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. Demands grow for full report into RBS misconduct allegations
The Treasury Select Committee is urging the Financial Conduct Authority (FCA) to publish a leaked report indicating serious poor treatment of clients by the Royal Bank of Scotland.
Findings from a report commissioned by the FCA linked to an ongoing investigation into RBS’ Global Restructuring Group (GRG) have been leaked to the BBC. They show that 92 per cent of GRG’s business customers experienced “inappropriate action” and only 10 per cent of struggling companies managed to emerge from the group.
The state-owned bank’s now defunct Global Restructuring Group ran from 2005 to 2013 with the purpose of helping recover troubled small businesses. However, details from the report carried out by Promontory Financial Group have been reported to suggest that there was evidence of systemically poor treatment of small business customers, and led to speculation that the bank was artificially defaulting small businesses to agree new loans with higher interest rates.
Chair of the Treasury select committee Nicky Morgan had written to the regulator’s chief exec Andrew Bailey, arguing that since the report has been leaked, and is also in the hands of a number of third parties, it must be made available to the public. Morgan writes: “The FCA now has no control over the timing or content of further public disclosures from it. The balance has tipped firmly in favour of full publication. I have written to Mr Bailey to urge him to secure the approval of RBS to do so, without delay.”
In November last year the FCA produced a summary of findings from the report and have initiated a leak inquiry into the disclosure of the S166 report on RBS GRG to the BBC.
2. Lessons from the All Blacks: Culture Change in Organisations
Yesterday saw the release of The Respect and Responsibility Review, a report commissioned by New Zealand Rugby (NZR) investigating misconduct and providing recommendations as how to bring about culture change in the organisation.
Headed by NZ Law Society President Kathryn Beck, with a panel of individuals drawn from outside New Zealand Rugby, the task force reviewed 36 investigations into misconduct and outlined six key changes to be implemented over the next two years.
Whilst the legal sector may be a step removed from the drug and alcohol offences, violent and inappropriate sexual behaviour reported by the world’s best rugby players, the six goals determined by the NZR review panel are transferable to any organisation which aims to improve its inclusivity and foster an environment which builds and develops its people.
This article takes the six recommendations given to NZ rugby, and assesses the extent to which they have been embraced by the legal sector.
Goal 1: Inclusive Leadership
Training leaders to become more inclusive is arguably the best thing law firms can do to increase the representation of minority groups within their organisations. By making leaders aware of their unconscious biases, and how this impacts the decisions they make regarding people similar or different to them, this ties together progress forged by other diversity and inclusion initiatives (i.e. mentoring & sponsorship, affinity groups) to make a difference at the individual level.
Whilst the majority of law firms have now invested in unconscious bias training for partners and key stakeholders, emphasis is on raising awareness of bias rather than how to lead inclusively.
Goal 2: Developing People
A highly competitive market, the battle is not won once law firms have attracted the best talent; they need to develop and retain them too. The more innovative firms have started to do this by introducing work allocation managers, who both manage the utilisation of associate work whilst at the same time matching it to individual career aspirations and areas of skill development.
Goal 3: Nurturing Wellbeing
Law firms have made proactive steps in the last few years to nurture wellbeing within their workforce by introducing flexible working, as well as affinity groups to support parents and carers live a more balanced lifestyle. Beyond this, we have seen a bigger push from firms focussing on mental health (see our guest blog on the subject HERE) with firms introducing initiatives such as mental health first aiders, staff and lawyers trained in spotting and engaging with individuals who appear to be stressed or overworked
Goal 4: Gender Equity
Gender equality is one of the areas in which law firms have given the biggest push to increase diversity and inclusion in recent years. Whilst strong progress was made by the sector through initiatives such as female partner targets, women’s leadership programmes as well as mentoring and sponsorship, the number of female partners has stagnated in recent years (particularly amongst the largest firms) whist the promotion rate of female senior associates has, on the whole, declined.
This situation needs to be monitored as so the progress made to date is not undone by market factors such as Brexit, the impact of which are yet to be seen.
Goal 5: Proactive Engagement
For any organisation to become more diverse and inclusive, the tone has to be set from the top. Progress will not be made on any of the themes already discussed unless key decision makers act as positive role models and inclusive leaders in enforcing behaviour change and ‘calling out’ what is unacceptable.
