Legal Business

Third party funding: Therium steps in to bankroll Lloyds group action

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In what constitutes the latest major bailed-out bank facing a shareholder dispute, third party financier Therium Capital Management is understood to be bankrolling the high profile claim by shareholders against Lloyds with the cost of funding the case thought to be as high as £12m so far.

In August, the High Court made a group litigation order, designed to manage large groups of claimants, in relation to an action pursued by shareholders in Lloyds TSB over allegations of losses suffered as a consequence of the bank’s acquisition of HBOS in January 2009, and the subsequent recapitalisation of the merged entity.

They allege that the bank, in which the taxpayer owns a 25% stake, concealed the fact that HBOS was reliant on emergency liquidity assistance from the Bank of England of up to £25.4bn, financial support from the Federal Reserve of up to $18bn, and a loan from Lloyds of £10bn. Total ‘losses suffered’ are estimated at £6bn and shareholders interested in making a claim will have until Monday (10 November) to apply.

Led by Harcus Sinclair litigation head Damon Parker, the claimants issued proceedings against the bank’s former directors Sir Victor Blank, Eric Daniels, Timothy Tookey, Helen Weir, George Truett Tate and Lloyds itself for ‘advising them that the acquisition of HBOS and the connected government re-capitalisation of Lloyds were in their best interests.’

Therium Capital Management has been looking to broaden its portfolio for some time and in 2012 agreed its first mandate to manage an account for an institutional investor, acting as an exclusive investment adviser for an initial £5m investment in a portfolio of litigation and arbitration-related claims. At the time, it aimed to increase the size of the fund to £15m.

According to sources, there is another funds management group in the pipeline looking to invest in the Lloyds case. Typically, for litigation to acquire third party funding involves strict assessment undertaken by professional funders on the merits of the case, and considers whether the defendant is creditworthy; if the cost of the case is proportionate; if the case has strong legal merit; and how experienced the legal team is.

Several sources close to the litigation funding industry told Legal Business that they would not consider investing in the Lloyds group action, and one in particular said: ‘They’re going to need more funders but I have absolutely no interest in that case I’m not sure that will change. It’s early on, I don’t know how big it will be; I don’t know how they will fund the whole case… a funder looks at lots of things. You don’t want to be left in a position where you have to fund more. The funding requirement on the Lloyds case will depend on how many clients they bring and to what extent the defendants have to spend money.’

Other high profile claims currently involving litigation’s bankrollers include a long running £4bn action filed by the shareholders of RBS in April 2013 over the bank’s 2008 rights issue, which is expected will be a source of guidance for practitioners in particular and is being funded by US shareholder firm Grant & Eisenhofer. Harbour Litigation Funding is also funding a £164m claim against Barclays alleging the bank mis-used confidential information in its 2010 takeover of Tricorona.

Lloyds Banking Group, which is represented by Herbert Smith Freehills disputes partner Damien Byrne-Hill on the matter, said: ‘The Group’s position remains that we do not consider there to be any legal basis to these claims and we will robustly contest this legal action.’

Therium declined to comment.

sarah.downey@legalease.co.uk           

Legal Business

The Friday Edit: Lloyds unveils panel, LB unveils The Disputes Yearbook and Slaughters’ magic still mesmerises the profession

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It’s that time of the week again, dear readers, where we help you look back at the interesting legal happenings since Monday and pick out some of the highlights of this month’s edition of Legal Business. You can click here for further information on gaining full access to Legal Business.

Analysis of the week: Martial law

Can the disputes boom continue? And if it can are City law firms ready to bring their once-marginalised litigators back fully into their inner circles? These and many other issues were tackled in the piece, Martial law, the combatively titled signature piece for our 2014 Disputes Yearbook. The article assesses if the post-Lehman expansion of contentious work can continue and finds litigators unlikely to again accept taking a secondary role to deal lawyers. By a similar token the momentum running in favour of litigation boutiques shows no sign of having run its course.

