,000 per point. This means that those on the bottom of the ladder will pay around £80,000 into the business, while those at the top of the equity will inject £240,000 into the firm with partners given the option of injecting the cash or allowing the sum to be deducted from their share of past and future profits.

Meanwhile, salaried partners have been asked to pay capital contributions for the first time in the firm’s history. Despite not traditionally being assigned profit points or being able to vote in partnership decisions, salaried partners have been asked to contribute £60,000 to the business.

Many consider this long overdue as it follows a period of increased financial strain that has seen KWM increase its loan with Barclays by £5m to £25m. The firm also moved to a monthly profit distribution system in February following repeated delays in quarterly payments, having only 25% of the profit payments for 2015-16 being made before this date. The firm also faced a significant hike in its London rent after a 10 year deal made by legacy SJ Berwin came to an end in May.

Unsurprisingly, this has led to a further string of partner exits across KWM’s European offices who have been picked up predominantly by US firms. The departure of the region’s COO Rachel Reid for Taylor Wessing in January as been followed this month with the move of former chief finance officer Jeremy Cross to Cadwalader Wickersham & Taft, with litigation duo Elaine Whiteford and Greg Lascelles joining Covington & Burling.

On the continent, investment management partner Hilger von Livonius moved to establish the Munich office of K&L Gates, whilst the firm lost a six-strong private equity team in Paris – including KWM Paris managing partner Christophe Digoy – who left to launch the office of Goodwin Procter.

Moving forward, the question remains as to whether contributing capital will stem future partner exits or is rather indicative of an inherently dysfunctional business model. Increasing the capital contribution of partners – especially salaried partners – enhances vested interest in the firm’s success and makes lateral partner exits more challenging due to the increased capital partners hold in the business. However, with the continued loss of prominent lawyers across Europe, it will be interesting to see whether this phase of their strategy leads to long term success or merely plugs financial issues in the short term.

2. FCA proud supporters of innovation

Last week, the Financial Conduct Authority (FCA) kicked off London Fintech Week, affirming their plans to get to grips with regtech and announcing their objective to foster innovation rather than obstruct it.

Speaking at the annual fintech conference, Christopher Woolard, Director of Strategy and Competition at the FCA, said that one of the regulator’s top priorities in 2016/17 is to facilitate innovation in ‘regtech’ – technologies that will help financial services companies fulfil their regulatory requirements. Woolard claimed that it is beneficial to both consumers and regulated companies to improve the technology used in achieving regulatory compliance. For banks and financial institutions, regtech could make regulatory reporting much more transparent, whilst also minimalising the time and resources utilised. Conversely, for consumers, this type of innovation has the potential to change business models and increase competition, allowing for better and more efficient services in the market.

The FCA is attempting to stay ahead of the curve by encouraging the integration of ground-breaking technology with current regulatory systems. Their response to the emergence of technology has been promising, with the UK regulator organising a number of regtech roundtables; collaborating with fellow regulators on enabling innovation, and issuing a Call for Input in order to learn more about the potential compliance solutions regtech could offer.

Meanwhile, the more pressing concerns for the FCA has to be regulation of the fintech space. Fintech companies are struggling to navigate through the complex regulatory landscape, as many of their products cannot be clearly defined under existing regulation. Creating and implementing a compliance framework is challenging under these conditions, and the FCA must adapt regulation to suit the needs of fintech companies if they want to avoid hampering innovation.

The FCA have noted the need to consider changes to regulation for the emerging fintech market and launched Project Innovate, an initiative that helps those developing new products to better understand financial services regulation, whilst also learning how regulation can be adapted to suit new products. One of the most well received applications from this project is the regulatory sandbox, a programme where businesses are able to test new innovations in a live environment before applying for FCA authorisation.

It is clear disruptive technology is here to stay in the financial services industry, and has become increasingly prominent in regulation. Within compliance, the furthest advancements are being made in automating AML & KYC processes, whilst innovation in data analytics capabilities is also advancing quickly. With the amount of activity in this space, we expect that this innovation will make fundamental changes to the regulatory landscape and possibly ease some of the compliance burden for financial institutions. We have already seen where technology has affected regulatory reporting and this is perhaps the start of a wave of technological changes which can affect financial services broadly.

Movers & Shakers of the week

Moves

Latham appoints senior A&O finance partner 
Stephen Kensell departs Allen & Overy after 22 years at the firm to join Latham & Watkins in their London office

Ashurst loses CFO
CFO Brian Dunlop leaves Ashurst, yet to take on another opportunity

Lloyds finds new GC from FCA
Tom Spender has joined Lloyds Banking Group as its new general counsel for group litigation, regulatory and competition legal. He joins from the Financial Conduct Authority where he was director of retail and regulatory investigations.

