Hello and welcome to the Fides Weekly Update. Here we discuss some of the main new stories in legal and compliance. See below our regular feature of Movers & Shakers of the week.
1. The exodus begins? The EBA, Lloyds of London and JP Morgan launch relocation plans
With Prime Minister Teresa May invoking Article 50 on Wednesday, and formally triggering the process for Britain to leave the EU, attention turned to the impact Brexit will have on the UK now that Britain has officially started the process to leave.
The first of these considerations was the new location of the London-based European Banking Authority (EBA), and future structure of the EU’s financial regulatory framework.
German officials are lobbying to have the EBA relocate to Frankfurt, and have the institution combine with the European Insurance and Occupational Pensions Authority (EIOPA). This model would emulate the ‘twin peaks’ structure seen in the UK, that if went ahead would likely transfer some of the consumer protection powers of the EBA to the Paris-based European Securities and Markets Authority (ESMA).
However, this suggestion has also stirred criticism from other EU nations who are also keen to host the agency and benefit from the jobs and prestige associated with hosting the EBA. Other likely locations for the EBA include Paris and Luxembourg, who on Thursday stated that they had the legal right to host the banking body.
Although a final timeline has yet to be set on the decision, the Commission’s Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) currently involved in discussions as to the new location, with any final decision having to be signed off by other member states in the European Parliament.
The second overarching concern is the location of global financial institutions outside of London once Britain exits the Union.
Yesterday, Lloyds of London announced that it will establish a new European subsidiary office in Brussels, which will likely affect 100 staff. This will allow the institution to continue underwriting insurance policies across all EU states after the UK leaves, with the company’s continental business generating 11% of its premiums.
J.P. Morgan on the other hand are considering a more wholescale move, with news emerging that the bank is in talks to secure an office in Dublin for more than 1,000 workers. Further fuelling concerns over exodus from the City following Brexit, a number of banks have already confirmed they could move staff, with Goldman Sachs looking to move hundreds of bankers to Frankfurt and Paris, while HSBC could switch 1,000 investment banking jobs from London to Paris.
With many things yet to be decided, such as whether the UK will still hold passporting rights, as well as the nature of the free trade agreement between the EU and UK once Britain leaves, for now these institutions are doing the same as any other – acquiring an option to help mitigate the risk Brexit brings to their business.
2. The new wave of modern law firms is here: Legalex 2017 showcases new innovations in the sector
We celebrated all things tech with law firms this week as the Legalex exhibition displayed some of the best tools out there specifically designed for the development of law firms and legal professionals.
Over 28th and 29th March, Legalex came to ExCeL London and hosted a floor of legal tech suppliers as well as numerous experts, presenting talks on different technologies and themes affecting law firms today. From gaining efficiencies to implementing an effective cyber security strategy, the event shared insight into all the hot topics we’re currently talking about in the legal sector.
Diversity leader Miranda Brawn kicked off the event, delivering a keynote speech on the benefits and importance of introducing diversity and inclusion into field of legal tech. Brawn claimed that legal tech companies must be more culturally diverse as the demographic of those using technology is more diverse: “Can you effectively serve a demographic not represented at the senior levels of your organisation?”
Brawn went on to explain how a diverse senior workforce can be financially beneficial, enforce a more collaborative culture and improve a company’s ability to attract talent.
Also in attendance at the event was Artificial Intelligence software company Luminance Technologies. CEO Emily Foges spoke at the event, accompanied by Murray Cox, M&A partner at Slaughter and May, whose practice uses the AI tool and helped pilot the software.
Live since September 2016, Luminance is a pattern recognition software that can identify key anomalies and clauses, carrying out the contextual review of thousands of documents in a fraction of time it would take humans.
The talk dealt with some of the mysteries and questions surrounding AI, including how it would affect the need for lawyers. They explained that although technology can review large data sets in place of lawyers, there still needs to be someone to evaluate these findings and sort through the information gathered. Cox argued that it could in fact have a positive impact on the recruitment and retention of junior lawyers as it would enable them to carry out more complex work and spend less time on mundane tasks such as doc review.
“It may be that we see more of a diamond-shaped law firm structure as opposed to triangular”, says Foges. That is to say law firms would not need such a high intake of trainees and could focus more on the development of their lawyers.
To conclude the two-day exhibition, one of the final sessions was delivered by Peter Wright, managing director of data protection and cyber security specialists DigitalLawUK. Titled “Effective Cyber Security for Law Firms”, Wright’s talk touched on the number of different ways a law firm can be targeted and the measures they should take to limit their vulnerability to cyber attacks.
Wright highlighted the types of individuals that can be targeting your firm. Aside from the well-known cyber criminals and fraudsters who are looking for financial gain, threats can include state targets, who may be seeking information about deals and clients; hacktivists, those who want cause chaos and destruction for large organisations; and ex-employees, who might have left the firm unpleasantly and have an understanding of your IT systems and how to access confidential information.
Law firms are a prime target for cyber attacks at the moment. Even the largest law firms don’t have the same level of resourcing for cyber security as global banks do, something which attackers are aware of and have been exploiting, particularly through phishing attacks. Phishing attacks remain commonplace in law firms, with 73% of the UK top 100 being the target of attacks in 2015. With these figures continuing to rise, lawyers must become more attentive to the risks they face and detect possible attacks quickly and manage them effectively.
Part of our aims and objectives at Fides Search are to encourage and promote innovation in law. We understand the importance of driving change in the legal workplace, which in turn plays a great part in how we advise our clients and partner with them to foster innovative solutions. If you would like to discuss this topic further, feel free to get in touch and contact firstname.lastname@example.org
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Movers & Shakers of the week:
RSA promotes new legal head
Jonathan Cope has been promoted to Head of Legal, UK and International at insurance company RSA Group, where he was formerly Managing Counsel.
Fried Frank appoints London head
Corporate partner Mark Mifsud will head up Fried Frank Harris Shriver & Jacobson in the City, succeeding current head Graham White who has announced his retirement from the firm.
Superdry owners takes on new GC
Simon Callander, general counsel at Addleshaw Goddard, is set to leave the firm to head the legal team of fashion retailer SuperGroup, replacing former general counsel Lindsay Beardsell, who joined Ladbrokes Coral in November last year
Freshfields hires ex-European commissioner for the UK
Jonathan Hill, who was former Commissioner for Financial Stability, Financial Services and Capital Markets Union, has accepted a part-time role at Freshfields Bruckhaus Deringer advising on Brexit-related matters
Reed Smith builds out its Munich office
A team of three lawyers from Olswang, including German head of technology and data protection Andreas Splittgerber, are moving to Reed Smith’s Munich office where they will join the firms IP, information and innovation group.
Ashurst expands high yield practice
Ashurst’s London office will be joined by Allen & Overy senior associate Tamer Bahgat, who joins as a partner, along with A&O counsel Natalia Sokolova.
Dechert appoints second finance partner from Kirkland
Four months after hiring Kirkland & Ellis partner John Markland, banking and finance partner Rob Bradshaw will also be joining Dechert in its London office
Mergers & Alliances