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.) Bailey voices concerns over PRIIPS
Head of the FCA Andrew Bailey this week revealed his concerns over recently implemented EU fund legislation PRIPPS.
Under the Packaged Retail and Insurance-based Investment Products (PRIIPS) regulations, introduced in January this year, fund managers must provide details on how they expect funds to perform in various market conditions through a standardised key information document (KID).
This is designed to help investors make more informed decisions by being able to better compare the key features, risks and rewards of products.
However, in a speech delivered at the London Business School Annual Asset Management Conference, Bailey highlighted some of his concerns about the incoming legislation known to be shared by many in the industry.
“I want to be clear that I am concerned about PRIIPS, and I know I am not alone” he said.
Bailey’s concerns centre on the information provided in the KID offering valid performance projections to investors, and the loss of business – especially of US funds – withdrawing from Europe to avoid the burden.
“We are extremely disturbed by the requirements of the key information document. We do not believe that reliance on past performance data is ever a sufficient guide to the many possible future outcomes in stocks and markets” Anderson said three weeks after the legislation was implemented.
The FCA published a statement clarifying its views on the KID in January, however Bailey conceded more needed to be done for investors to get the full benefit of the regulation in his speech.
2.) How much will AI affect law firm headcount?
Report produced by CBRE suggests that job cuts will take place in junior and support roles as a result of AI – but will it necessarily change total headcount?
Commercial real estate firm CBRE produced a report this week on the real estate trends related to law firm offices based in the City of London. Alongside Agile Working and Brexit, the report cited that Artificial Intelligence (AI) could be a future contributor to reduction in London headcount within City law firms.
From all the firms surveyed, CBRE reports that: “almost half of firms believe there will be a reduction in headcount at junior level (43%) and support level (45%).”
With incoming automation and augmentation processes, manual reviewing and other labour-intensive tasks will likely be taken away from junior and support levels. However, it could also be argued that this allows junior lawyers to spend time working on more complex work, which would not only allow them to develop faster, but also likely lead to improved retention rates.
Furthermore, bringing in this technology would require a law firm to house more non-lawyers with a different skillset i.e. individuals who can develop, build and manage new technology.
As well as AI, low cost hubs and alternative legal services are also employing other automation tools to produce legal services in a faster, more efficient way. As lawyers become more comfortable around document automation and machine learning, more senior non-lawyer roles will become available as they begin to rely on these tools in their everyday practice.
However, hires won’t just take place in support functions, but likely extend to include non-lawyer revenue generating individuals.
We have already begun to see a rise in the number of legal project managers and heads of innovation, with these roles gradually becoming more valued within the ranks of senior management.
As this continues increasing, alongside growth in headcount for technology-focused roles lower down in law firms, it’s possible this could mitigate any fallout that may arise from the introduction of AI and other disruptive technologies.
With this mind, we must view the future of law not as shrinking but rather shifting to a different business model.
3.) Movers & Shakers
Skadden Arps Slate Meagher & Flom has hired Jan Bauer into its Frankfurt office. Bauer joins after 13 years as a partner at Gleiss Lutz, and most recently the firm’s co-head of private equity
Finance partner Sam Hutchinson is leaving Dentons to join Cadwalader Wickersham & Taft as a partner in London
White & Case regulatory partner James Greig is joining Barclays as the bank’s head of regulatory relations
Patrick Zheng leave his position as Beijing managing partner for Clyde & Co to join local Shanghai firm Llinks Law as the firm’s head of dispute resolution
Founder of litigation boutique David & Co Mark Davis is joining Mischon de Reya’s London disputes team, along with a three-strong team
Slaughter and May has hired director of enforcement Wynne Mok from the Hong Kong Securities and Futures Commission, who joins as a partner in the firm’s litigation and investigations practice
Having hired 20 partners from DLA Piper’s US offices this month, McDermott Will & Emery has announced a further three DLA real estate partners will be joining the firm’s London office. Laurence Rogers, Neville Wright and Tom Calnan will all join as partners.
Goldman Sachs Hong Kong managing director Andrew Chung will join Linklaters’ Hong Kong office as a partner, focusing on disputes and regulatory matters across AsiaPac
RPC promotes two female lawyers
Charles Russell Speechlys makes up eight to partnership, four of which are women
TLT confirms six partner promotions, with 50% female lawyers
Stewarts has promoted five lawyers to partner, including three women