Welcome back to the Fides Weekly Update.

We would like to inform you this week of our recent office move. Fides Search has found a new home at 60 Gresham St, London, EC2V 7BB.

Read on for the week’s top stories along with our regular list of movers and shakers.

Follow us @Fides_Search for the latest headlines in legal and compliance.

This week:

1) ‘Panama Papers’ and its effect in the legal sector

Tensions are high this week as the ‘Panama Papers’ scandal puts many at risk of exposure for dodging taxes, money laundering and evading sanctions.

11.5 million documents were leaked on Sunday from Panama-based law firm Mossack Fonseca and  implicate a variety of current and former heads of state, global institutions and the rest of the world’s most rich and powerful, making it the largest data leak in history.

As journalists gradually scour through the mountain of leaked files, the revelations are bringing up a whole host of questions in the legal market.

Firstly, it reignites the debate regarding the ethical implications of tax avoidance as well as the fine line between “aggressive” tax avoidance and illegal tax evasion. Legal Business posted an insightful blog that discusses a shift that took place post-banking crisis, discouraging the use of offshore jurisdictions for tax purposes, and how this scandal will shift this perspective further, placing additional pressure on the morality of law firm clients’ tax affairs.

The leak has also revealed a multitude of allegations regarding money laundering and evading sanctions. The FT reported on Wednesday that 33 companies and individuals listed in the leaked documents are on the US sanctions blacklist, many of whom are guilty of supporting regimes in North Korea, Zimbabwe, Russia, Iran and Syria.

The London property market is also being looked into as the documents show a huge number of London properties are being purchased through offshore companies supplied by Mossack Fonseca. The Guardian has revealed that the prime minister of Pakistan, Iraq’s former interim prime minister and the president of the Nigerian senate are among those whose links to London property appear in the files. These arrangements, although legal, could be dangerous as they allow for large sums of black money to be laundered through the property market. A director at the National Crime Agency aired his views last year, claiming that the London housing market had been “skewed by laundered money”.

In light of the data leak, the Financial Conduct Authority (FCA) has set a deadline for banks to disclose any business conducted with the law firm to ensure no wrongdoing has taken place. A number of global investment banks are featured in the ‘Panama Papers’ requesting the set-up of offshore companies for their clients, including those subject to international sanctions, making it harder for officials to pinpoint money flows. The action taken by the FCA comes days after the organisation released their business plan for 2016/17, which featured a crackdown on financial crime and money laundering as one of their seven priority themes for the year.

Lastly, such a big data leak has highlighted the inadequacy of data security in law firms. Last week we took a look into cybersecurity in law firms, and the impending threat to their outdated systems as it was reported that 48 top US law firms, along with a selection of UK firms, were targeted by a Russian cybercriminal in an attempt to extract confidential client information. The kind of data breech that brought on ‘Panama Papers’ however, has exposed an even larger weakness in law firm security and questions the ability of law firms to protect confidential client data, a fundamental aspect to their businesses.

The vulnerabilities of Mossack Fonseca’s front-end computer systems that were outlined by wired.co.uk will only further put into the spotlight the outdated systems operated by some law firms, leaving many in the sector open to attacks. If a firm that is shrouded in so much secrecy can have over 11 million documents stolen, how easy can it be to access the files of law firms who don’t require such high levels of privacy?

It is clear that there will be fallout in the legal profession as a result of ‘Panama Papers’, both for law firms themselves as well as consequences for their clients. In particular, it seems this scandal could cause the legal industry to begin offering more advice on the ethical ramifications of their deals as reputational risk begins to carry more weight alongside the legal liability of their actions.

2) Cravath lose M&A heavyweight

It is not often that you see the details of a lateral partner move reported in the New York Times, but that is what happened this week when it was announced on Sunday that M&A heavyweight Scott Barshay has joined Paul, Weiss, Rifkind, Wharton & Garrison from Cravath, Swaine & Moore, where he has spent the entirety of his 25 year career.

With Barshay advising on $292 billion in M&A transactions last year, roughly a third of Cravath’s total announced deals for 2015, this is undoubtedly a huge blow for the firm. One of the best-regarded M&A practices in the US, Cravath ranks second only to Skadden according to data compiled by Thompson Reuters, having completed 97 transactions worth $926.5 billion last year. Paul Weiss on the other hand, where Barshay will join as Global Head of M&A, currently rank at 19th in the mergers league tables, working on 142 deals announced last year that were worth $309.3 billion.

Beyond the financial implications, a reason why this move has garnered so much national (and international) attention, is because lateral hires from Cravath are rare. With the majority of partners working at the firm having done so since the inception of their careers, more frequently Cravath partners who’ve left the firm have gone to banks or taken up positions with the government.

As for what motivated the move, the profitability of Paul Weiss (which last year reported its 20th consecutive year of profit increase), and attractiveness of its modified lockstep remuneration system have been well cited.

Despite advising on a record-breaking $927 billion in deals in 2015, revenues at Cravath only rose a modest 2.9 percent to $666.5 million. Paul Weiss on the other hand turned over $1.109 billion in revenues last year, an increase by 7.1 percent from 2014 that saw average take-home profits for equity partnership surge past the $4 million mark for the first time. Under the modified lockstep and sizeable bonus pool at Paul Weiss, opposed to the pure lockstep at Cravath, it also stands that Barshay will be better remunerated at his new home.

However, this overlooks the point Barshay stated for moving; that greater diversity in Paul Weiss’s practice areas offered him a more attractive platform from which to expand his practice. With market leading practices in litigation, private equity and white collar defense, a Global Head position at Paul Weiss offered “such an amazing opportunity for me and for our clients that I couldn’t say no.”

In a sector that remains highly competitive on both sides of the Atlantic, with firm’s modifying their lockstep systems (as we have noted in previous weeks with Freshfields) in order to hang on to and attract star performers, it again raises the question of law firm partnership structures whilst also promoting that successful lateral hires shouldn’t be focused solely on money, but about the importance for partners and firms serving their clients to the best of their ability.

Movers and Shakers of the week

Moves

Paul Weiss hire top M&A lawyer
Scott Barshay has exited Cravath, Swaine & Moore to join Paul, Weiss, Rifkind, Wharton & Garrison as global head of M&A.

KWM lose IP head along with two further partners
Intellectual property head David Rose is to join Mischon de Reya as fellow IP partner Campbell Forsyth joins Dentons. Partner Gretchen Scott also exits the firm to join Goodwin Procter.

Lloyds appoints new GC for group legal
Nathan Butler has been hired from the National Australia Bank where he was general counsel to become general counsel for group legal at Lloyds, a role formally held by Hugh Pugsley.

Squire Patton Boggs boosts financial services capability in Paris
Veronique Collin has joined Squire Patton Boggs, having previously been a partner at Freshfields and DLA Piper.

Mayer Brown adds two partners to its German Banking & Finance practice
Mayer Brown has hired Dr. Martin Heuber and Dr Holger Schelling, joining from Freshfields Bruckhaus Deringer and DZ Bank AG respectively.

White & Case make an addition to their Global Intellectual Property Practice 
IP partner Lindsey Canning has joined White & Case from Freshfields Bruckhaus Deringer.

WFW make key hire in Paris
Former De Gaulle Fleurance & Associés partner Arnaud Trozier has moved to Watson Farley & Williams and will sit in their Paris Energy & Infrastructure team.

Simmons adds to financial markets team in Singapore
Simmons & Simmons has appointed Matthew Cox to their Financial Markets practice in their Singapore office. He joins from Dentons.

