Hello and welcome to the Fides Weekly Update, your one stop shop for all the key legal and financial news of the week! Bankers bonuses alongside Legal and RegTech are the key focuses of this week’s issue, alongside a bumper edition of Movers & Shakers (it has been a busy week for sure!)
We hope you enjoy, or even better get in touch with us on Twitter and LinkedIn for more regular market updates.
1). Bonus Season: Bigger bonus pools expected all round at US banks
Annual bonus season is upon us with the City offices of the largest US banks announcing staff bonuses this week for their efforts in 2018. Citi, Morgan Stanley and JP Morgan are expected to be delivering envelopes throughout the week, which has been cause for much speculation in financial news as to what staff should be expecting.
We’ve kept our eye on all bonus related stories throughout the first few weeks of the year to provide you with a summarised account of what this year’s bonus season looks like.
Overall, it seems expectations are high. The 6 largest US banks posted over $100 billion in profit for the first time, with JP Morgan and Bank of America announcing record results, and Goldman Sachs and Citi making their largest annual profit since 2008.
Whilst Q4 revenue wasn’t great for the bulge bracket, the first three quarters bodes well for those awaiting their bonus figures.
Business Insider reported that those at JP Morgan should expect bonus percentage gains to come in around mid-single digits compared to last year, furthered by a Reuters article, which suggested that JPMorgan Chase & Co will increase the pool for employee bonuses by 3 percent.
Unfortunately for those in JPM’s fixed income unit, weak trading revenues could see them receiving lesser figures than their counterparts in equity trading and investment banking.
Morgan Stanley appeared to have a particularly challenging fourth quarter, whose institutional securities group (made up of its trading and investment banking teams) suffered a 15% fall in net revenues year-on-year. Although these gloomy figures come so close to bonus season, eFinancial Careers commented that the division performed better overall than it did the year before, for which year the bonus pool increased by 5%. This indicates that there’s a high chance compensation figures will increase for those in MS’ institutional securities group.
Meanwhile, bankers at Deutsche Bank are preparing for more sombre bonus announcements as the FT reports a likely double digit cut in the German bank’s bonus pool after the investment banking unit recorded one of its worst years since 2008. Deutsche Bank’s financials for 2018 will be posted on 1st Feb and bonuses are expected to be announced on 22nd March, according to the FT.
Amongst rising revenue gains and net profits, the widening gap in compensation between US and European banks is becoming more apparent. Speaking with the Telegraph, PwC payment expert Jon Terry believes: “Individual European bank increases will be in the order of 5pc to 15pc below the increases in individual US bank bonus pools.”
2). Technology tops in-house agenda for 2019
Technology is on top of the agenda for legal and compliance teams in 2019, two surveys released this week show.
The first by legal services provider Lexoo asked 90 GC’s and senior legal counsel to identify their team’s top priorities for the coming year as well as outline their personal goals for 2019.
Adopting technology tools such as contract management or legal spend trackers topped the list, with 63% of GC’s surveyed including it as one of their top 3 priorities. Other common objectives included the need to reduce legal spend, cited by 53% of respondents, and to look for ways to outsource legal work more effectively, as noted by 48%.
Upskilling in legal tech and legal operations was also a personal goal for 43% of the GC’s questioned, however this behind developing one’s personal brand within the company (76%) and being more involved in company strategic decision making (69%).
Law firms have been quick to respond to client’s growing demand for legal tech solutions, as seen this week by DWF who has brought on ex-Freshfield’s senior manager of legal technology operations Jamie Whalebone as its new head of legal service delivery and transformation. This follows the hire of Freshfields’ chief of business operations Anup Kollanethu, who left the firm in August to become CEO of the firm’s managed services business line.
Linklaters also has looked into integrating one or two associates into full time non-legal positions within its AI team in attempt to make the development of it’s technology more ‘lawyer friendly’.
Similar trends can be seen across regulatory compliance, with a survey of 500 executives from Intertrust revealing that four-in-ten (38%) had invested in new technology solutions, and that the same proportion had increased their use of external advisors and consultants.
With respondents indicating that technology will play a pivotal role in maintaining compliance with new regulations – with 87% of firms predicting that demand for ‘RegTech’ solutions will increase in the next two years – this presents a number of challenges for corporates across the board who must decide how best to adapt to a changing environment and acquire the necessary technology and skills their business requires.
3). Movers & Shakers
Deloitte hires senior A&O finance partner and former managing partner contender Michael Castle as head of legal
National Grid hires Gowling WLG partner as UK general counsel
Linklaters drafts in former HSF CEO Sonya Leydecker
Balfour Beatty hires new general counsel from Tesco
Mishcon moves to replace Levitt with Kingsley Napley hire
Mishcon de Reya has moved to fill a gap left by its former head of white collar crime and investigation Alison Levitt QC by hiring Kingsley Napley criminal litigation partner Johanna Walsh.
Taylor Wessing raids Bird & Bird for seven-lawyer Paris team
Bird & Bird public sector head Sophie Pignon and banking and finance partner Eric Charvillat join Taylor Wessing with a team of three associates, one of counsel and a consultant.
Kirkland continues London push with Weil Gotshal partner hire
Tax partner David Irvine is set to join Kirkland later this year
Dutch firm hires six-person team from local rival
Dispute resolution team joins Loyens & Loeff from local competitor from Liedekerke Wolters Waelbroeck Kirkpatrick
Fried Frank hires City Milbank partner as firm targets 30% London growth
Milbank finance partner Neil Caddy joins Fried Frank amid London expansion plans
HFW hires Dentons team to launch Australia employment practice
The team is led by national employment and safety head Mark Sant and employment director Brendan Milne, and is to be based across HFW’s Sydney and Melbourne offices
Signature Litigation moves to Paris with Hogan Lovells hires after 35% growth
Former Hogan Lovells partner and Paris disputes head Thomas Rouhette will lead the new office, along with former Hogan Lovells senior associate Sylvie Gallage-Alwis and reinsurance litigation lawyer Emmanuele Lutfalla, who joins from French firm Soulie & Coste-Floret.
MoFo launches first London real estate practice with Reed Smith hire
Reed Smith’s head of private equity real estate, Oliver s’Jacob has left to join US counterpart Morrison & Foerster as its first real estate partner in London
DWF targets Freshfields again in bid to expand legal tech
Freshfields Bruckhaus Deringer’s senior manager of legal technology operations Jamie Whalebone is to join DWF to boost the firm’s growing managed services unit
Office Openings & Closings
KPMG opens Hong Kong law firm and prepares for Shanghai launch
Ex-Freshfields partner launches own firm in Amsterdam after EY stint
CMS announces office launch in Liverpool
Gowling WLG sells Monaco office in shift from private client work
Technology and Innovation
Linklaters begins moving associates into permanent tech roles
Slaughter and May chooses six more startups to receive free legal support