Bakers hires four partner-strong team in Germany
Baker & McKenzie have strengthened their German offering with Taylor Wessing corporate partners Thomas Dormer and Tim Heitling. They will be joined by senior associates Claire Polte and Daniel Neudecker, who will also join the firm as partners.

Mayer Brown boosts Brussels capability
Former Hunton & Williams partner Geneviève Michaux has moved to Mayer Brown in their Government & Global Trade practice in Brussels

HFW bolsters insurance practice in London
Leading insurance partner Christopher Foster has joined Holman Fenwick Willan’s insurance and reinsurance practice from Herbert Smith Freehills’ in the City

Office Openings & Closings

Pinsents opens in South Africa 
Rob Morson and Shane Voigt have left Bowman Gilfillan to launch Pinsent Masons’ first Africa office in Johannesburg

Mergers & Alliances

Norton Rose forms Kenyan alliance
Norton Rose Fulbright and Kenyan firm Walker Kontos have entered into an alliance, to be formally launched in October

Hello and welcome back to the Fides Weekly Update. Here we provide you with analysis of the top stories in legal and compliance this week. Don’t forget to take a look at the movers and shakers of the week!

Tweet us at @Fides_Search for your comments

This week:

1. This week in Panel Reviews: An Analysis 

Panel reviews dominated the news this week as a number of financial institutions and corporates refreshed their rosters.

Swiss private equity house Partners Group announced an inaugural six-firm panel of international firms to advise on deals across the globe.

Firms named on the panel include Latham & Watkins, Clifford Chance, Milbank, Tweed, Hadley & McCloy, Ropes & Gray and DLA Piper.

Whilst Milbank, DLA Piper and Clifford Chance are longstanding advisers to Partners Group, the inclusion of Latham & Watkins and Ropes & Gray follows strategic investment by the firms in Europe and New York.

This includes key lateral partner hires of Burc Hesse from Clifford Chance and ex-Linklaters head of private equity Rainer Traugott to Latham’s Munich office, and the move of David Blittner from Weil, Gotshal & Mangers to Ropes & Gray in New York – with both Linklaters and Weil Gotshal missing out on final panel selection.

Meanwhile, Edinburgh based asset manager Standard Life Investments (SLI) expanded its panel from three to five firms with the addition of Shepherd & Wedderburn and commercial real estate specialists Maples Teesdale.

Holding existing client relationships with Ignis Asset Management which SLI acquired in July 2014, these firms join Addleshaw Goddard, CMS Cameron McKenna and Herbert Smith Freehills to be appointed to the panel for five years.

Largest education company and book publisher in the world Pearson also announced the line-up for its first US M&A panel, with Cleary Gottlieb Steen & Hamilton, Dorsey & Whitney, Goodwin Procter, Morgan Lewis & Bockius, and Sullivan & Cromwell all making the cut.

The US panel, established to deal with litigation, compliance and government investigations follows the completion of the review of the UK panel last year which involved it being divided into sub-panels by practice area for Corporate/M&A, IT/ Commercial and Employment.

Beyond expertise and experience in the M&A space, the panel review also focused on value, flexibility in billing and alternate fees, and diversity and was completed with the help of management consultancy Accenture.

This followed the announcement that BT had launched a formal panel review for its UK legal advisers and intends to create its first (non-UK) international legal panel by the end of the year.

These panel appointments are representative of wider trends in the legal sector predominantly driven by clients’ needs to cut costs.

Where smaller institutions such as Partners Group and Standard Life look to expand their panels in search of greater value, global corporations such as Pearson and BT have moved to streamline and specify their panel appointments by practice area. Last month saw banking giant Barclays reduce the total number of firms on its global panel by two thirds to cut costs.

As with all panel appointments, although pre-existing client and individual partner relationships are clearly important, clients are more willing to consider more niche market players or alternate legal providers that will offer greater flexibility regarding costs and openness to fix fees. With competition for each panel position incredibly high, other differentiating factors such as diversity and provision of thought leadership, training and knowledge management become vitally important.

2. FX rigging charges brings regulatory compliance back under the spotlight

HSBC’S global head of foreign exchange (FX) trading faces criminal charges, along with a former British HSBC trader, for allegedly front-running a currency trade.

On Tuesday, Mark Johnson, global head of FX cash trading based in London, was arrested and charged with conspiracy to commit wire fraud. Former EMEA head of FX trading Stuart Scott also faces charges. The US Department of Justice has accused the traders of “front-running” a currency deal, rumoured to have been carried out by HSBC client Cairn Energy in December 2011.