The participation of law firm leaders in mentoring and sponsorship programmes sends a strong message that management are engaged in the issue, and that the partnership of tomorrow will be expected to foster an inclusive environment.
Goal 6: Accountable and Independent
Following on, there is no point engaging individuals to become more inclusive without having the accountability mechanisms in place to support change. This needs to happen both at the individual level with the provision of unconscious bias and inclusive leadership training, alongside the implementation of systems and processes to root out bias and help create an inclusive company culture. Examples of this in law firms include the provision of ‘blind CV’s’ and structured interviews when recruiting, and balanced promotion and remuneration committees.
In conclusion, culture change is hard. In both elite sport as it is in corporate culture, changing individual behaviours to help create a more inclusive environment where all can thrive is extremely difficult. It is here where organisations need to step up and take a multi-pronged approach to both assess and change individual behaviour on the micro level, whilst making sure this is supported by firm-wide systems and processes to enforce accountability to change.
Although the legal sector has some way to go, law firms are making important introductory steps in the right direction. As with the All Blacks, it will be interesting to see the progress made in the next few years.
If you are interested in this, or any other of the themes addressed in this article, please contact firstname.lastname@example.org
Movers & Shakers of the week
Hogan Lovells senior management retained for a further two years
CEO Steve Immelt and deputy CEO David Hudd will stay on as senior management for Hogan Lovells for an additional two years, having been elected in July 2014
HSF replaces Gilchrist as Australian head
Andrew Pike will replace Sue Gilchrist as the firm’s regional managing partner in Australia for Herbert Smith Freehills
Real estate investment fund hires first ever GC
Nick Russell moves to real estate investment fund Henderson Park as its first general counsel, joining from Goldman Sachs where he served as senior counsel
PwC assign a new head of regulations
Regulatory counsel for ETF securities Marco Boldini is set to join PwC in January 2018 as head of regulations, base in London
DWF hires DLA veteran as chairman
Sir Nigel Knowles will become chairman of DWF after retiring from DLA Piper as its chair last year, having spent over 40 years at the firm
EDF secures new nuclear business GC
Head of power and renewables for Herbert Smith Freehills Julia Pyke has left the firm to join key client EDF as general counsel for nuclear new build businesses
CC further bolsters US capability
Clifford Chance has continued its spate of US hiring, adding partners Joshua Berman and Glen Donath to its litigation team along with counsel Josua Fitzhugh.
Greenberg makes play in Poland
An 11 lawyer real estate team hire has been made by Greenberg Traurig in Warsaw from Hogan Lovells, including local practice head Jolanta Nowakowska-Zimoch.
Dechert strengthens London finance practice
Partner Monica Gogna departs Ropes & Gray to join Dechert’s finance practice in London
HSF makes first NY corporate hire
Corporate partner James Robinson leaves Morrison & Foerster in Tokyo to rejoin Herbert Smith Freehills and transfer to the firms New York office.
Reed Smith makes addition to investment funds group
Kirkland & Ellis City funds partner Leith Moghli has left the firm to join Reed Smith’s private equity and investment funds practice in London.
Sidley boosts Brussels practice with privacy hire
Privacy and cybersecurity partner Wim Nauwelaerts has joined Sidley Austin from Hunton & Williams in Brussels
Bird & Bird makes hires in London and Paris
Capital markets partners Clive Hopewell and Adam Carling both join Bird & Bird in London from Charles Russell Speechlys, whilst Paris partner Jean-Jacques Essombe Moussio joins the firm from Orrick Herrington & Sutcliffe in Paris to lead its French banking & finance group.
Office Openings & Closings
Norton Rose expand legal process hub
Norton Rose Fulbright will create 100 new jobs in its Newcastle legal process hub, including both legal and non-legal positions.
Osborne Clarke targets Sweden
Osborne Clarke is opening an office in Stockholm, Sweden with the hire of Bird & Bird partner and head Swedish commercial group Henrik Bergstrom, and former founder of Stockholm boutique Baumgarten Bystroem Rooth & Partners Fredrik von Baumgarten. Also joining are three associates.
Eversheds make triple office launch
In Russia, Eversheds Sutherland will be launching two new offices in St Petersburg and Moscow and one office Luxembourg through the acquisition of Nordic firm Hannes Snellman’s entire Russian offering, along with two partners and five associates from Simmons & Simmons