Story of the week: Lloyds panel review

Though we reported it first late last Friday evening, it was this week that most readers would have seen the news of Lloyds’ long-awaited panel review, with 10 law firms making it on to the bank’s core own-account roster. Previous Lloyds counsel not on the list include Osborne Clarke, Stephenson Harwood and Berwin Leighton Paisner. By all accounts, the process was considerably less aggressive than Barclays’ overhaul earlier this year – which was reputed to have sliced £20m off the bank’s annual legal spend – but few expect the trend for tough bank reviews to change any time soon. Click here for our report and here for a recent interview with Lloyds’ Andrew Whittaker and Kate Cheetham for more background.

Comments of the week: Keeping Slaughters relevant and Norton Rose Fulbright’s ‘seamless’ service

In a further reminder that something mysterious about Slaughter and May still quickens the profession’s pulse, our piece on the firm ‘Never mind the magic, feel the substance‘ rapidly became the most widely read comment piece to have appeared on Legal Business’s website this year. While taking a sceptical view of the firm’s chances of sustaining its position indefinitely, we conclude its quality and consistency still provide formidable and enduring assets in the age of global law. We raise the point that Slaughters’ traditionalist view of client services could be more aggressively deployed to its advantage. Subscribers wanting to read the accompanying assessment of the firm’s celebrated corporate practice, The new boy, should click here.

Another popular piece came from regular LB contributor Bruce MacEwen of Adam Smith, Esq, who takes a jaded view of Norton Rose Fulbright’s attempt to have its cake and eat it in a dispute about conflicts and the status of its multi-profit centre combination. Bruce concludes: ‘Lawyers get enough of a bad rap in the public imagination for this very kind of behaviour: Saying one thing for widespread public dissemination and standing on contradictory legalistic distinctions invisible to anyone who’s not a lawyer, and implausible to many who are, when that tactic suits their self-interest.’

Quotes of the week:

‘There is a storm on the horizon and I don’t think many UK in-house counsel recognise it. Where is the line? Where do we have a moral, social or legal obligation to offer testimony and evidence, and discuss things externally? Or do we just have to shut up, be quiet and only speak to our client? That is a moving target right now.’

Bill Mordan, group GC at RB, reflects on the ethical challenges facing the modern in-house counsel, Where next, consigliere?

‘Professionals spend their career trying to convince their clients that they are essential and then at a certain point they realise that they will have to leave the firm and slip out of the door and no-one will really notice. That’s really hard.’

Slaughters veteran William Underhill reflects on the changing of the seasons, The new boy.

‘The kind of people you want to hire at a law firm are those who have a major zest for life and want to do things outside the office. That lawyer will otherwise lack in originality and the ability to work fast and efficiently. I see a lot of friends and family, play a lot of sport, and watch a lot of films. I saw Guardians of the Galaxy the other night – I highly recommend it.’ Clifford Chance litigation partner Simon Davis on keeping his edge, The Disputes Yearbook

Top posts:

Revealed: Lloyds unveils 10-firm roster as panel overhaul draws to a close

Comment: Never mind the magic, feel the substance – Slaughters has only one shot at staying relevant

Guest post: ‘Seamless’? The unintended consequences of Norton Rose Fulbright’s ‘combination’ argument

Quinn Emanuel targets City competition practice with Hausfeld partner hire

What’s in a name: One year on King & Wood Mallesons drops SJ Berwin

alex.novarese@legalease.co.uk

Legal Business

Sainsbury’s unveils new panel as Lloyds appoints insurance GC

Significant in-house announcements in May saw King & Wood Mallesons SJ Berwin and TLT awarded first-time spots on Sainsbury’s panel, while Lloyds Banking Group (LBG) appointed RSM Tenon’s former group general counsel (GC) Joanne Jolly to lead its insurance group.