Front-running is a term that describes how a broker can benefit from a trade at the expense of their clients. In this case, HSBC were aware that their client Cairn Energy had plans to convert 3.5 billion US dollars into sterling. Using this insider knowledge, the two HSBC executives chose to trade ahead of the deal, “ramping” up the price of the currency, after which they carried out the client transaction, and subsequently sold their own currency for a sizeable profit.

This case has been brought to light as a result of the three-year long investigation by regulators into the global rigging of the forex market. In November 2014, UK and US regulators collectively fined a total of six banks, including HSBC, £2.6 billion for the attempted manipulation of foreign exchange rates. This case, however, marks the first time a regulator has brought charges against individuals for FX rigging.

The news of this landmark arrest comes only a few months after the Serious Fraud Office (SFO) announced their decision to drop the investigation into forex rigging. It raises the question of whether this was in fact the right choice as the prospect of convictions was clearly more realistic than they had anticipated.

The SFO have also been criticised recently for the extra funding they receive for lengthy investigations, with claims that the blockbuster funding model, currently employed by the SFO, isn’t the most effective use of resources. However, given that US regulators employ similar funding methods and have built solid cases resulting in criminal charges shows that maybe this additional funding is needed to eradicate fraudulent activity in the banking industry.

This is just a further example of the rise of individual accountability within financial services. Tom Hayes’ sentencing for manipulating Libor interest rates and the introduction of the FCA’s Senior Mangers Regime also demonstrate how we’ve reached the beginning of a new era in the global financial services sector, which attempts to foster a fundamental change in the behaviour of those operating in financial markets.

This insider dealing case has come at a bad time for the bank in light of MAR (Market Abuse Regulation) only coming into effect on 3rd July 2016. The spotlight is sure to be fixed on HSBC and many of the larger trading organisations, which could lead to a similar cases with individuals being the targets as much as the organisations.

Movers & Shakers of the week

Moves

Clydes loses private client partner
Mischon de Reya has hired private client partner Martin Davies from Clyde & Co

Bakers strengthens German offering
Baker & McKenzie have hired a team of four partners in their Berlin office. Former Taylor Wessing corporate partners Thomas Dormer and Tim Heitling will be joining the firm, along with former senior associates Claire Polter and Daniel Neudecker, who will also be joining Baker & McKenzie as partners

King & Wood Mallesons loses further London partner
Covington & Burling has gained a London competition litigator, Elaine Whiteford, who departs King & Wood Mallesons

Jones Day hires four lawyer team in Amsterdam
Jones Day has added partner Mike Jansen to its M&A team in Amsterdam, joining from Baker & McKenzie. He brings with him associates Reinout Bautz, Justus Fortuyn, and David Weinstein.

Office Openings & Closings

K&L Gates opens third office in Germany
Along with their offices in Berlin and Frankfurt, K&L Gates will extend their German offering to Munich as well with the hire of King & Wood Mallesons partner Hilger von Livonius, along with counsels Philipp Riedl and Michael Harris

EY Law launch in Belfast
Axiom director Aaron Stewart has joined EY Law to lead their legal services team in Belfast

DLA opens in Puerto Rico
DLA Piper has opened an office in San Juan with four local partners: Nikos Buxeda, who will assume the position of managing partner, Miriam de Lourdes Figueroa, Jose Alberto Sosa-Llorens and Manuel Lopez-Zambrana.

Mergers & Alliances

Olswang and CMS Cameron McKenna rumored to be considering a tie-up

Reed Smith set to enter a formal law alliance with Singapore firm Resource Law LLP

Partner Promotions

Withers promotes seven, one in the City

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) Who runs the world…GIRLS!

With Theresa May becoming the UK’s second female Prime Minister and Liz Truss the first ever female Lord Chancellor, the political scene has shifted significantly from a gender perspective this week. Politics aside, gender equality was big on the agenda in the Fides office this week as we hosted our first roundtable discussion on the subject of building inclusive legal teams. For more information on the debate, or to be added to our mailing list to hear about similar events in our Path to Parity series please contact research@fidessearch.com

The issue of gender and the representation of women in the higher echelons of law also caused ripples across the Atlantic this week, as news emerged that Faiza Saeed was elected as presiding partner at Cravath, Swaine & Moore – the first female leader of any Wall Street firm.

The current co-head of M&A, Saeed was the consensus choice among the firm’s 89 partners and will assume her position in January whilst continuing to practice. With joint Pakistani-American heritage Saeed will also become one of only a handful of Asian-Americans ever to lead an Am Law 100 firm, a major diversity milestone in its own right.