Fieldfisher partner moves in-house 
Banking and restructuring partner Simon Coles has taken on the role of general counsel for cash flow finance provider MarketInvoice.

Freshfields partner launches boutique in Hamburg
Planning and regulatory partner Michael Schaefer has left Freshfields Bruckhaus Deringer and taken three associates with him to launch boutique firm Chatham Partners in Hamburg.

Goodwin Procter launches PE practice in Paris
Six partners have joined Goodwin Procter from King & Wood Mallesons, including KWM’s Paris head Christophe Digoy, to build a french private equity offering.

Office Openings & Closings

Freshfields open second legal services hub
Freshfields Bruckhaus Deringer will launch their second legal services centre in Vancouver to work alongside their current office in Manchester

Partner Promotions

Addleshaw Goddard promotes 15, 13 in the UK

Skadden promotes 11 globally, two in the City 

Allen & Overy promotes 21, six in London

Nabarro promotes five partners

Pinsent Masons promotes 18, one in France

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 @Fides_Search for regular market updates and insight .

This week:

1) Cyber Insecurity

Cybersecurity was all the news this week as The Wall Street Journal reported that federal investigators were exploring whether hackers stole confidential information on M&A deals from some of America’s largest law firms.

The breach, which took place at a number of firms last summer including Cravath Swaine & More and Weil Gotshal & Manges, is being investigated by the FBI and Manhattan US attorney’s office to ascertain whether confidential client information was stolen to facilitate insider trading. Where spokespeople from Weil declined to comment, representatives from Cravath admitted that a ‘limited breech’ of its security systems took place, but that the firm was “not aware that any of the information that may have been accessed has been used improperly.”

This came after it was reported on Tuesday that 48 top US law firms – as well as UK firms Allen & Overy, Freshfields Bruckhaus Deringer and Hogan Lovells – had been targeted by a Russian cybercriminal in an effort to extort confidential client information for financial gain. In an attempt to solicit help from other hackers, ‘Oleras’ offered to sell his phishing services on a cybercriminal forum to infiltrate the target firms and use keyword search to locate drafts of merger agreements, letters of intent, confidentiality agreements and share purchase agreements. As well as the list of target firms, he also posted the names, email address and social media accounts for specific employees at these firms, leading the FBI to issue a formal alert to firms about these kind of attacks in recent weeks.

Phishing attacks, where criminals send emails to employees masked as legitimate messages in an effort to learn sensitive information like passwords or account information, have become increasingly common and complex. Instead of widespread spam emails, such attacks are now targeted to specific law firm employees and partners often in the guise of seeking legal representation.

With 13 of 15 most prestigious law firms in America targeted, law firms make attractive targets to cybercrime as they hold trade secrets and other valuable information of their corporate clients and are traditionally understaffed in cybersecurity, compared with large corporations and banks. Furthermore, cyber incidents involving law firms are rarely reported to the authorities as there is no specific regulation directed at law firms requiring them to report data breaches and doing so can result in a huge loss of customer confidence. Clients have also come to realise the cybersecurity risk attached to their external counsel, with many conducting independent assessments of the firms that they hire.

Cybersecurity has long been on the boardroom agenda of law firms both sides of the Atlantic. With the stories reported in the news this week confirming that this threat is far from diminishing, law firms must move beyond acknowledging the importance of cybersecurity to seriously improving their systems and training programs to ensure that they will not become victims of the next breech.

2) Lloyds advance on legal restructuring

This week we saw further job losses for junior lawyers at Lloyds Banking Group, making it the second time this year that the bank has restructured its legal team.

These changes are all a part of the three year strategy Lloyds released in October 2014, which involved plans to cut the bank’s workforce by 9,000 and shut 200 branches over the three year period. Lloyds has not yet released details concerning their most recent job cuts in the legal team, but they have stated that new legal roles are also being created as part of their wider restructuring plan.

The restructuring initiative has affected many divisions within the bank, largely hitting their retail, commercial banking and consumer finance teams. The bank’s legal function in particular, has seen its fair share of job cuts as well as experiencing a host of organisational changes, which has resulted in a revolving door of senior level team members.

It was announced in July last year that Linklaters managing partner Simon Davies was exiting the magic circle firm to join Lloyds in the newly created role of chief people, legal and strategy officer. Following this, litigation general counsel Michael Hartridge was replaced by former JP Morgan EMEA litigation head Wilson Thorburn.

It seems the level of structural changes may not have been very well received amongst legal team members at the bank as this week The Lawyer reported on the results of an internal staff survey carried out at Lloyds. It stated that “a significant majority of both the commercial banking and lending support legal teams responded unfavourably to questions about satisfaction and engagement in their jobs”. It was also mentioned that the results from these teams showed “some of the worst scores in the entire organisation”. Wider restructuring across Lloyds will continue, as they works towards the goal of becoming more digitally focused. The bank is expected to continue to reduce headcount, while investing a total of £1.6bn in digital services and automation.

Movers and Shakers of the week

Appointments

A&O welcomes back corporate partner in the Middle East
Tom Butcher has returned to Allen & Overy after two years at Simmons & Simmons to lead their Middle East TMT and IP practice groups

Linklaters assigns new global restructuring co-heads
Rebecca Jarvis and Richard Bussell have been appointed global co-heads for restructuring and insolvency at Linklaters for a four-year term

Moves

BLP add to international arbitration practice
Ania Farren joins Berwin Leighton Paisner from K&L Gates as a partner in their international arbitration team in London

Ashurst hire TMT duo from Herbert Smith
Ashurst has hired partners Nick Elverston and Amanda Hale from Herbert Smith Freehills. They will be joining the firms global TMT practice

Slater & Gordon’s GC exits
Moana Weir is stepping down as general counsel after two months at the firm

Hogan Lovells adds to two partner team in Australia
Partners Richard Hayes, Scott Harris, Andrew Crook and Ros O’Mally have been hired into Hogan Lovells’ Sydney office, the first major office expansion since it launched with two partners last July.

Sidley takes on seven Kirkland associates
Sidley Austin has hired a team of seven corporate associates from Kirkland & Ellis, paying a signing-on fee of up to £100,000 each

Welcome back to the Fides Weekly Update – a round-up of the week’s key news and developments in legal and compliance.

Feel free to tweet us @Fides_Search, we would love to hear from you!

This week:

1) A tipping point for Talent Strategy?

Law firms must prepare effectively now to ensure that they are not left behind at the end of the decade, or so argued a report published this week from Deloitte Developing legal talent: Stepping into the future law firm.

According to the report, increasing client expectations combined with external factors such as rapid technological advancement and the shifting of workforce demographics and expectations, will lead to a ‘tipping point’ for individual firms in 2020 which will impact the competitive landscape within the sector and the role of talent within law firms.

Although the employment of solicitors into top corporate firms has increased by a fifth over the past decade, the report identified a bigger shift in skills and expectations by law firms, who have already identified a mismatch in the skills being developed through education and those required in the workplace. “We believe that the most successful law firms will be those agile enough to flex resources to meet client’s needs at an efficient price” the report stated. “They will need access to lawyers who have a broader skill set and are not just technically competent lawyers.”

Further technological advances and continued client demand for a better value of service mean that future skill requirements at law firms will change over the next decade. With the growth of automation opportunities through robotics, algorithms and Artificial Intelligence, lower skilled jobs will be replaced with the highly skilled roles created to develop and manage this new technology. To an extent this change has already started with increasing demand for legal knowledge engineers, legal technologists and legal process analysts. As clients drive to keep costs low, law firms have turned to the hiring ‘non-traditional and transient employees’ – such as project managers, sales executives and dealmakers – to ensure efficiency, value for money and the availability of low cost options for clients. This led The American Lawyer to herald the move of the four-person Legal Project Management team from Berwin Leighton Paisner to Herbert Smith Freehills to be its most prized lateral hire of 2015.