Sainsbury’s recently concluded the third review of what it calls its ‘legal community’: a 12-strong collaborative law firm panel, which saw reappointments for Addleshaw Goddard; Bond Dickinson; CMS Cameron McKenna; Croner; Dentons; DWF; Wragge Lawrence Graham & Co; Linklaters; Shepherd and Wedderburn; and Winckworth Sherwood.

Legal Business

In-house: Sainsbury’s unveils new panel; Lloyds brings in insurance GC; Ladbrokes promotes deputy to GC role

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A trio of significant in-house moves and announcements yesterday (6 May) saw King & Wood Mallesons SJ Berwin and TLT awarded a first-time spot on Sainsbury’s latest panel, as Lloyds Banking Group appointed RSM Tenon’s former group general counsel (GC) Joanne Jolly to lead its insurance group and outgoing Ladbrokes GC Jonathan Adelman handed over the reins to his deputy.

Sainsbury’s recently concluded the third review of what it refers to as its ‘legal community’: a 12-strong collaborative law firm panel which saw reappointments for Addleshaw Goddard; Bond Dickinson; CMS Cameron McKenna; Croner; Dentons; DWF; Wragge Lawrence Graham; Linklaters; Shepherd and Wedderburn; and Winckworth Sherwood.

Linklaters has extended its remit working for the major retailer and is now working on commercial work in addition to competition, the area for which it was originally instructed.

Firms that were not reappointed, having been awarded a place when Sainsbury’s last overhauled its panel in 2011, include Simkins Solicitors and Charles Russell, although a spokesperson for Sainsbury’s said it would continue to work with Charles Russell on ‘a bespoke basis’.

While a number of firms named on the 2011 panel have since merged and been reappointed under an altered name – including legacy SNR Denton, Bond Pearce and LG – McGrigors has not been reappointed following its merger with Pinsents in 2012.

The review, which Sainsbury’s said ‘ask[ed] all firms involved to demonstrate expertise, appetite, value for money and an understanding of the demands of the retail sector and Sainsbury’s values’, focused heavily on costs management and a willingness to work collaboratively with in-house teams to deliver legal services to the business.

Head of legal, Nick Grant (pictured), said: ‘We take this opportunity every three years to look at the quality and range of firms in the Sainsbury’s legal community to ensure the company continues to receive the best possible service.

‘I’m very pleased with the outcome – we’ve managed to both bring in new talent and retain the expertise and experience of long-standing Sainsbury’s firms.’

The process was run by Clare Russell and Paul Jenkinson from the Sainsbury’s in-house team, in partnership with Phil Sykes from its procurement team.

At Lloyds Banking Group (LBG), meanwhile, Jolly has taken over as GC and company secretary of the insurance group from Catriona Herd, who has become regulatory and conduct risk director for the insurance group.

Barrister-trained Jolly joined legacy RSM Tenon – which was acquired last year by Baker Tilly – in 2012, taking on the role of group GC and company secretary, having previously acted as GC of Aviva Group between March 2010 and December 2012. Prior to that she was a reinsurance and international risk partner at Barlow Lyde & Gilbert, which merged with Clyde & Co in 2011.

At RSM Tenon, which went into administration last year, Jolly led the sale of its business to the Baker Tilly group and, according to her LinkedIn profile, ‘assisted with the integration of both firms and the legal issues arising’.

There have been further leadership changes at Ladbrokes, where GC and company secretary Jonathan Adelman has left, with his role split between Annabel Bannerman, who takes over as GC, and Adrian Bushnell, who assumes the company secretary role.

Bannerman was a senior associate at SJ Berwin until August 2010, when she joined Ladbrokes as senior legal counsel, becoming deputy general counsel in February 2013.

Bushnell, meanwhile, joined Ladbrokes as head of secretariat in January 2014, and has a longstanding career in company secretary roles, working for companies including Greene King and LBG.

Adelman joined Ladbrokes in 2008 when there was no internal legal team and a high external spend. In four years, he transformed the gaming company’s in-house offering, cutting a roster of around 100 firms to less than a dozen, reducing the typical legal spend of £8m-10m down to £4m-6m at the last count.

