Welcome back to the Fides Weekly Update. Read on for our analysis of the top legal and compliance new stories of the week. You can also scroll down to see our regular feature: Movers & Shakers of the week.
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This week:
1) Middle East exits continue: Weil Gotshal announces Dubai office closure
Weil Gotshal has become the third major law firm to announce office closures in the Middle East this week with the decision to close its Dubai office, the US firm’s only outpost in the region.
This move is somewhat unusual as other firms have typically scaled back in secondary regional markets, evidenced by the decision of Clifford Chance and Herbert Smith Freehills to close their Qatar offices last week.
This follows a raft of further consolidation, with HSF also closing its office in Abu Dhabi in 2015, and US giant Latham & Watkins also following suit, shutting its operations in Doha and Abu Dhabi in the same year. Other international firms to scale back include Baker Botts and Simmons & Simmons who both closed their Abu Dhabi bases in 2015 and 2016 respectively.
The retrenchment in its international network comes despite an expansive 2016 for Weil, which posted a 9% income hike to push its revenues to $1.27bn. During the 2016 financial year, profit per equity partner (PEP) also rose more than 22% to $3.1m, following a prolonged period in which Weil had struggled to sustain growth and a 1% revenue rise in 2015.
For law firms operating in the region, the UAE market remains intensely competitive, with significant pressure on fees. The market is heavily saturated, with 45 international law firms in Dubai and 20 in Doha competing with local firms for work.
The intense competition for work is not the only challenge, with falling oil and gas prices in recent years also impacting work levels in other practice areas such as project finance.
Despite this, the Dubai International Financial Centre – the UAE federal financial free zone in Dubai – continues to attract business, with most law firms believing an office base there is a prerequisite of successful practice.
2) RBS accused of fraud and forgery
The Royal Bank of Scotland has been accused of systematically faking and manipulating documents to cover misconduct, according to a number business customers and a former bank employee.
This comes as the latest in a long line of accusations of wrongdoing by the bank, which was bailed out by the tax payer in 2008, that includes the of miselling financial products, money laundering and forex manipulation.
Mark Wright, a former manager at the bank, accused two former colleagues in the Group Compliance Unit of fabricating bogus complaints from five of his customers, who later submitted statements contrary to this affect.
He maintained that the matter was not suitably investigated after the individuals in question left the bank, and that the complaint negatively affected his career progression within RBS as they failed to accord him the status of a whistleblower. He left the bank in 2013 with mental health issues, eight years after his grievance was first recognised.
This concurs with the experiences of Andy Keats and Clive May, who are amongst 300 others in seeking legal representation against RBS for fraud. Mr Keats contends that the bank falsified documents that led to the insolvency of his security business, whilst Mr May claims that RBS defrauded himself and the government by selling him an Enterprise Finance Guarantee (EFG) when he was ineligible for this.
The justification for the bank to be acting in this way is to cover up wrongdoing, in particular the alleged defrauding of thousands of small businesses for billions of pounds of assets.
Internal emails handed to BuzzFeed News and the BBC in October 2016 show that the bank implemented a plan to squeeze customers facing financial difficulty and gave bonuses to staff for identifying struggling firms.
RBS then bought assets at rock-bottom prices once companies hit difficulties, often selling them at a profit. It also hit them with large fees, driving many into the ground and boosting its own bottom line, according to the documents.
This is also in line with the findings of the Tomlinson Report (2013) which found that RBS made huge profits by engineering the failure of business customers.
The question remains as to how high the knowledge of this fraud and document manipulation went, and the extent to which the institutional culture within RBS facilitated this. Will this be the next big regulatory fine for misconduct, or left on the backburner by the FCA? Whatever the outcome, in the words of Steve Middleton, head of the RGL Management group helping individuals seek legal representation against the bank;
“In most cases the end result of what the bank did to their people was the total destruction of their businesses and people’s lives. These people were intentionally financially and emotionally destroyed. Their only mistake was to trust the bank that they thought was there to help them succeed.”
3) Movers & Shakers
Moves
Slaughter and May makes second ever lateral partner hire with addition of HSF pensions head
Daniel Schaffer becomes Slaughters first ever lateral hire in London
Cleary’s London capital markers partner exits for Simmons
Simon Ovenden joins Simmons & Simmons in a rare departure from the US firm in London
Freshfields pick up five-partner private equity team from Ashurst Paris
Partners Guy Benda, Nicolas Barberis, Stephanie Corbiere, Yann Gozal and Laurent Mabilat are set to join the magic circle firm in Paris subject to a partner vote.
Kirkland & Ellis loose seven-partner team to Sidley Austin in Munich
Sidley raids Kirkland for the second time in a year for a private equity team led by Volker Kullmann, whilst also hiring Linklaters’ Frankfurt banking and finance partner Kolja von Bismarck.
Morgan Lewis turns to Orrick for four further partner hires to strengthen Hong Kong base
Four Orrick of counsel – Rosita Chu, Eli Gao, Yan Zeng and Roger Zhou – will are set to join Morgan Lewis as partners, following the hire of nine Orrick partners in Hong Kong, Beijing and Shanghai last month.
K&L Gates expands City finance practice with hire of aviation finance head from Arnold Porter
Head of aviation finance and ex London managing partner Philip Perrotta joins K&L Gates
Office Openings and Closings
Weil Gotshal to close Dubai base as Middle East cutbacks continue
Mergers & Acquisitions
Eversheds Sutherland follows transatlantic tie up with Singapore merger deal
Financials
Cooley’s London base nears $50m mark two years after launch
White & Case posts 3.6% London revenue rise as global growth outstrips UK performance
David Polk sees double-digit revenue and PEP rises for 2016 as partner profits hit $3.75m
Cadwalader revenue shrinks 2.5% following office closures and partner exits