Beyond considering individual business needs, and what sort for leaders law firms need to develop to strive in the future (Through the consideration of diversity initiatives, succession planning and alternative skillsets), law firms also need to meet the individual expectations of their employees regarding opportunities and responsibilities within their role, as well as personal development and the firm’s alignment to social values. With 71% of UK millennials surveyed expected to leave their current employer in the next five years, this becomes especially pertinent within the legal sector given the large demographic of partners expected to retire by 2020, as well as alternative career options in-house and increasing competition from ABS and ‘new law’ firms.

As such, talent strategies will be will be key to dealing with future challenges as concludes the report. By considering the number and type of people needed in the future, and how to attract, retain and change skills within individual organisations, there is a clear opportunity for UK law firms who evaluate how they cultivate talent now to make competitive business gains in the future.

2) Fried Frank conquer the City

Fried Frank’s record-breaking 2015 financials were released this week, highlighting the successful execution of their 2014 ‘realignment’ strategy, which involved the firm focusing on its core practice areas and locations.

The firm’s total revenue increased by 9.7 per cent in 2015 to $504m, whilst profit per equity partner reached a new high of $2.2m, 21 per cent higher than 2014. Net profit also rose by 18 per cent to $228.5m.

 It can be assumed this growth is attributed to the rigorous assessment carried out by the firm in 2014 when former Goldman Sachs deputy general counsel David Greenwald was appointed new chairman. The new strategy placed greater emphasis on costs and efficiency, cutting loose any areas operating at a loss. Their assessment concluded that the firm’s most profitable operations existed in US and Europe, leading to their decision to close offices in Hong Kong and Shanghai.

Greenwald took a risk in making such bold decisions and eliminating any resources that didn’t justify the costs. He has managed to change firm culture and his experience working in-house enabled him to create initiatives that would maximise efficiency and productivity at all levels of firm structure. New initiatives included a partner self-assessment process and a timekeeping policy that fines partners $100 per day if they are late to record their weekly billable hours.

In particular, London has been a remarkable area of growth and is also where the firm have made their most high-profile lateral hires in the last 12 months. This is a result of the impressive restructuring Fried Frank’s London office has been carrying out since 2014. To enable greater efficiency, the firm cut headcount significantly, dropping their London team to below 20. They have subsequently expanded to a 45 lawyer office, exceeding the previous headcount and are likely to continue to grow. Their lateral hires have been particularly strategic, only taking on high-class talent in their core practice areas.

Private equity and restructuring & insolvency have been the most active hiring spaces for the firm as Kirkland & Ellis’ Graham White joined the firm in October 2014 to head up their European private equity practice and London office, followed by a team of three funds partners also from Kirkland. Additionally, Ashley Katz joined the firm more recently from Mayer Brown, where he co-led their restructuring, banking and insolvency practice.

Fried Frank have given themselves a strong footing in the market and built a solid foundation for further growth. After the announcement of their upcoming office move to 41 Lothbury, which is double the size of their current City office, alongside their claim to be “understaffed” in a number of practice areas, including real estate, private equity, M&A and asset management, it is likely to see a continuation of significant lateral hiring from the New York-based firm.

Movers & Shakers of the week

Merger talks

BLP and Greenberg end merger talks

The transatlantic merger plans between Berwin Leighton Paisner and Greenberg Traurig have been called off due to differences in individual pay models, firm culture and other factors. Creating a mammoth real estate and infrastructure practice, with a revenue in excess of $1bn, was an exciting prospect; however, the lack of ‘common ground’ was too considerable a factor to progress any further.

Appointments

Addleshaw Goddard elect new senior partner

Corporate finance head Charles Penney has been appointed new senior partner at Addleshaw Goddard

Lloyds assigns a head of legal for ring-fencing

Frances McLehman was appointed head of legal for ring-fencing at Lloyds Banking Group, after having been previously seconded to the bank as interim head of corporate and M&A legal in 2014 from Berwin Leighton Paisner.

Ashurst appoint new Italian managing partner

Capital markets partner Stephen Edelmann will replace Domenico Gullo as managing partner of Ashurst in Italy.

Moves

Freshfields elects competition head in Hong Kong

Alastair Mordaunt has joined Freshfields Bruckhaus Deringer as a partner in their Hong Kong office, moving from Clifford Chance in London. He will become the firm’s new head of competition in Hong Kong.

Spotify gains Microsoft GC

Microsoft general counsel and corporate vice president Horacio Gutierrez is to become general counsel at Spotify

Eversheds gain 3-strong pensions team in London

Partner and former head of pensions at Squire Patton Boggs Charmian Johnson will join Eversheds along with two associates in their Manchester office

W&C strengthen Belgian finance practice

Former Shearman & Sterling partner Hadrien Servais joins White & Case’s Global Banking Practice, based in Brussels

EU Law partner joins Heuking Kühn Lüer Wojtek

Ursula O’Dwyer has been hired into the Brussels office of Heuking Kühn Lüer Wojtek. She previously worked at Philip Lee and founded their Brussels office.

HSF make international arbitration hire in Frankfurt

International arbitration specialist Patricia Nacimiento will become a partner at Herbert Smith Freehills in Frankfurt, joining from Norton Rose Fulbright

Dentons bolsters Dubai disputes practice

King & Wood Mallesons partner Matthew Showler has joined Dentons partnership, based in their Dubai dispute resolution practice

Jones Day hires new lead for non-patents IP litigation practice

Jones Day have appointed Rebecca Swindells as head of the non-patents IP litigation practice. She joins from Fieldfisher

Mischon further boost their commercial disputes team

Addleshaw Goddard partner Sonia Campbell has exited the firm to join Mischon de Reya, specialising in insurance litigation

Ince & Co hires Dubai corporate heavyweight

Corporate partner Tom Briggs has joined Ince & Co’s Dubai office after having spent three as head of corporate/commercial team in Bahrain at Charles Russell Speechlys.

Office Openings and Closings

Fasken Martineau relocate to smaller London office

Fasken Martineau close office in Hanover Square and relocate their reduced 10-lawyer team to Old Broad St

Partner Promotions

Slaughter and May promote 10, all in London

Burges Salmon promotes five

Until next week,

Team Fides

Welcome back to the Fides Weekly Update. Scroll down to take a look at what news stories our researchers have been talking about and don’t forget to check out this week’s movers and shakers!

This week:

1) ABS takes on a new form

As we witness an influx of Alternative Business Structures (ABS) appearing amongst traditional law firms in the market, the SRA has granted an ABS license to an all the more unusual business model, in which fee earners and employees alike could earn the same amount of remuneration.

South west law firm Stephens Scown has become Stephens Scown Limited after employing a shared ownership model, making it the largest law firm to introduce such a scheme. The business model, most commonly used by department store John Lewis, will come into play at the start of May and will work by depositing all profits exceeding the minimum threshold into a pool. This will then be split 50/50, half being distributed between staff members and the other half retained by the firm.

Average bonuses will rise considerably under this model, with an average bonus of £1,300 for staff last year expected to increase to over £2,000 this year. The levelling out of remuneration across all ranks is a risky strategy for the firm and unchartered territory within private practice. However, there is no doubt this model will encourage all members of staff to perform well and take responsibility for the firm’s profitability as they will be direct beneficiaries. Robert Camp, managing partner at Stephens Scown, said: “I believe it will have a tremendously positive impact on the firm. Back-office support staff in particular will feel much more involved as we will all be working towards the same goal.”