Caroline.hill@legalease.co.uk

Legal Business

Lloyds inaugural customer-pay panel sees places for Hogan Lovells; CMS; Addleshaws and Osborne Clarke

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Lloyds Banking Group (LBG) has almost finalised its inaugural customer-pay panel with key spots allocated so far to firms including Hogan Lovells, CMS Cameron McKenna, Addleshaw Goddard and Osborne Clarke.

The panel, in which the bank’s customers pay the fees, follows a tender process and the bank is understood to be in ongoing discussions with other firms including Ashurst. There are a total of 12 places on the panel.

This is the first time the high street bank has formalised a panel for work where the costs are passed on to customers, with the results of the tender initially expected early last year, after the decision was taken to split customer-pay from LBG’s own-account panel.

Firms that have been notified are understood to have been sent notification letters two weeks ago.

With an annual legal and regulatory spend of $402m, LBG is expected to review its own-account legal line-up in the next six months, where the emphasis will be on a smaller number of core firms that advise ‘across the piece’.

LBG’s group general counsel (GC) Andrew Whittaker recently told Legal Business: ‘One of the requirements of being a core law firm is that you have strengths in each of the main areas in which we are likely to want expertise.’

Lloyds has previously turned to a range of firms including Linklaters, Berwin Leighton Paisner, Eversheds, Stephenson Harwood, DLA Piper, Squire Sanders, Allen & Overy, Herbert Smith Freehills, Wragge & Co and Pinsent Masons.

A spokesperson for Lloyds said: ‘Customers are always our priority, and the group only works with firms who reflect this in the way they operate. The firms we instruct on behalf of our customers are just as important to the group as our own account work.’

Sarah.downey@legalease.co.uk

Legal Business

Profile: Andrew Whittaker and Kate Cheetham, Lloyds Banking Group


The bank’s group and deputy GCs discuss the split of Lloyds and TSB, and helping Lloyds’ efforts to rebuild trust after the banking crisis.

When Andrew Whittaker joined Lloyds Banking Group as group general counsel (GC) in May 2013, the message to the market behind his move following a 13-year stint as GC of the UK’s Financial Services Authority (FSA) was not lost.

The trend towards embracing regulatory skills (think now-departed FSA chief executive Hector Sants’ appointment as compliance head at Barclays) came as the major high street bank continued to deal with the fallout of the financial crisis, which for Lloyds meant a multi-billion pound bail-out by the UK government. That is to say nothing of its implication in payment protection insurance mis-selling and ongoing investigations into its involvement in alleged Libor rigging.

Legal Business

Lloyds Banking Group takes on Morgan Stanley lawyer to head litigation and contentious regulatory

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As Lloyds Banking Group makes a series of senior management hires it has emerged that the global financial institution has brought in Morgan Stanley lawyer Michael Hartridge to replace group litigation and contentious regulatory head Nicola Myatt, who has left the bank.

Following LBG’s takeover of UK banking group HBOS in 2008, Myatt was appointed to head the combined litigation team, having headed the same function at Lloyds.

Hartridge’s hire earlier this year comes as the bank conducts a shakeup of parts of its in-house function, including considering outsourcing its retail & wealth and asset finance litigation teams to a panel firm. Currently all teams involved in the restructuring are reporting to Hartridge.

His appointment is one of a series of recent high level hires for LBG. This summer retail and wealth disputes head Aamir Khan left LBG for US legal process outsourcing provider (LPO) Clutch, where he is GC and senior director for the UK and Europe, with his position now filled by UBS Wealth disputes chief and former DLA Piper lawyer Philippa Simmons, who started her new role last Friday (8 November).

That LBG is reviewing its litigation and regulatory arm is not surprising given that it hired the former GC of the Financial Services Authority, Andrew Whittaker as its current GC in June 2012. It is also following the trend of many financial institutions, which have had to beef up those functions in the wake of a tougher regulatory landscape.