With gender parity at entry level into law firms in the US and UK, the underrepresentation of women in partnership and positions of senior management continues. Whilst 34% of partners in large American law firms are women, they only make up 18% of equity partners and 8% of employees earning more than half-a-million dollars. In the UK, women still only account for 17% of full equity partners in top 10 firms and 16% in top 11-25 firms, figures that have remained consistent over the past few years. This suggests that the impending launch of gender pay gap reporting will reflect poorly on law firms when introduced next year.

Despite this, evidence suggests that firms are making concentrated efforts to improve the talent pipeline for women and increase the number of female role models within their firms. Last week CMS became the latest firm to pilot a work allocation system for associates in its corporate department, following schemes introduced by Ashurst and Hogan Lovells last year. The distribution of work through a dedicated resource manager helps to eliminate unconscious bias associated with receiving work directly from partners, and ensures that associates experience a wider variety of work as their career progresses.

In the US, data from the AML’s Women in Leadership Survey also found that despite low partnership numbers, 23% or one in four female partners are members of key governing committees, including key decision-making bodies such as compensation and partner promotion committees. With women only making up 18% of equity partners, this means that a female equity partner is significantly more likely to sit on a key governing committee than her male counterparts, both increasing the number of female lawyers in leadership positions and creating female role models for the future.

Whilst a major milestone has been reached with the election of Faiza Saeed as presiding partner at Cravath, the path to gender parity in law is a long and complicated one. Saeed’s election demonstrates that women can succeed at the highest levels in law and provides hope for the future that greater numbers of female lawyers progress now that firms are more actively engaged in the issue.

2) Deutsche Börse / LSE merger

 In February it was announced that the German stock exchange Deutsche Börse and London Stock Exchange (LSE) were in merger talks in a deal worth £27billion, creating the world’s biggest exchange operator by revenue and the second largest by market value. It will also be viewed as a much needed European powerhouse to rival exchanges in Asia and the U.S. This merger is indicative of the current exchange sector which in recent years has seen a decline in their number, as firms have merged to ensure they can compete globally, moving away from the traditional “specialist” model to a broader inclusive platform.

The potential merger has been met with various roadblocks, particularly since the UK voted to leave the EU last month. Germany and France have questioned the arrangement which would result in the business being located in London and effectively outside of the EU. This has raised concerns that a euro clearing house should be based in Frankfurt and within the EU, rather than in the UK, despite Britain’s victory in the courts last year to protect its right to clear euro trades.

Shareholders remain divided, and whilst LSE shareholders are still approving of the deal, some German investors have become skeptical, calling for a re-evaluation of the plans. Deutsche Börse decided this week that it would lower the threshold for the number of shareholders needed to approve the deal from 75 per cent to 60 per cent. 53 per cent of investors have tendered their shares so far.

Although there are concerns with the exchange being held in a non-EU country, coupled with the new political climate, many are offering a positive spin on the merger. The new exchange could provide a much-needed bridge between Britain and the EU, highlighting the importance of keeping a solid relationship, mutually beneficial to both economies. As Andreas Dombert who sits on the Bundesbanks executive board commented “The parties’ concerned need to find a governance structure which balances all reasonable interests – even at the expense of synergies”

Should the merger still go ahead, where Deutsche Börse/LSE are headquartered should be a tell-tale sign of things to come. There are a number of broader financial services firms considering a shift from London to main land Europe, mainly due to passporting issues should the UK not secure favourable terms and access to the single market. However, as with most issues concerning Brexit, we can only speculate until we have a clearer picture of the deal to be struck with the UK and the rest of the EU.

MOVERS & SHAKERS OF THE WEEK

Appointments

Visa Europe appoints new deputy GC
Visa Europe have appointed Prini Pithouse as deputy general counsel after starting in the company in May 2015

Barclays appoints GC for its corporate and international arm
Mark Shelton has moved from his role of legal head for the investment banking and Americas to GC of Barclays Corporate & International (BC&I)

Freshfields Bruckhaus Deringer appoints new regional managing partners for its European offices
Berlin competition partner Helmut Bergmann has taken up the role of regional managing partner for Germany, Austria, and central and Eastern Europe, whilst Paris corporate partner Alan Mason takes on the newly created role of managing partner for the rest of continental Europe

Moves

Ashurst exits continue as City restructuring partner joins Reed Smith
Ashurst has lost another partner in London with restructuring and insolvency expert Diane Roberts joining Reed Smith.

Sidley Austin Continues London Expansion with Leveraged Finance Partner
James Crooks has joined Sidley Austin LLP as a partner and member of its Global Finance practice in London.