It was revealed last month that Mischon de Reya may also be considering undertaking a shared ownership scheme. The firm’s proactive attitude to market-leading initiatives, such as agile working and “unlimited holidays”, shows their sincerity in implementing such a daring scheme, as well as the value they place on their employees in fostering a healthy firm culture.

The SRA’s decision to grant such a license is another ground-breaking movement in the sector and points to further diversification of the legal market. This adds another layer of competition for traditional law firms, who due to their fixed pricing structure and less flexible working models need to continue to pursue more competitive strategies to remain attractive to their workforce.

2) Firm’s strategy focuses on diversity

In celebrating the principles of International Women’s Day that took place on the 8^th March, Osborne Clarke announced this week that they have hired their first diversity and wellbeing manager Su Akgun.

The appointment comes as Osborne Clarke update their firm-wide strategy to include a strong focus on diversity, with Akgun’s role specifically covering family balance, female retention and social mobility. Currently 20% of the firm’s UK partnership are women, compared to 62% in non-partner legal roles. This sits on average with female partnership rates across the UK top 25 firms at 20.61 percent.

The legal sector has seen an increase in the number of strategies being developed around diversity as it becomes an important factor regarding both client relationships and firm culture. As such, many firms have invested in hiring top talent from a variety of sectors to help lead their Diversity & Inclusion initiatives. Diversity managers including Daniel Danso, who joined Linklaters from LGBT rights charity Stonewall, and DLA Piper’s Mitra Janes, who previously worked at Ford Motor Company are some examples of the leading professionals transforming the legal landscape.

Gender equality in the UK legal sector is a topic recently explored in an article by Fides Search “The Path to Parity: Reassessing Gender Balance within UK Law Firms”. To request your copy of the article, please contact research@fidessearch.com.

Movers and Shakers of the week

Appointments

Nabarro appoints new senior partner

Real estate head Ciaran Carvalho has been elected as Nabarro’s new senior partner, commencing his role on 1 May

Bird & Bird elect next chief executive and chairman

Chief executive David Kerr has been re-elected into his role for the next three years, whilst Italian managing partner Massimiliano Mostardini has been newly appointed chairman

Resignations

CC banking and finance partner exits after 16 years

Leveraged and acquisition finance specialist James Johnson will leave Clifford Chance and the legal sector after 16 years at the firm

Moves

London-based architecture and design firm hires first GC

Zaha Hadid Architects has hired Tamsyn McLean as general counsel. She joins from Balfour Beatty Investments where she served as senior commercial manager

DLA lose UK competition head

UK head of competition at DLA Piper Kate Vernon has joined Quinn Emanuel Urquhart & Sullivan as the second partner in their London competition practice

Freshfields hires CC competition partner

Alastair Mordaunt will depart from Clifford Chance’s London office to relocate to Hong Kong and lead Freshfields Bruckhaus Deringer’s Asia competition practice

K&L Gates expands Berlin office

Greenberg Traurig’s chair of employment, incentives and pensions group Manteo Heikki Eisenlohr has joined K&L Gates in the firm’s labour, employment and workplace safety practice

Latham lose further partner in Frankfurt

Latham & Watkins partner Rudolf Haas will join King & Wood Mallesons in the Frankfurt Corporate team

Dechert strengthen white collar practice in the city

Former Skadden partner Matthew Cowie has joined Dechert’s white collar team in London

CMS build out Dubai Middle East offering

Islamic finance partner Shakeel Adli departs Norton Rose Fulbright to become a partner in CMS’s banking and finance practice.

Partner promotions

Freshfields Bruckhaus Deringer promotes 16 globally and 5 in London

Squire Patton Boggs promotes 30 globally and 7 the City

Berwin Leighton Paisner promotes 17 globally, 14 based in London

Slater & Gordon announces Restructuring Plan following £493m six month loss

Slater & Gordon (S&G) is going to conduct a major restructuring of its UK operation after announcing an A$958m (£493m) loss for the six months ending 31 December 2015. Facing debt of A$741m, lenders have given the firm until the end of April to present a new plan for reorganising the business, with the likelihood that a number of offices in the UK will close. The first listed law firm in the world, Slater & Gordon has now lost more than 95% of its value since April 2015, with shares dropping a further 30% after the announcement was made on Monday.

So what happened?

The staggering loss, amounting to three times the sum of the firm’s profits, was primarily attributed to an A$876.5m impairment of intangible assets caused by a write-down of goodwill. This was a result of S&G’s acquisition of the insurance outsourcer Quindell’s professional services arm for £700m in May 2015.

Controversy surrounding the deal concerning Quindell’s valuation and accountancy practices was quickly justified with the launch of an initial FCA and then SFO investigation following the admission that pervious management had overstated the division’s profits by more than £300m in 2014. Due diligence for the acquisition, which was based on a ‘bottom up’ review of case files, did not consider Quindell’s accounting policies as fundamental to decision making compared to the profits it was expected to generate, although S&C assured investors that it was aware of the mistakes in the accounts ahead of the deal.

The announcement also revealed a sharp decline in UK business performance, responsible for 45% of the firm’s revenue. Having already entered into consultations in January to close two of its UK offices, personal injury (PI) law revenue was ‘materially weaker than expected’ following shock government proposals to ban claims for general damages in ‘low value’ whiplash cases made in the Autumn statement. This has the potential to severely affect profits from fast-track road accident claims, upon which S&G now account for most of their UK earnings.

So what next?

The future of the firm now depends on S&G’s lenders, and whether or not they are willing to renegotiate the terms of its debts. With the firm submitting a restructure proposal to its banking syndicate at the end of the month, any amendments to its debt facility must be made by the end of April or the firm faces the nearly impossible task to repay $800 million in loan facilities by next year.

Until recently a highly successful firm, expanding significantly in Australia before coming to Britain, the £493m half yearly loss demonstrates how quickly a law firm’s fortune can turn in the face of a poor business decision and unfavourable market conditions. In acquiring Quindell, S&G bought a business valued (at the time) more than its Australian and UK operations combined, that doubled staff numbers overnight and caused a vast amount of reputational damage to the firm. To add flame to the fire, planned changes by the government to limit personal injury claims continues to undermine the business S&G so heavily relies upon in the UK.

Hopefully the firm can reach an agreement with investors by the end of March to rescue the firm and its 4,000 UK employees.

Barclays face displeased shareholders

Barclays share prices dropped by more than 10 per cent earlier this week after the bank reported a drop in full-year profits and a subsequent 54 per cent dividend cut.

The bank’s annual profits fell by two per cent to £5.4bn for 2015 as well as disclosing a further £1.45bn provision for mis-selling. This year’s results indicates that Barclays have now failed to generate cumulative profit over the past four years, which has brought about chief executive Jes Staley’s decision to accelerate their major restructuring plans.

The plan involves selling off a large amount of their 62.3% stake in Barclays Africa Group, something Staley had intended to do when he stepped into the role, as well as splitting the company into two divisions Barclays UK and Barclays Corporate International, which will be in line with the industry’s new ring fencing regulations. It is apparent that the main aim of Barclays’ restructuring is to eliminate any under-performing areas, i.e. many of its non-core assets, and focus on running their most healthy operations concentrated in the UK and US, which will transform it from a global bank into a transatlantic bank, according to Staley.

In order to carry out such plans, however, the bank have needed to strengthen capital reserves through dividend cuts. The bank announced the final dividend for 2015 of 3.5p, stating that this would fall to 3p for 2016 and 2017. This came as a shock after chairman John McFarlane made a pledge last June that the bank’s share price would double in three years. Cutting dividends to offset drastic restructuring costs is becoming commonplace for Barclays and is creating a high level of uncertainty amongst the shareholders.