The bank is currently advertising for a further litigation lawyer and is one of many dealing with the continuing fallout from the financial crisis, having set aside a UK fund of around £750m in provisional legal costs.

Other internal movement at the bank of late has included former corporate M&A head Hugh Pugsley, who took over as GC for group legal from Kate Cheetham in mid-September, when the latter was promoted to deputy GC in January this year.

LBG declined to comment. At the time of writing Myatt’s destination was unknown.

sarah.downey@legalease.co.uk

Legal Business

Lloyds sees knock-on effect of GC for group legal hire

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In-house promotions and moves often have a domino effect across the wider legal function and Lloyds Banking Group (LBG) is no exception. The major British financial institution has recently announced that former corporate M&A head Hugh Pugsley will take over as general counsel (GC) for group legal from Kate Cheetham, who was promoted to deputy GC this January.

Pugsley, a former associate at Allen & Overy, has moved up the ranks of the 60-strong team and will now be responsible for advising the banking giant on financial reporting, M&A, corporate development, HR, and property-related issues.

Legal Business

First limb of Lloyds privatisation sees Slaughters and Freshfields win lead roles

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Five years on from the collapse of Lehman Brothers, Slaughter and May and Freshfields Bruckhaus Deringer have won the leading roles on the first limb of the government’s privatisation of Lloyds Banking Group, which was rescued by the UK taxpayer in 2008.

Slaughters is advising UK Financial Investments Limited (UKFI) on the HM Treasury’s disposal of a 6% stake in Lloyds Banking Group, worth around £3.3bn.

The Slaughters team is being led by corporate and commercial partner and head of the equity capital markets group, Nilufer von Bismarck, supported by associates Jonathan Wiseman and Liam Townson. The team also includes tax partner Tony Beare who is supported by associate Michael Ringer.

Freshfields is representing Bank of America Merrill Lynch, J.P. Morgan Cazenove and UBS as joint bookrunners in relation to the sale, led by corporate partners Will Lawes, Julian Makin, Sarah Murphy and Mark Austin, while UK tax advice is being provided by partner David Haworth.

Cravath Swaine & Moore is advising UKFI on US law aspects, led by corporate partner Alyssa Caples, who is supported by associate Jonathan Coleman.

Today’s share placing to institutional investors will raise proceeds of £3.2bn and reduce the government’s 38.7% stake in Lloyds to 32.7%.

In what represents a potential windfall instruction for the Magic Circle firms, the second limb of the privatisation will see the government sell Lloyds stock to retail investors, although potential institutional buyers have been promised that the Treasury will not sell any more Lloyds shares for at least 90 days.

jaishree.kalia@legalease.co.uk

Legal Business

In-house: Lloyds Banking Group sees knock-on effect at senior level as it fills GC for group legal role

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In-house promotions and moves often have a domino effect across the entire legal function and Lloyds Banking Group (LBG) is no exception. The major British financial institution has most recently announced that former corporate M&A head Hugh Pugsley will take over as general counsel for group legal from Kate Cheetham, who was promoted to deputy general counsel in January this year.

Pugsley, a former associate at Magic Circle firm Allen & Overy, has moved up the ranks of the 60-strong team and will now be responsible for advising the global banking giant on financial reporting, M&A, corporate development, HR, and property-related issues.

The lawyer has a wealth of industry experience behind him, having previously led the corporate group for UBS’ Middle East North Africa region before joining LBG in 2010.

Meanwhile, Pugsley’s internal promotion follows LBG’s lateral hire of UBS Wealth’s disputes chief Philippa Simmons, who replaces dispute resolution head Aamir Khan after he left this summer for US legal process outsourcing provider Clutch to become its general counsel and senior director for the UK and Europe. Her appointment comes as LBG looks at options including outsourcing its retail & wealth and asset finance litigation teams.

Pugsley’s replacement has yet to be announced. A spokesman for LBG declined to comment.

sarah.downey@legalease.co.uk