White & Case expands Global Banking Practice with new partner in London
Jeffrey Rubinoff joins the Global Banking Practice of White & Case

Former KWM European finance chief to join Cadwalader in London
King & Wood Mallesons exits continue with former finance head Jeremy Cross joining Cadwalader, Wickersham & Taft LLP

KWM litigation partner follows ex-head to Covington & Burling
King & Wood Mallesons litigation partner Greg Lascelles is to follow his former practice head to US firm Covington & Burling.

Latham & Watkins makes second Ashurst hire this month
Leading Restructuring and Insolvency partner Simon Baskerville joins Latham’s London office

Senior Prosecutor from the UK’s Serious Fraud Office to Join Latham’s in London
Stuart Alford QC set to join Latham & Watkins as a partner in the Litigation and Tax department

Latham’s builds Real Estate Finance Practice
Jeremy Trinder and Quentin Gwyer have joined the firm’s London office as a partners in the Finance Department.

DWF enhances commercial litigation offering in London with team hire from PwC
DWF has appointed partner Jonathan Isaacs, senior associate Joshua Fineman and solicitor Alex Green to build on the firm’s commercial litigation offering in London.

K&L Gates welcomes London finance partner from Mayer Brown
Mayank Gupta has joined the firm as a partner in the firm’s global finance practice.

Osborne Clarke Netherlands bolsters team with four new hires
OC makes four additional hires in the Netherlands, including Johannes de Jong joins as Head of the Amsterdam Financial Regulatory practice

Hogan Lovells hires corporate tax partner
Elliot Weston joins Hogan Lovells from Gowling WLG

Office Openings and Closings 

K&L Gates opens Munich office with hire of KWM team

Shoosmiths to launch Leeds office with Gordons partners

Clyde & Co opens first German office with team hire from Noerr

Dentons opens second Italian office in Rome

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. Andrew Bailey’s first week on the job

On Monday, Former Deputy Governor of Prudential Regulation Andrew Bailey commenced his first week as the new Chief Executive of the Financial Conduct Authority (FCA). It seems he has come into the organisation at a tumultuous time, as the outcome of the EU referendum will result in a heavy work stream for the regulator, alongside the wave of changes that are being made to numerous regulations.

Bailey has already had his first dealings with the aftermath of Brexit as the UK’s biggest commercial property fund decided to close its doors following the vote. Standard Life Investments, closely followed by Aviva and M&G, chose to suspend trading on their UK property fund on Tuesday, the first time Standard Life have stopped investors from taking money out of the real estate fund since the financial crisis in 2008. Bailey signed off on the suspension, but claimed that monitoring the behaviour of these funds is necessary while also highlighting his reservations in the press earlier this week, commenting that the design of these funds needs to be reviewed due to the illiquid nature of the assets.

This is just another reason for the asset management industry to be placed under further scrutiny. The new chief exec has arranged to meet with the country’s largest asset managers to discuss the effects of Brexit on the industry, whilst the FCA’s upcoming asset management review could likely bring about fundamental changes to the £6.6 trillion industry.

As FCA head he will also oversee changes to a number of important directives that will be coming into play over the coming year. Solvency II and MAR are just a couple of examples of newly implemented regulations, not to mention the delayed implementation MiFID II. It’s too early to tell what effect Brexit will have on the UK financial services regulation, but it’s clear that Bailey’s main priority will be ensuring market stability and maintaining European regulations may be the best approach to do so.

The market will be watching how Andrew Bailey approaches this new tenure and drives the direction of the FCA as he considers the best approach to securing the stability of the UK financial services sector and the effectiveness of current and incoming regulation. If he manages to navigate this well, not only could he transform the financial services landscape, but there is also talks that he will have put himself in good stead to return to the Bank of England as the next Governor.

2. Financials season

It’s that time of the year again, and law firm financial postings are flooding in. On the whole, the results have been encouraging, albeit showing fairly moderate gains, with most firms posting revenue rises in single digits.

Out of the magic circle firms, Freshfields Bruckhaus Deringer announced the greatest uptick in revenue, posting a 7 per cent rise to £1.327bn, in comparison with Linklaters, Clifford Chance and Allen & Overy reporting increases of 3.5 per cent, 3 per cent and 2.3 per cent respectively. Freshfields is one of the few UK based law firms to have experienced significant growth in the US, which is one the key reasons for their promising 2015/16 figures. It seems their offices across the pond remain a priority in the firm’s growth strategy, as they continue concentrating on corporate enlargements in the jurisdiction, further validated by the appointment of NY based partner Valerie Ford-Jacob to co-lead the financial institutions sector group.