McFarlane alleged that “a high and progressive dividend will in future need to make up a significant portion of our annual total shareholder return”, but there have been no signs yet as to whether the bank will be making consistent and stable returns anytime soon. Despite strong efforts to recapitalise the business, investors remain wary of the banks strategic targets.

With the continued regulatory pressures and evolving strategy at Barclays it will be interesting to see how the coming 12 months progresses for the bank. As Fides have noted in recent blogs and our regulatory article, all financial institutions are having to face up to this new world environment and deal with significant profit challenges through more robust legal and compliance regimes. As such how the bank utilises its legal and compliance function along with external counsel in this continued period of change and uncertainty will be interesting to observe and analyse.

Movers and Shakers

Appointments

Slaughters appoints new M&A head
Corporate finance partner Roland Turnhill will replace Steve Cooke as the firm’s head of M&A when he becomes senior partner

DLA choose new global co-chair
Juan Picon will become the firm’s global co-chair as Sir Nigel Knowles steps down Moves

Moves

Mayer Brown strengthens London Finance Practice
Mayer Brown has appointed Kieron Dwyer, ex-head of international energy and natural resources at Wragge Lawrence Graham, as a new Finance partner in London

Eversheds grows corporate finance team
Eversheds has enhanced its corporate team with the appointment of partner Sebastian Orton who joins the firm from Jones Day.

Linklaters appoints UK trusts lawyer
Peter Golden has been hired from Forsters to lead Linklaters’ trusts practice

Clifford Chance adds to its growing white collar and regulatory defence team in the U.S.
Clifford Chance have hired Daniel Silver, Deputy Chief of the Criminal Division in the United States Attorney’s Office for the Eastern District of New York, into the firm’s Americas Litigation and Dispute Resolution practice

Mayer Brown expands regulatory practice
Former head of the FCA’s enforcement and market oversight division Guy Wilkes will join Mayer Brown as a partner in their financial and regulatory enforcement practice DLA Piper bolsters investment funds team

DLA Piper bolsters investment funds team
DLA Piper appoint new London head of investment funds Andrew Wylie, joining from Nabarro, where he served as head of alternative investment fundsTaylor Wessing hires venture capital expert

Taylor Wessing hires venture capital expert
Angus Miln has joined Taylor Wessing in their corporate technology team. He previously worked at Bird & Bird and led their Venture Capital practice

Eversheds expands in Munich
Competition partner Martin Bechtold joins Eversheds’ Munich office as their Head of Competition for Germany. He has held previous positions at Clifford Chance, Allen & Overy and King & Wood Mallesons

Jones Day lose London energy head
Energy and corporate partner Paul Exley is to join Baker Botts in their UK energy practiceMorgan Lewis bolster antitrust and competition practice

Morgan Lewis bolster antitrust and competition practice
London partner Omar Shah has joined Morgan Lewis & Bockius from Latham & Watkins to their antitrust and competition practice

BLP strengthen German real estate offering
Dentons counsel Boris Strauch has been hired by Berwin Leighton Paisner as a real estate and infrastructure partner in their Frankfurt office

Jones Day gain energy duo in Beijing
Partners Dirk Walker and Dina Yin have exited King & Wood Mallesons to join Jones Day’s Beijing office

Kirkland loses further partner in London
Capital markets partner Andrew Hagan will join Freshfields Bruckhaus Deringer, alongside former Kirkland partner Ward McKimmTravers Smith add to Restructuring & Insolvency practice

Travers Smith add to Restructuring & Insolvency practice
Former K&L Gates partner Edward Smith will join Travers Smith as a Restructuring & Insolvency partner

Sidley sets up PE team in the City
Sidley Austin has taken six private equity partners from Kirkland & Ellis’ London office to set up a private equity team. The partners are Christian Iwasko, Erik Dahl, Fatema Orjela, Bryan Robson, Sava Savov and Oliver Currall

Office closings

Vinson & Elkins consolidate in the Middle East
Vinson & Elkins will close down their Abu Dhabi office and transfer their offering to their Dubai and Riyadh offices.

Welcome back to the Fides Weekly Update. Read on to see what news stories our researchers have been talking about this week.

Tweet us @Fides_Search with your thoughts and comments.

This week:

Another Trans-Atlantic tie-up?

Wednesday saw the announcement of another proposed trans-Atlantic tie up, with Berwin Leighton Paisner (BLP) confirming that it has entered into preliminary merger talks with US firm Greenberg Traurig. Both recognised for their global real estate practices, a merger between the two firms would create a practice with 2,500 lawyers – 750 of which would be based in New York and London.
The proposed merger could offer a good potential match for both firms. With 75% of its lawyers based in London, it would not only give BLP a major presence in the US but access to offices in Europe, Israel and Latin America to complement the firm’s existing offering in Asia. For Greenberg Traurig, who recently hit the headlines with the hire of former New York mayor Rudy Giuliani, the merger would bolster the firm’s practice in London which last year reported a 6% loss in profit. As well as reinforcing both of the firms’ real estate practices, which currently accounts for 30% of BLP’s revenue and a 300-lawyer practice at Greenberg, the merger would also provide both firms with the opportunity to strengthen other global practice areas.

However, a proposed merger is not without challenge as a substantial gap in size and profitability exists between the two firms. Already with 1,950 lawyers and 38 offices globally, Greenberg is the third largest firm in the US and ranks as the world’s 20th largest firm by revenues with PEP standing at $1.424m against £661,000 ($1.090m) for the UK firm’s 2014-15 year. Despite a 15% profit rise for BLP over the same period, with turnover at £259.2m and PEP at £465,000, the 850-lawyer firm remains a substantially smaller offering.

BLP has been searching for a suitable merger since last spring, signalled by the election of Lisa Mayhew as managing partner. Having rejected a UK merger with Olswang in late 2015, US firms Morrison & Foerster, Holland & Knight and Covington & Burling have also been mentioned as potential suitors. Greenberg Traurig on the other hand have never merged with another law firm, achieving such phenomenal levels of growth organically. Any merger would be subject to a partner vote from both firms.

Credit Suisse face gloomy outlook

Credit Suisse featured heavily in the news this week, most significantly for the sharp falls in profit they experienced in the fourth quarter of 2015. Their global markets division lost $3.5bn in Q4 and the bank reported their first full year loss since 2008 to be CHF2.44bn, a loss that was 16.7 per cent greater than anticipated.

These bleak results have caused Credit Suisse’s shares to fall by a whopping 13 per cent on Thursday, which saw them at their lowest value since 1991. It has sparked their decision to accelerate plans for a costs savings programme, which will involve cutting 4,000 jobs as well as seeing bonuses in the investment banking division slashed by as much as 36 per cent. The bank will stick to their strategy of shifting the focus onto wealth management and emerging markets, whilst continuing to cut costs in investment banking in an attempt to save CHF3.5bn by 2018.

The figures reported are a consequence of the torrid market conditions global banks have been facing. Swiss rivals UBS have also published their discouraging Q4 earnings and revealed its wealth management business experienced net outflows of CHF3.4bn, whilst Deutsche Bank’s securities unit also slipped into a loss in the fourth quarter. It has been a hard hit for the banking sector and Credit Suisse CEO Tidjane Thiam stated market liquidity, the sharp decline in oil prices and widening credit spreads as some of the destructive qualities to have shaped the market in Q4 and expects these challenging conditions will persist.

