Welcome back to the Fides Weekly Update. Read on for our analysis of the top legal and compliance new stories of the week. You can also scroll down to see our regular feature: Movers & Shakers of the week.
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1) The price of misconduct: Global Bank’s fined $321 Billion since the financial crisis
A report released this week by the Boston Consulting Group found that banks have globally paid out $321 billion in fines since the financial crisis in 2008 – more than the GDP of Israel, South Africa and many European states. Banks paid $42 billion in fines in 2016 alone, a 68 percent rise on the previous year, the data showed.
Furthermore, this rate of regulation is unlikely to slow down, as European and Asian regulators look to match the regulatory enforcement of their US counterparts. For example, the number of individual regulatory changes that banks must track on a global scale has more than tripled since 2011, to an average of 200 revisions per day.
The study itself surveyed more than 300 retail, commercial, and investment banks, which represented more than 80% of all banking assets worldwide. Alongside regulatory trends, it examined the sector’s economic profit (EP) and future boardroom agenda for senior managers.
Regarding economic profitability, the banking industry still hasn’t completely recovered from the losses it suffered after the onset of the financial crisis, especially in Europe. Whilst U.S. firms have been in the black for the last three years, and banks in Asia-Pacific, South America and the Middle East and Africa have posted an economic profit year on year, European lenders are yet to post an annual economic profit since the crash
Because of this, coping with increased regulation must remain a priority argued the report, with the increasing costs of doing so putting pressure on banks to create more effective and efficient processes as well as harness technological innovation.
Defining an efficient mode of interaction between banks and regulators will be a critical task, as with many of the major reform packages now in place, banks now face the challenge of implementing technical regulatory measures and responding to audits.
Bank steering functions too will need to become more involved and effective in overall cost management, whether this be through adjusting the organization and operating models to partnering with fintech and regtech startups to provide, for example, more flexible IT infrastructures that are based on advanced analytics and big data and on improvements in process efficiency and automation.
As such, the report advocates closer collaboration between banks risk and steering functions, and the more integrated management of banks’ P&L and balance sheets to successfully navigate the regulatory environment.
2) Changing landscape: Team hires flood the Paris market
In recent weeks, the Paris legal market has seen a flurry of high profile and team hires that have brought about a shift in certain practice areas. This week it was announced that Reed Smith added an eight-lawyer tax team to its ranks, whilst US firm Ogletree Deakins is continuing its European expansion plans with a further office opening in Paris.
Thursday saw US employment specialists Ogletree Deakins take on three of Olswang’s remaining Paris lawyers, including employment partner Karine Audouze, who will be leading the US firm’s new French base. Numerous Olswang Paris partners have already departed the firm ahead of the launch of the three-way merger after it was announced that Olswang’s Paris office would be shutting down as opposed to joining the ranks of CMS Cameron McKenna Nabarro Olswang. The office closed on the 28th February, as the three-way merger is expected go live in May.
Ogletree Deakins has also hired Hogan Lovells Jean-Marc Albiol ahead of its office opening, along with two associates. Following launches in Berlin and London, Paris will be the third European base for Ogletree, who also operate in 49 domestic outfits across the US.
Meanwhile, Reed Smith has bolstered its Paris tax offering with a team hire of three partners, three counsels and two associates from Winston & Strawn. The partners joining are Jean-Pierre Collet, Florence Bilger and David Colin, who will sit alongside the seven partners and 11 other lawyers the firm brought on from King & Wood Mallesons (KWM).
Reed Smith made the most of the fallout from KWM, confirming a 50-strong KWM team hire back in January across its London, Paris, Munich and Frankfurt practices. Such a mammoth hire has greatly altered Reed Smith’s European capability, increasing the firm’s total European headcount by 10%, whilst also marking the largest team hire as a result of KWM’s collapse.
