Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.
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1) US firms feast on London market
The domination of US firms within the London legal recruitment market was further confirmed this week with the publication of research by Legal Week, which found a 20% increase in lateral partner hires into US firms in 2015.
Last year US-based law firms made 110 lateral partner hires, up from 90 in 2014, making this the highest number of lateral partner hires to be made by this group in the last four years.
With the launch of its first European office in January, Cooley’s was the biggest lateral hire in the London market last year. The firm brought across 24 partners including teams from Edwards Wildman and Morrison and Foerster to open their London office whose headcount now stands at over 60 lawyers.
Other firms that were particularly active in the lateral recruitment market include Morgan Lewis, Ropes & Gray, King & Spalding, Kirkland & Ellis, Morrison & Forrester, Gibson Dunn & Crutcher and White & Case.
However, London expansion was not on the agenda for all US firms with Skadden, Arps, Slate, Meagher & Flom, Sidley Austin and Davis Polk seeing London partner numbers contract over the 12-month period.
In a year that saw high profile hires in the likes of Steve Thierbach to Gibson Dunn, Matthew Elliott to Kirkland & Ellis and David Ereira to Paul Hastings, is the aggressive lateral partner hiring strategy of US firms set to continue?
If the start of 2016 is anything to go by, the trend for US and international firms to boost their London offering looks here to stay.
Last week saw White & Case make a second lateral partner hire from Ashurst as part of their strategy to reach 500 lawyers in the City, and Kirkland & Ellis returning to familiar hunting ground Linklaters for partner hires in tax and private equity.
In April, Cleary Gottlieb Steen & Hamilton made only its third London lateral partner hire in more than a decade with the recruitment of Allen & Overy’s head of non-contentious financial services regulation Bob Penn.
However, the flow of lateral partner hires has been more than just one way with Kirkland losing seven London partners to Freshfields and Sidley’s in February which saw the firm double its notice period for equity partners.
The increase in lateral recruitment trends by US firms from 2015 and beyond show the scale and depth that many US firms have now achieved in the London market.
This will continue to pile pressure on UK firms as they scramble to protect their top talent, with the Magic Circle now looking to compete by reviewing the equity and remuneration structures they have in place to attract high profile partners – as evidenced by Freshfields hiring of Kirkland high-yield partner Ward McKimm.
However the impact of these lateral recruitment trends play out in the future, the one certainty is that for now at least, London is the place to be.
2) Anti-Corruption on top of the agenda
The ‘Panama Papers’ scandal brought about a flurry of protests after it led to the surfacing of multiple cases of corruption, money laundering and tax evasion. As world leaders begin damage control and attempt to deal with the corruption that has now come under the spotlight, the UK has decided to hold an Anti-Corruption Summit, hosted by Prime Minister David Cameron in London, in an attempt to face the global challenges for combating corruption.
Prior to the summit, a UK Country Statement was released, outlining three main objectives: to expose corruption in the UK; to introduce stronger legislation that punishes the corrupt and supports those affected, and to eliminate the culture of corruption.
It seems top executives are all on board with the statement as many have signed a pledge confirming their commitment to collectively crackdown on corruption, particularly in jurisdictions where regulatory frameworks are less developed. The executives involved include a number senior management from law firms, such as Ashurst, White & Case, Allen & Overy, Linklaters and Herbert Smith Freehills.
The firms have released a joint statement in which they profess to “play our part in efforts to prevent the proceeds of crime and corruption from entering legitimate capital and investment markets”.
Whilst law firms are tackling the issue by backing new government policy and regulation, banks are also making steps to improve their stance against anti-money laundering and financial secrecy by culling tens of thousands of existing customers.
The FT reported on Wednesday that Deutsche Bank, Barclays and UBS will be closing between 20,000 and 35,000 customer accounts. These accounts are found within their corporate and investment banking operations and have been deemed “too risky under anti-money laundering rules or…have become uneconomic in light of new regulations”.
The culling has proved worthwhile as plans were announced in the Anti-Corruption Summit that financial services companies are to be made liable for their employees’ complicity in money laundering and fraud. With the onus now on the financial services companies, it is likely we will see a similar overhaul of clients from further institutions.
Professional services firms and financial institutions all seem to be on board with the new measures, and the addition of corporate liability will provide a major incentive for them to improve their financial crime policies and procedures. However, it is difficult to maintain momentum when trying to create systemic change in the financial services industry. We saw similar issues with the FCA’s Senior Manager’s Regime, as it lost its sting when abandoning the “reverse burden of proof” clause, which would have held senior managers to account for compliance failings. Ultimately, time will tell as to whether the fight against corruption will succeed and if it remains a priority on the agendas of the world’s elite.
Movers and Shakers of the week
Saudi Aramco appoints new GC ahead of their IPO
Nabeel Al Mansour has been named new general counsel at Saudi Arabia’s state owned oil company Saudi Aramco, after previously serving as deputy general counsel.
BLP lose head of international arbitration
Kent Phillips has left Berwin Leighton Paisner to join Hogan Lovells in their Singapore office. Jonathan Sacher will replace Phillips as head of international arbitration in London
Sidley enhances London employment practice
Susan Fanning has joined Sidley Austin from DLA Piper and will sit in their labor, employment and immigration practice
Mayer Brown gain energy lawyer in Paris
Olivier Mélédo departs Orrick, Herrington & Sutcliffe to join Mayer Brown in their Banking & Finance practice and Energy group
K&L Gates strengthens energy practice in Milan
Former DLA Piper energy specialist Paolo Zamberletti joins K&L Gates in Milan. He is the fourth addition to the firm’s global energy practice in 2016.
Gowling WLG make double partner hire
Gowling WLG have hired banking and finance partner Matthew Harvey from Dentons and projects partner Andrew Newbery, who previously headed up Herbert Smith Freehills’ Abu Dhabi office, after which he set up his own consultancy in London.
Taylor Wessing bolster their TMC practice
Former Latham & Watkins global technology co-chair Martin Cotterill has made a move to Taylor Wessing, where he will sit in their technology, media and communications practice.
Norton Rose bolster European tax offering
Tax partner Antoine Colonna d’Istria is to join Norton Rose Fulbright from Freshfields Bruckhaus Deringer in Paris
Weil Gotshal gain HSF’s London head of PE
James McArthur, London head of private equity at Herbert Smith Freehills, has joined Weil, Gotshal & Manges in London
Fifth Ashurst partner to join Goodwin Procter in Frankfurt
Ashurst tax partner Heiko Penndorf will join Goodwin Procter’s Frankfurt office after the US firm launched their Frankfurt office with four Ashurst partners
Lathams gain antitrust partner in Germany
Leading antitrust lawyer Michael Esser has joined Latham & Watkins in Düsseldorf as a partner. He previously worked at Freshfields Bruckhaus Deringer’s Cologne office
Office Openings & Closings
DLA plan to axe 200 jobs in UK, focusing on Warsaw centre
DLA Piper consider cutting 200 business support roles in the UK and shifting the roles to their shared services hub in Warsaw.
Ex-CC partner launches boutique in Sydney
Mark Pistilli, former managing partner of Clifford Chance’s office, has set up a corporate boutique in Sydney alongside fellow partner Danny Simmons. The firm will be called Pistilli Simmons.
Dentons launch Munich office
Dentons are setting up their third German office in Munich with the hire of three partners from Norton Rose Fulbright. German head of corporate Alexander von Bergwelt, fellow corporate partner Michael Malterer and tax partner Igsaan Varachia will all be making the move.