The news of Credit Suisse’s hefty loss comes only three days after the SEC and NY attorney general announced the bank is to pay a total of $80.3m for misconduct within their dark pools. The bank’s dark pool CrossFinder, one of the largest dark pools in the industry, has been censured for misleading customers who used them and allege that they welcomed high-frequency traders into their pools at the expense of the bank’s traditional customers. Barclays have also admitted to wrongdoing and will pay a penalty of $70m.

Eric Schneiderman, the New York attorney general, said the fines were a “major victory in the fight to combat fraud in dark pool trading”, an activity regulators have been targeting for a number of years. Dark pools are a closed trading platform and are inaccessible to the public. This form of trading highlights the lack of visibility in the banking system and is an aspect of the obscure shadow banking sector that has gained real influence in recent times. Click here to read director Tom Spence’s blog on shadow banking in European markets.

Movers and Shakers of the week 

Appointments

McDermott Will & Emery appoints new London head
Hugh Nineham will retire as the firm’s head of the London office and will be replaced by private client partner Andrew Vergunst

CMS elect new managing partner
Stephan Millar will replace Duncan Weston to take the role of managing partner at CMS Cameron McKenna

Moves

Fieldfisher add to Financial Services Regulatory team
Azad Ali has moved to Fieldfisher as a partner, joining from Shearman & Sterling where he served as counsel in their Financial Institutions Advisory & Financial Regulatory Group

VW hire CC German parter as US legal chief
VW has hired Clifford Chance German partner David Detweiler as their general counsel in the US

Fieldfisher take three from IP boutique
Partners Diana Sternfeld, Nicole Jadeja and Rebecca Baines will join Fieldfisher’s IP and life sciences practices from IP boutique Rouse.

Norton Rose lose regulatory team in Sydney
Clyde & Co have gained 10 lawyers in Sydney, including regulatory partners Michael Tooma and Alena Titterton, as well as four lawyers from Norton Rose Fulbright

Stephenson Harwood gain 7-strong team in Hong Kong
Stephen Harwood have hired a seven lawyer trade finance from Eversheds in Hong Kong, which includes partners King Tak Fung and Ivan Ng

Quinn Emmanuel expand Israel practice
Litigation partner Paul Friedman exits Clyde & Co to join Quinn Emmanuel Urquhart & Sullivan in both their London and Israel offices

White & Case hire Linklaters heavyweight in Hong Kong
Linklaters partner Christopher Kelly will be joining White & Case in Hong Kong as their Asia head of corporate.

Hill Dickinson boost corporate practice
Mark Weston will be joining the firm’ London office from Matthew Arnold & Baldwin

Clyde & Co hire IP partner
IP lawyer Ralph Cox departs from Fasken Martineau as head of the contentious IP group in London to join Clyde & Co in their London office

Eversheds lose corporate partner to DWF
Alasdair Outhwaite will be joining DWF’s national corporate practice from Eversheds

Dechert strengthen competition offering in Paris
Dechert have hired former Norton Rose Fulbright partner Mélanie Thill-Tayara into their antitrust and competition practice Paris.

Mergers

DLA boost Nordic offering after merging with Finnish firm
DLA piper have merged with Peltonen LMR to give them over 200 lawyers in the region

BLP reveal possible tie-up with US firm
BLP have released a statement confirming merger talks with Greenberg Traurig

Office openings and closings

Jones Day expand in Australia
Jones Day have opened a third Australian office in Brisbane, alongside their Sydney and Perth offices

Orrick announce office opening in Houston
Orrick, Herrington & Sutcliffe are launching a new office in Houston, joined by 13 new partners

Welcome back to the Fides Weekly Update. Read on for this week’s key moves, trends and developments in legal and compliance.

Feel free to tweet us @Fides_Search with your thoughts and comments – we always love to hear them!

This week:

1) Partner departs from Slaughter and May

Slaughter and May lost their first partner in Hong Kong since 2006 this week, as news emerged that corporate partner Laurence Rudge is to join global supply chain managers Li & Fung. Corporate partner Paul Chow, now of Davis Polk & Wardwell, was the last departure from Slaughter’s Hong Kong office when he jumped ship to Linklaters in 2006 to head their Beijing office.

RPC also made a move into the Asian market this week, after its alliance with Singapore’s Premier Law was announced on Thursday. This joint venture will double the size of RPC’s Singapore practice as well as giving them access to Premier Law’s corporate and commercial capability in Hong Kong, complementing the firm’s existing presence in this space.

International firms have been increasingly looking at boosting their offering in Hong Kong, as Olswang tied with local firm Haldanes in December and White & Case hired corporate partner Catherine Tsang from Paul Hastings earlier this month. However, firms are also considering the slowdown of the Chinese economy and the adverse effect it could have on the Hong Kong legal services sector, with many firms like Milbank Tweed Hadley & McCloy re-jigging their practices to reflect this new market reality and Fried Frank Harris Shiver & Jacobson leaving the jurisdiction altogether. For a full analysis into the Hong Kong legal market, click here to see The Lawyer’s Special Report.

2) New FCA chief announced

After a global search to find the replacement for Martin Wheatley, the FCA this week announced its new CEO to be Andrew Bailey, current chief executive of the PRA and deputy governor of prudential regulation at the Bank of England. Bailey will be taking on the position as permanent leader of the FCA as soon as a replacement is found for his current role, replacing interim chief Tracey McDermott who withdrew herself from the running for the top job earlier this month.

Overall, the reaction within the financial services industry has been fairly positive to his placement, with many describing Bailey as a safe and sensible appointment. Bailey is a well-respected character at the bank and HSBC chief executive Stuart Gulliver says the new FCA boss is “very bright, technically superb…He is tough and fair – a real coup for the FCA.” Bailey’s current standing in heading up the PRA provides him with sufficient knowledge and experience to run the FCA, although some argue that he may struggle with the publicity associated with the role as well as performing the enforcement aspects of the FCA, something which he hasn’t executed in his previous roles.

It will be interesting to see how this appointment affects the culture of the regulator, and whether or not Andrew Bailey’s leadership creates a more “bank-friendly” environment. However, the FCA and PRA have shown they plan to continue to clampdown on the sector as this week they also launched investigations into the senior managers at HBOS, after a report was released in November criticising the lenient decisions made by the Financial Services Authority.

The future direction of the FCA has been subject to much scrutiny recently, with the last-minute ditching of their review into banking culture as well as recent changes made to the Senior Managers Regime (SMR), which included removing the reverse burden of proof principle. (For our January blog on the issue, click here.) Some consider this to be the start of a new era of financial regulation, where others consider it proof that regulatory standards on banks are falling. Indeed, it will be interesting to see the outcome of the Treasury Select Committee’s inquiry into the shelved banking culture review, and how Bailey responds to this and sets the tone for his first few months in charge.

Further confusion surrounding the SMR also emerged this week, as a further consultation was launched into the regime’s coverage of in-house lawyers, and whether those in charge of legal functions will need to gain approval under the regime. The FCA acknowledged that “significant uncertainty” existed regarding the overall responsibility of decision-making, and have made interim arrangements whilst they consult fully on the issue.

 
Movers and Shakers of the week 

Moves

BNY Mellon hire BofE counsel
Former head of legal for markets, banking and notes directorates at the Bank of England Jacqueline Joyston-Bechal to join BNY Mellon as EMEA head of their advisory compliance team for investment services

Insurance firm RSA gains new chief legal officer
RSA’s GC and company secretary Derek Walsh is stepping down and being replaced by Charlotte Heiss, who will take the new role of chief legal officer and company secretary

BLP carry out double partner hire in UAE
King & Spalding’s Dubai disputes head Raza Mithani and DLA Piper’s energy and infrastructure partner Alexander Sarac join Berwin Leighton Paisner’s disputes practice and project finance practice respectively.