Most firms have experienced modest uplifts in both revenue as well as profit per equity partner (PEP), but the two to note that have posted some of the best results for 2015/16 so far are Clyde & Co and Herbert Smith Freehills (HSF).

Clyde & Co has seen the largest rise in turnover amongst law firm results so far with an impressive 13 per cent increase in turnover to £477.3m. This exceeds their previous year’s similarly remarkable 9 per cent revenue boost, whilst this year’s PEP climbed to £665,000 from £600,000. The firm have been aggressive with their expansion plans, merging with six office Scottish firm Simpson & Marwick last year as well as taking on a 30 lawyer team from Sydney firm Lee & Lyons. A further boost in headcount is also in the pipeline, with a new Miami office opening in July, which will see a 40 litigation lawyers joining from the acquisition of five partner strong litigation firm Thornton Davis Fein in May.

Meanwhile, HSF’s joint CEO Sonia Leydecker said their financial results marked “the third consecutive year of significant progress for the firm.” The firm turned over £870m, a rise of 6.7 per cent from 2014/15. PEP was also up by 5 per cent to £840,000, although this showed a slight slowdown compared to an 8 per cent rise in PEP in 2014/15. Their achievement has largely been attributed to their European offering. Paris and Madrid have proved noteworthy offices for the firm, and Germany has been highlighted as an “ongoing success story”, with their fourth German office opening in Düsseldorf in November 2015.

This year’s results has unfortunately highlighted Ashurst’s continuing struggles, as it marks the second consecutive year of decline for the firm. The firm’s revenue dropped 10 per cent to £505m, which follows last year’s 4 per cent decrease. Ashurst’s PEP took a hard hit in 2015/16 as it fell by 19 per cent from £747,000 to £603,000. Since the merger with Blake Dawson in 2013, Ashurst’s figures have been anything but promising. With a lot of lateral partner movement flowing in and out of the firm, along with a shake-up of its executive management team, the firm has experienced a turbulent year, and after two years of falling revenues, the next twelve months will prove critical for the firm.

On the whole, it’s been a stable year for UK law firms, although growth may have slowed for many compared to last year. It will also be interesting to see how firms react to the challenges and opportunities that will be brought about by the current political climate and, in turn, volatile financial markets.

Movers & Shakers of the Week

Appointments

Linklaters appoints global head of corporate
Following the end of Robert Elliot’s five-year term in October, M&A partner Aedamar Comiskey will take over as Linklater’s global head of corporate

Moves

OneSavings Bank hire new GC
Jason Elphick has joined OneSavings Bank as their group general counsel after departing Santander where he served as their head of banking legal.

Simmons makes further hire in Amsterdam
Simmons & Simmons appoints Erwin Bos as a partner in their financial markets team in Amsterdam. He was previously a counsel at Allen & Overy.

Simmons adds to International Projects team
Simon Moore joins Simmons & Simmons as a partner in their projects team. he joins from Mudabala Development Company, where he was the general counsel for projects globally.

Cadwalader makes rare City hire
King & Wood Mallesons loses former European finance chief Jeremy Cross. He will join Cadwalader, Wickersham & Taft in their London office, and marks the first lateral hire for the US firm since March 2015

Latham hires SEC chief
Former chief of the U.S. Securities and Exchange Commission’s office of international corporate finance Paul Dudek will be joining Latham & Watkins as counsel in the firm’s corporate department

Squire Patton Boggs boosts Madrid capability
Manuel Mingot has been hired by Squire Patton Boggs as a financial services partner. He was previously head of the Madrid finance practice at Broseta Abogados, and co-head of its UK desk in London

Shoosmiths strengthens City corporate practice
Adam Chamberlain has left RPC as a senior associate to become a corporate partner in Shoosmiths’ London office

Ashurst takes on funds finance partner from KWM
King & Wood Mallesons lose finance partner Robert Andrews to Ashurst in London

Hello and welcome to the Brexit special of the Fides Weekly Update.

Results of the EU referendum have been released and as we face the decision that Britain have chosen to leave the European Union, we provide you with a short overview of the reactions in both the UK and European markets.

Tweet us @Fides_Search for your thoughts on the result #EURefResults

This week:

Brexit: Continental Shockwaves 

Whilst an equally divided Britain wakes up to the news that the country will be leaving the European Union, the shock and in some quarters disbelief across mainland Europe might be more palpable. During recent weeks the team at Fides have been meeting and speaking with numerous leading figures across the continent to gather their views in the lead up to yesterday’s referendum. As those views in light of this morning’s news are outdated, we will provide a more extensive update next week once the dust settles across the EU, although the expectation across Europe from the legal and financial sectors prior to the result are important when assessing how these markets will evolve and move forwards in light of Brexit.