One firm that has witnessed significant volatility with French headcount is Freshfields Bruckhaus Deringer. Last month Freshfields’ partnership voted to take on a five-partner private equity team from Ashurst, after the Paris arm took a corporate and finance hit last year, losing a four-partner team to Orrick, Herrington & Sutcliffe.
It subsequently suffered another loss, as Jones Day hired Freshfields Paris real estate head Erwan Le Douce-Bercot along with the rest of its real estate team.
It seems team hires have become a trend amongst Paris law firm offices over the last few months, and with the instability of various international offices currently set up in the French capital, namely Ashurst, King & Wood Mallesons and Olswang, partners are keeping their alliances intact and acting a little more cautiously regarding the health of their respective firms. As this would naturally bring more insecurity for a partner, with more individuals therefore taking advantage of new opportunities, lateral hires will undoubtedly continue to rise in Paris.
3) MOVERS & SHAKERS
A&O hires three-layer regulatory banking team from Mayer Brown in Frankfurt
The team, led by partner Alexander Behrens joins A&O in Germany
Clifford Chance disputes partner joins Dechert
Clifford Chance disputes partner Stephen Surgeoner has joined the London office of Dechert after 26 years at the magic circle firm.
Morgan Lewis expands Shanghai office with Simmons employment team
Morgan Lewis has bulked up its Shanghai office with a team of five lawyers from Simmons & Simmons, led by employment and investigations partner Lesli Ligorner.
Reed Smith hires eight-lawyer Paris tax team from Winston & Strawn
Partners Jean-Pierre Collet, Florence Bilger and David Colin have joined Reed Smith alongside a team of lawyers that also includes three counsel.
Cadwalader ex-City head joins Winston & Strawn
Winston & Strawn has hired Cadwalader Wickersham & Taft’s former London head Angus Duncan.
Goodwin hires two more litigators from Freshfields in New York
Litigation partner Gabrielle Gould has joined Goodwin as a partner in its financial industry practice group, moving with litigation senior associate Samuel Rubin, who will become a counsel.
DLA Piper Asia employment head leaves to launch Hong Kong office of Seyfarth Shaw
Employment head Julia Gorham is set to establish Seyfarth’s fourth Asia-Pacific office
Simmons & Simmons and Goodwin Procter make further hires from KWM
Simmons has hired former KWM corporate partner David Parkes for its London office, while Goodwin has recruited former Luxembourg office managing partner and private equity partner Alexandrine Armstrong-Cerfontaine as a consultant.
A&O’s global dispute resolution head becomes new US and Latin America senior partner
Allen & Overy (A&O) global dispute resolution head Tim House is relocating to New York to take up the new role
Freshfields corporate partner Richards moves into Rio Tinto legal team
Philip Richards has been seconded to head up Rio Tinto’s legal team following the dismissal of legal and regulatory affairs group executive Debra Valentine
Former One Savings Bank GC joins Lloyds Bank
Former One Savings Bank general counsel Zoe Bucknell has taken on a new role at Lloyds Banking Group as deputy company secretary.
Anglo American hires Shearman mining co-head as new Group GC
Richard Price is set to replace longstanding group GC Ben Kiesler effective of the 1st May.
Latham appoints London capital markers partner as vice-chair
Richard Trobman joins Ora Fisher as the vice-chairs of Latham & Watkins
KWM appoints Hong Kong co-chief exec as new China chairman
Hong Kong co-chief executive Zhang Yi succeeds global chair Wang Junfeng as the firm’s new China chairman.
Office Openings & Closings
US firm Ogletree Deakins opens in Paris with three remaining Olswang lawyers
Mergers & Acquisitions
Dentons has secured its first base in the Netherlands via a merger with Dutch firm Boekel
King & Spalding turnover drops 8%, while Covington ups City revenue by 9%
Gibson Dunn posts rising revenues for 21st consecutive year
Slater and Gordon writes down value of UK business as half-year revenues fall 34%
Goodwin nears $1bn revenue mark after year of expansion across Europe