KWM boost Brussels corporate practice
King & Wood Mallesons have hired Squire Patton Boggs’ head of Belgium practice Anthony van de Hauwaert into their European corporate practice

A&O expand German disputes practice
Allen & Overy have appointed Orrick’s disputes partner Benedikt Burger to their Frankfurt office

Slaughters lose Hong Kong partner
Corporate partner Laurence Rudge has left Slaughter and May’s Hong Kong office to join global supply chain managers Li & Fung as deputy general counsel

A&O lose nine-strong team to Italian firm
Bonelli Erede Pappalardo have hired nine lawyers from Allen & Overy, which includes their Italian senior partner Massimiliano Danusso, to headquarter their London office.

Office openings and closings
Pinsents lauch second German office
Pinsent Masons have hired KPMG partners Thorsten Volz, Torsten Wielsch and Sönke Gödeke to lead their German energy practice and will be based in Düsseldorf

Simmons exit Abu Dhabi
Simmons & Simmons are closing their Abu Dhabi office, leaving the firm with four offices remaining in the Middle East

Recognition
The Lawyer releases 2016’s Hot 100

Hello and welcome to the Fides Weekly Update. Here we provide you with a breakdown of this week’s key moves, news and developments in the legal market.

Tweet us @Fides_Search with your thoughts and comments – we always love to hear them!

This week:

1) Magic Circle overhaul lockstep

Freshfields Bruckhaus Deringer and Clifford Chance featured in the news this week in relation to their partnership remuneration models. In Tokyo, Freshfields saw the introduction of an alternative lockstep ladder that will run parallel to their existing lockstep. This serves as a means to recalibrate less productive partners or those who are in markets that are not as profitable, and will prevent partners from reaching historically high levels of remuneration. The new lockstep runs from 15 to 30 points, and is likely to affect a quarter of partners globally. Clifford Chance has also announced that it has launched a review to assess a possible move to a full equity partnership. This has again sparked speculation in the news of an overhaul in remuneration, especially the models operated by Magic Circle firms and the trickle-down effect this will have on the rest of the industry.

Other modifications to remuneration include creating additional bonus facilities to compensate top performing partners. This has become increasingly common amongst the top UK firms, with Clifford Chance introducing superpoints to their remuneration system whilst Linklaters plan to introduce gates within their equity structure. Although all these firms consider themselves to be true lockstep firms, these tweaks to their models imply a gradual move towards a merit-based pay system may be underway.

The level of competition amongst firms has intensified due to the growing globalisation of the legal industry, which signals that lockstep may no longer be sufficient for international firms to both retain and attract star performers in the market. Arguably, for firms with a greater UK presence (e.g. Macfarlanes, Slaughter and May, Travers Smith) traditional lockstep remuneration systems may be sufficient. Despite this, with the aggressive expansion of US firms in London, as shown with recent lateral hires by Baker & McKenzie, Morrison & Forrester and Cooley’s amongst others, a number of top UK firms are sacrificing the rigidity of their structures in order to remain competitive.

2) Probe into Legal Services announced

Thursday saw the announcement that the Competition and Markets Authority (CMA) are launching an investigation into UK legal services. The study will examine the affordability of civil legal services, and consider whether the £30bn industry is providing adequate service to consumers and small businesses.

More specifically, the study plans to investigate if there is effective competition and if consumers are protected from potential harm and whether they are capable of gaining redress when necessary. The study will also consider how regulation affects the competition and supply of legal services. After an initial six-month investigation, the CMA will decide whether to refer the market for a more in-depth tier 2 investigation.

This comes in the wake of recent research conducted by the Legal Services Board, which revealed that one in 10 users of legal services in England and Wales thought they received poor value for money. On the other hand, only 13% of small businesses viewed lawyers as cost effective, with half admitting that they only used legal service providers as a last resort to solve business problems.

It has been 15 years since competition in the legal profession was reviewed by the CMA’s predecessor the Office of Fair Trading, in a report that eventually led to the Legal Services Act 2007. It comes before a government-led consultation, expected to be launched in spring, on removing barriers to entry for alternative business models, and on making legal service regulators independent from their representative bodies.

3) Busy week for DLA

DLA Piper are well on track in their plans to expand their banking and financial services offering after making a slurry of hires over recent weeks. On Wednesday, the firm appointed Andy Kolacki as a partner in their Debt Finance team in London. He joins from Latham & Watkins, having previously worked at Freshfields Bruckhaus Deringer. This hire comes shortly after the announcement that Mark Dwyer, ex-head of Derivatives at Slaughter and May, and Vincent Keaveny, ex-head of Structured Capital Markets at Baker & McKenzie have also joined the firm. The firm have also made an additional hire this week, taking on Simmons & Simmons’ international commercial practice head Mark Dewar.

These hires support the firm’s sector-driven growth strategy, which was introduced in September. Based on factors such as cost-effectiveness, existing client base and potential for growth, increased responsibility has been placed on sector heads to meet KPI’s and drive further profitability within the firm. This has included the announcement of a new co-head of banking & finance Philip Butler, who will sit alongside Frankfurt-based partner Frank Schwem. Spearheaded by co-chief executive Simon Levine, the firm is also looking to expand in Africa having split from its alliance firm relationship with Cliffe Dekker late last year to launch its own office in Johannesburg.

Movers and Shakers of the week:
Moves

Barclays appoints new UK/EME GC
Victoria Hardy has been appointed Barclays’ general counsel for the UK, Europe and Middle East region

KWM’s Europe and ME managing partner steps down
William Boss is resigning after one year in his role as managing partner of Europe and Middle East for King & Wood Mallesons, leaving his position in April.

Winckworth Sherwood hire three partners in London
The firm has hired corporate partners Catherine Moss and John Burnand as well as disputes partner Robert Paydon, all from Fasken Martineau.
De Pardieu Brocas Maffei makes capital markets hire
Former Linklaters counsel Jeremy Grant joins De Pardieu as a partner in their Paris office.

Pinsent Masons hire new head of flexible resourcing
Matthew Kay has replaced Pinsents’ Vario founders Alison Bond and Katherine Thomas as the head of Vario.
Ashurst restructuring partner joins Weil Gotshal in Frankfurt
Ingo Scholz has left Ashurst’s German finance practice to join Weil Gotshal & Manges in their global Business Finance & Restructuring department.

Pinsent Masons financial services chief to join Hogan Lovells
John Salmon will join Hogan Lovells as a partner in their corporate practice.

BLP litigation partner to join Squire Patton Boggs
Squire Patton Boggs has hired litigation partner Chris Webber, who has joined the firm from Berwin Leighton Paisner.

Jones Day boost competition capability in Brussels
Mario Todino joins Jones day as a partner in their Antitrust & Competition Law practice in Brussels from Gianni, Origoni, Grippo Cappelli & Partners.

Partner Promotions

Reed Smith promotes 24 lawyers, including six in London

Restructurings

Reed Smith axes 45 lawyer roles across US, UK and Europe
Reed Smith has laid off 45 lawyers across its offices in the United States, Europe and the Middle East, as well as a number of non-legal employees.

See you all for the next Fides Weekly Update!

Welcome back to the Fides Weekly Update. After taking on the feedback from our wonderful readers, we have added a movers and shakers section to our newsletter, keeping you updated on all the key moves in the legal market. Plans are also afoot to expand our coverage into Compliance.

Tweet us @Fides_Search for your thoughts!