Generally speaking, most in mainland Europe held the view that there was a very limited chance for a Brexit, with some respondents almost dismissing the idea entirely contending that when the public went to the polls, Europe would prevail and the threat offered by the Leave campaign would be quashed. What we have instead is the complete opposite. Whilst here in the UK there was an awareness of a potential Brexit and a noticeable surge in momentum building from the Leave campaign, the European view seemed one of scepticism that this could actually happen. This scepticism has led to disbelief and dismay is now very much the reality. Whilst the UK comes to terms with this definitive change in course, the question that many within mainland Europe will now have to tackle is where this leaves their nations domestically from a political context, as the continued rise in nationalism is likely to surge upon this result.

Whilst the economy comes to terms with this result, we must recognise that the shock being felt across mainland Europe might potentially be greater than that seen here in the UK. Those in mainland Europe will now be coming to terms with the fact that there might be greater changes ahead for the EU, as the public voices of other member states might begin to be heard more loudly and clearly seemingly than those here in the UK.

We here at Fides remain committed to our work for clients across Europe and will bring full reaction to this result from our network next Friday.

Brexit: Market Reaction

Today Britain voted to leave the European Union. Law makers have been divided on the subject in spite of every major party aside from UKIP campaigning to Remain. It is now clear that London voted wholly in favour of the UK remaining in the EU, along with Scotland and Northern Ireland. Questions will now be asked and we will enter what must be considered a period of significant uncertainty. The reaction of the financial markets has been negative as expected, further exacerbated by the significant late betting on a remain vote last night worsening the fall of the FTSE and the Sterling.

Internationally, our close friends, colleagues and business partners will also be scratching their heads, no doubt asking themselves what next? The reality is that Brexit will create an unprecedented amount of work for law firms, but whether this is additive to the wider industry and how it effects the future of the sector is yet to be seen. Markets across the world are reeling from the ‘out’ vote and it is for our politicians and business leaders to provide calm heads and clarity to enable the financial markets to settle more swiftly from this shock. The Prime Ministers decision not to immediately invoke Article 50 following the result, along with statement from Bank of England governor Mark Carney, have offered the markets some comfort in the short term but the long term uncertainties will continue to create a fragile state within the City.

Importantly, whilst financial institutions and corporates will be looking for answers, we have seen law firms rally and react at pace to the questions of what next by utilising webinars to host briefings and setting up Brexit hotlines for clients. We anticipate that this trend will continue as there is a significant responsibility burdened on the legal sector to help clients understand and approach this period of change. Law firms along with many businesses will now have to consider their strategy here in the UK and across the continent in this newest of new worlds.

There is no doubt that challenges lie ahead for the legal sector, but given the calibre of lawyers based in London and their colleagues across Europe, we are sure that this will represent a truly interesting chapter in peoples career. The same has to be said for our friends and colleagues working in-house within legal and compliance. Those we canvased last night were somewhat more positive than those that we have spoken to this morning, but there is a sense of rallying to work through the shock to enable the UK and Europe to get through this as smoothly as possible.

So whilst this is a shock and goes against what many in the City might have wish for, it is those within the legal and compliance sectors that must react with a positive mindset to embrace this challenge, and we believe the industry and our clients are well placed to do so.

Movers & Shakers of the week 

Moves

McDermotts makes double partner hire in London
McDermott Will & Emery have added Simon Goldring and Michael Holter to their partnership in London, sitting in their private client practice and transactional practice, respectively.

Dentons strengthen London corporate practice 
Partner Jonathan Cantor is to join Dentons’ corporate practice in London from Nabarro

EY Legal boosts capability in the Americas
EY launches a legal services practice in Argentina with the hire Jorge Garnier from energy company Genneia as well as launching a practice in Chile with the former GC of retailer Falabella Paola Bruzzone. EY has also hired corporate partner Tony Kramreither from Norton Rose Fulbright to lead the legal team in Canada.

Freshfields senior corporate lawyer moves in-house 
Mark Rawlinson, former head of corporate at Freshfields Bruckhaus Deringer, has moved to Morgan Stanley where he will lead their UK investment banking arm

Freshfields lose executive partner in NY
Executive partner Michael Lacovara joins Latham & Watkins in their litigation and trial department in New York

Reed Smith makes US securities appointment
Reed Smith has hired US securities partner Daniel Winterfeldt from CMS Cameron McKenna, where he previously led their international capital markets group

Office Openings & Closings

Mayer Brown launches first Middle East office 
Mayer Brown has opened a new office in Dubai, to be headed up by Middle East chair Charles Hallab and regional corporate head Tom Thraya who both joined the firm from Baker & McKenzie last year.

