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 .
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
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
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