1) Deferred Prosecutions

We finally saw the Serious Fraud Office (SFO) use a deferred prosecution agreement (DPA). This did bring a huge smile to our faces at Fides Search, not only because it’s new or novel, but because it has the opportunity to change things. We are well aware of DPAs or NPAs having worked with US law firms and international institutions; it is not a new concept to the energy sector and it certainly isn’t new to many of the Banks. What is new however, is that an institution cooperated with the SFO to the extent that it was deemed in the public interest to grant a DPA.

Just how far must the legal team at Herbert Smith Freehills have gone to cooperate with the SFO and who should be celebrating? It is really hard to say, but at a recent talk where we saw both David Green CB QC, Director of the SFO and Andrew Weissmann, Chief of the Fraud Section of the U.S. Department of Justice’s Criminal Division sit opposite one another and broach the subject, it became clear that change really isn’t set to come fast.

Although it may be seen as a victory for the defence, Fides Search has worked with a number of institutions subject to a DPA. Although the prosecution is deferred, the impact it can have on an institution remains huge, in particular if you look at the effect of having a monitor imposed on an institution. Fessing up to your actions means that you have no defence and nowhere to hide, alongside the pressure of continuing to cooperate. The impact this can have on an in-house legal and compliance team’s resources is huge and costly. The monitor consumes vast internal resources, and because they systematically thrall through the institutions practices, teams need to be established to deal with the various challenges of the investigations. The follow on work can also lead to external investigations and painful changes to the way an institution is run.

Although this is the first decision of its kind in the UK, our feeling is that it is still a difficult pill for any institution to swallow and that the comments of Ben Morgan, joint head of bribery and corruption at the SFO, are not necessarily required. The huge downside an institution faces when going down this route is likely enough to remove any complacency around the notion that it is light touch enforcement.

2) In-House Bonus Season or not?

Director Ed Parker has taken a look into what the forecast will be for this year’s in-house bonuses, and whether the lack of information being reported on this topic may be a sign. Please see our blog for more detail.

3) PwC Legal hire A&O China head

Joseph Tse, former Greater China senior partner at Allen & Overy (A&O), has joined PwC Legal only a few months after retiring from the magic circle firm.

We have noticed various departures from A&O’s Asian offering in recent years, such as corporate partner Linda Lee joining Cary Olsen’s Singapore office. The notable factor in this hire is how the big four continue to attract high-profile legal talent, not just in London, but also internationally. We have begun to track these moves, as their intentions gradually become clearer. Earlier this year, EY hired ex-BLP finance head Matthew Kellett to their legal team alongside Philip Goodstone, former corporate managing partner at Addleshaw Goddard, and laterally Paul Devitt in Manchester.

It remains to be seen what long-term impact Alternative Business Structures (ABS) could have on the legal market. However, it does give the move to a big four a great deal of legitimacy when senior equity partners are seeking out such career moves.

The race for talent is a complex one, and most of the searches we undertake are competitive, often in areas where there are multiple buyers. The entry of non-legal firms into the market has been impressive, and they look set to create more competition into this space.

Movers and Shakers of the week

Linklaters in the market for China merger

Linklaters is in advanced discussions with two Shanghai-based firms, Shanghai Capital Law & Shanghai Kai-Rong Law Firm.

Dentons merges once again

Dentons plans to launch in Latin America with Colombia’s Cárdenas & Cárdenas, and Mexico’s López Velarde, Heftye y Soria.

DLA continues hiring spree in Germany

DLA Piper has added a team of seventeen to their Hamburg office. Five partners, four counsels, one of counsel and seven associates have been appointed, joining their Intellectual Property & Technology (IPT), Corporate and Regulatory practices.

MoFo bulks up London team with double partner hire

Partners Peter Declercq and Sonya Van de Graff will take their places in Morrison & Foerster’s restructuring and insolvency group, joining from Schulte Roth & Zabel.

Linklaters appoint new International Arbitration heads

Matthew Weiniger QC and Pierre Duprey have become Linklaters’ new co-heads to their international arbitration practice.

HFW builds corporate practice

Corporate Partners Giles Beale and James Wilson have joined Holman Fenwick Willan’s London office from Reed Smith.

Good afternoon,

We’re back with a new instalment of the Fides Weekly Update. Read on to see what legal and business news our Researchers have been talking about this week.

Tweet us @Fides_Search to let us know your thoughts!

1) Paris attacks

Our sympathies go out to all friends, families and colleagues affected by the horrific terror attacks that took place in Paris on Friday. Hogan Lovells experienced great tragedy in losing one of their junior lawyers during the attacks at the Bataclan concert hall, Valentin Ribet, a litigation associate and LSE graduate. He was described as “a talented lawyer, extremely well liked, and a wonderful personality in the office.”

The loss from this event has been shocking and it is touching to see how the international legal community have united in the wake of such sorrow.

2) HBOS report leads to probe

A report released yesterday by the BoE and FCA, which looked into the failure of HBOS plc, has identified up to 10 former executives of the bank linked to its collapse.

Some of the former bank’s top executives have retained senior manager positions at other companies, including Andy Hornby, ex-HBOS Chief Executive, now COO at Gala Coral, and Mike Ellis, former group finance director at HBOS, who has taken on a position as chairman of the Skipton Building Society.

The former UK regulator, the Financial Services Authority (FSA), was also heavily criticised for its failure to deal with the reckless management of banks, with the BBC citing the report in saying the FSA had been “deficient” in the way it handled HBOS. Clive Adamson, former director of supervision at the FSA, noted that “the most culpable people were let off”.

The BoE and FCA are considering barring the executives in question and plan to take enforcement action “as early as possible next year”.

3) Back-office centres “more efficient and effective”

This week saw DLA Piper launch a low-cost centre in Warsaw to service its business globally, whilst White & Case are considering opening a further shared services centre, alongside their existing hubs in Tampa and Manila, to provide back office support across its European offices.

The Lawyer revealed DLA chief operating officer Andrew Darwin said: “Our objective is to improve our ability to provide integrated and efficient service internally so that, in turn, our lawyers can do the same for our clients.”

This outlines a trend in which international firms are launching shared services centres, many of those based in the UK. Freshfields launched their shared services centre in Manchester in February this year, with an objective to support their client-facing lawyers in the most efficient way.

Other firms to have opened low-cost centres include Baker & McKenzie, BLP and Ashurst.

4) Asset managers under the spotlight

The FCA have an issued a review on the £6.6 trillion asset management industry, arguing that the level of competition in this market needs to be examined.

The review will concern the services delivered to both retail and wholesale customers, and looks to ensure these consumers are purchasing value-for-money services. The lack of transparency in costs and charges from asset management compBanies will therefore be the one of the focal points of the study, alongside the assessment of the role of investment consultants. The FCA plan to examine how investment consultants in particular affect competition in the market, as they provide critical advice to customers on product and manager selection.

The FCA will publish interim findings in the summer of 2016 and a final report by early 2017. The FT reports.

5) Barclays shell out further $150m to regulator

Barclays will have to pay an extra £98m ($150m) fine to US regulators for misconduct through the use of their forex trading platforms, Reuters reports. The New York Department of Financial Services (DFS) has also declared the bank must let go of their global head of electronic fixed income, currencies and commodities (eFICC).

Barclays’ super-fast trading systems allowed them to take a “last look” at trades, which they then used to automatically reject clients’ orders. The regulator argued that this misuse of their trading system put the bank’s interests ahead of those of its clients.

This settlement adds to Barclays’ total for forex related fines of £1.53bn, with fines for FX manipulation across the seven implicated global banks totalling over $10bn.

Until next week,