Ashurst to close in Sweden
Ashurst is closing it’s Stockholm office, with all lawyers moving to local firm Hamilton

Mergers & Alliances

Ashurst partners with Axiom
Ashurst have announced a partnership with Axiom to support banks in meeting new regulations coming into force in 2017

Fieldfisher merges in Italy 
Fieldfisher has merged with Italian firm Studio Associato Servizi Professionali Integrati (SASPI)

Partner Promotions

King & Wood Mallesons promotes 12 lawyers in Australia

Welcome back to the Fides Weekly Update. Here we provide you with the main trends, moves and developments in legal and compliance. Scroll down to check out the Movers & Shakers of the Week.

Tweet us at @Fides_Search – we would love to hear from you!

This week:

New tech on the market for OTC derivatives regulation

This week we saw an alliance formed between a magic circle firm and one of the Big Four that could signal a significant shift in the legal market.

Allen & Overy has partnered with Deloitte in developing a tech system that helps banks handle new regulatory requirements in the over-the-counter (OTC) derivatives market.

MarginMatrix is their newly launched digital derivatives compliance system, which codifies the laws in various jurisdictions and automates the drafting of tailored documents for OTC derivatives products, subject to rules under the European Market Infrastructure Regulation (EMIR).

The product also accommodates for the new margin requirements within EMIR coming into force this September. The new rules demand that all counterparties to derivatives contracts, which are not cleared through an authorised clearing system, must provide additional margin for their net exposures. Studies have estimated that banks will need to reserve approximately $10 billion to cover these initial margins. A&O claims that their new system will lead to significant cost-savings for their clients through the auto-drafting of complex documentation as well as minimise the risk of a non-compliant outcome.

The launch of this product was a ground-breaking move in the legal market, as it saw A&O and Deloitte join forces, combining A&O’s well-established derivatives practice with Deloitte’s impressive technical expertise and managed services. It highlights the impact alternative business structures are having on the legal market as they not only inject a new wave of competition in the sector, but also make strategic alliances to further solidify their stance in the sector.

MarginMatrix is just the latest in a string of new technology solutions tools available to law firm clients. Pinsent Masons’ Cerico, Simmons & Simmons’ navigator and A&O’s Rulefinder are some of the other tools banks can use to assist in maintaining regulatory compliance.

The Deloitte A&O tie-up is a further development that points towards the determination of professional services firms in becoming recognised legal services providers. It also adds to the raft of legal tech entering the UK legal market. With the increasing focus on effective client solutions, technology and innovation has become more fundamental in shaping law firms strategies, and we expect to see further developments both through increased outputs from law firm innovation labs and market collaboration.

Movers & Shakers of the week

Appointments

Sullivan & Cromwell elects new London managing partner
Corporate partner Richard Pollack has been named managing partner for the London office of Sullivan & Cromwell, taking over from Richard Morrissey in July

Moves

Simmons boost internal capital markets offering 
Simmons & Simmons have appointed former Allen & Overy counsel Jeroen Bos to their international capital markets practice in Amsterdam as a partner

Jupiter Asset Management gains new GC
Former Man Group general counsel Jasveer Singh takes on new position as GC for Jupiter Asset Management

W&C appoint Asia corporate head
Linklaters former Asia head of private equity Chris Kelly has joined White & Case, where he will sit in their global M&A practice and lead their corporate practice in Asia

Debevoise associate becomes legal chief at investment manager 
Chris Wright has left Debevoise & Plimpton to join Leadenhall Capital Partners as their head of legal

Skadden adds to white collar crime team in London
Partner Elizabeth Robertson leaves K&L Gates to join Skadden, Arps, Slate, Meagher & Flom in their European Government Enforcement and White Collar Crime practice

Quinn Emanuel hires HSF partner to launch UK construction disputes offering 
Partner James Bremen leaves Herbert Smith Freehills to set up Quinn Emanuel Urquhart & Sullivan’s UK construction disputes practice

Paul Hastings hires A&O finance counsel
James Taylor has joined Paul Hastings as a partner in their City finance practice, moving from Allen & Overy where he was counsel in London and Frankfurt

Mayer Brown further expand private equity offering in London 
James West departs Reed Smith to become a partner in Mayer Brown’s corporate & securities practice in London

Mergers & Alliances

Bond Dickinson makes transatlantic alliance
Bond Dickinson has carried out an exclusive strategic alliance with US firm Womble Carlyle Sandridge & Rice