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. FCA’s Bailey on how to tackle cultural change in Banks
FCA chief executive Andrew Bailey has called on firms to focus on pay and incentive structures, alongside broader governance and risk management practices, in order to effect cultural change in banks.
The comments were made in a keynote speech at the HKMA’s Annual Conference for Independent Non-Executive directors, which looked to tackle cultural change, considered to be “one of the major root causes of conduct failures” in recent years.
Entitled the ‘Culture in financial institutions: it’s everywhere and nowhere’, the speech built on the fact that cultural outcomes are a product of a wide range of contributory forces, most prominently the structure and effectiveness of management and governance – the ‘tone from the top’ – and the willingness of people throughout the organisation to wholeheartedly adopt and adhere to this.
Banker’s remuneration and incentive structures are a good example of where practices such as performance management intersect with an institution’s culture, with a firm’s approach towards remuneration ‘no doubt’ having a heavy influence on both culture and conduct.
As such, Bailey advocated that it is critical for boards and regulators to understand how incentives work, and for firms to think through the consequences of such structures and incentives on culture. This has been done by the FCA to date through the enhanced focus on deferring variable remuneration, which recognises how the risks and returns of activities can evolve over a considerable time.
However, for this to be effective it needs to sit within a broader framework of enhanced governance and responsibility, argued Bailey. This has been achieved in the UK through the introduction of the Senior Managers and Certification Regime, which ensures that senior managers know what they are responsible for, and that these individuals are approved by the regulators as fit and proper to carry out the responsibilities of their role.
Bailey also discussed the impact of greater public interest on the conduct of financial institutions since the financial crisis, how this has increased scrutiny on firm culture, and why now it is more important than ever for regulators to think through the likely consequences of their intended actions to understand the effects.
In conclusion, because of its multifaceted nature – being both ‘everywhere and nowhere’ – Bailey concedes that culture is remarkably resilient in the face of change. As such, “The answer is not to try to tackle the culture” Bailey argues, “But to act on the many things that determine it, of which governance and remuneration are important.”
2. Addleshaws is the latest firm to target fintech startups
As part of a scheme to get to grips with the burgeoning fintech movement, Addleshaw Goddard has selected seven startups to join its programme and receive free legal advice and mentoring from the firms fintech lawyers.
Labelled AG Elevate, the scheme is directed at both early stage startups with less than £1m investment, and the more established companies with over £1m. The mentors that will take part in advising the new companies will be a collection of partners, legal directors and associates, including the firm’s head of fintech Fiona Ghosh.
As reported by Legal Week, the compliance technology company Comply Advantage; money management service Mobillity; online savings and credit company Moneyfellows; startup banking company Penta; currency conversion payments service Valoot; Pace Invoice, described as “a multi-currency invoicing platform”; and Delio – “a white label platform solution for private assets”.
Launching such a programme will not only support fintech companies looking to reach the next stage in their businesses, but can also help Addleshaws learn more about the fintech industry, gain a thorough understanding of how best to advise fintech companies and, in turn, better service their financial institutions clients who are currently investing in this space.
The City-headquartered firm is the third law firm to launch a scheme providing free legal advice to fintech startups. Simmons & Simmons were the first to set up a legal advice fund for up to four fintech startups, followed by Slaughter and May who have chosen five companies to receive its free services.
As technology is being increasingly embraced by the legal sector, firms have also been introducing new innovative tools in their own industry. The rise of legal technology, or legaltech, seems to be following the curve of the fintech trend as more legaltech startups are working their way into the practices of some of the most traditional law firms.
To find out more about the rise of legal technology, take a look at our article written by Fides Research: “Crossing the Chasm: Establishing widespread use of legal technology in law firms”. To request a copy of our article, please contact firstname.lastname@example.org
Movers & Shakers of the week
Partner Charlotte Stalin will be leading the financial institutions teams, taking over from Jonathan Hammond, whilst Paris disputes partner Alexandre Reginault will take over from Jacques-Antoine Robert as the head of life sciences
Visa has hired new European general counsel Emma Slatter. She previously held the role of global head of strategy at Deutsche Bank, and had worked at the bank for over 20 years.
Robert Millar has left his role as CLO and company secretary at King to join Improbable, which creates virtual reality simulations for online gaming.
An eight-strong patents team from Olswang will reunite with former Olswang patent prosecution co-head Justin Hill at Dentons
Capital markets partner Antony Dapiran, who was formerly Hong Kong managing partner for Freshfields Bruckhaus Deringer, is set to leave Davis Polk & Wardwell after the region experiences a dip in capital markets work. His next move is unknown.
Two weeks after former Yahoo general counsel Ronald Bell stepped down from his position, Arthur Chong has taken on the role. He previously acted as a GC for Broadcom as well as an outside legal adviser for Yahoo for the last five months
Private equity partner Volkmar Bruckner departs Weil, Gotshal & Manges to join Kirkland & Ellis in its Munich office. He will join their corporate team, which recently lost five partners to Sidle Austin last month
US firm Holland & Knight are taking on the City aviation finance team from Freshfields Bruckhaus Deringer. Global head of asset finance and co-head of the aviation sector group Rob Murphy has chosen to join CDB Aviation Lease Finance, whilst the five associates in his team will move to Holland & Knight’s London office
The corporate team of litigation specialists Boies Schiller Flexner in New York is departing for Paul Hastings. The team includes five partners and several associates
Office Openings & Closings
Mergers & Alliances