Legal Business

In-house: RBS to tackle peaks and troughs with flexible legal providers

In-house: RBS to tackle peaks and troughs with flexible legal providers

The need for a more ‘nimble and agile’ environment is driving the Royal Bank of Scotland’s (RBS) foray into the flexible lawyers market, reducing a dependence on the need for secondees from external firms.

RBS general counsel (GC) Michael Shaw (pictured) confirmed the bank has gone out to a number of flexible resourcing providers with an eye to setting up its first-ever panel in the area later this year.

Shaw told Legal Business the bank, like other major corporates, went through peaks and troughs in activity that altered demand for particular skills. Sometimes that demand was met through the use of external firms, and also through the use of secondees.

However in recent years there have not been as many spare bodies at law firms and the regular rotation of secondees could cause disruption.

‘We’re all living in an environment where you have to be more nimble and agile than perhaps was the case in years gone by,’ Shaw commented. ‘What’s useful to have is contractors and other people who will be with us longer than firms are normally happy to spare secondees for.’

Shaw said the bank, which has an in-house team of more than 300, therefore wanted to create a more flexible internal resource base made up of a mix between permanent staff and contractors. RBS had approached a number of providers, some of which he was more familiar with than others.

Alongside well-known providers like Axiom and New Law pioneer Lawyers on Demand (LOD), various firms including Pinsent Masons, Eversheds Sutherland and Allen & Overy have set up flexible lawyer offerings in recent years. LOD recently secured private equity backers as it geared up for global growth.

Earlier this week another, Riverview Law, made headlines when it was acquired by Big Four accountancy firm EY. Another newer entrant which has a database of more than 750 lawyers in over 40 countries, Lexoo, recently made its way onto Vodafone’s panel.

Shaw added: ‘There’s now quite a few players now. That enables us to have some price competition in the process but also slightly different individuals and skill sets available through different providers.’

Late last year, the RBS legal team appointed its first chief operating officer (COO) in a bid to shake-up the bank’s senior in-house roles. Head of data privacy law, Suzanne Rodway, took on the role, while also joining Shaw’s executive committee.

Hamish.mcnicol@legalbusiness.co.uk

Legal Business

Appeal hope remains for property investor despite losing £20m Libor claim against RBS

Appeal hope remains for property investor despite losing £20m Libor claim against RBS

Bird & Bird client Property Alliance Group (PAG) has lost in the Court of Appeal over a circa £20m Libor manipulation claim against The Royal Bank of Scotland (RBS) and is currently weighing up whether to appeal the decision.

PAG alleged in the claim, which was brought in 2013, that it had been mis-sold four interest-rate swaps for three months Libor. The company argued that the swaps were mis-sold on the basis of implied representation, given previous findings of Libor manipulation against RBS.

Legal Business

RBS shareholders agree settlement ahead of court date signalling end of epic dispute

RBS shareholders agree settlement ahead of court date signalling end of epic dispute

Some 9,000 Royal Bank of Scotland (RBS) shareholders have accepted a last-minute 82p per share out-of-court deal from the bank over its 2008 share sale, ahead of this morning’s court appearance.

The hearing is set to resume this morning in London’s High Court before Mr Justice Hildyard. A final settlement would draw to a close one of the most high profile and expensive commercial disputes to hit the London courts for years.

The majority of remaining claimants, represented by the RBS Shareholders Action Group, were prepared to accept an offer made last week in the rights issue damages claim against the bank and four of its former senior executives.

A few former investors, however, have been seeking further investment since being urged to settle last week by lead investor tycoon Trevor Hemmings and the RBS Action group.

One adviser close to the case told Legal Business that ‘for them it was no longer about the money, they want justice and Fred Goodwin [former RBS chief executive] to take the stand. But I would have been astounded if they obtained the extra funding to continue.’

The bank’s final offer of 82p per £1 remains a fraction of the 200-300p-per-share that claimants paid for RBS shares back in 2008, in the run-up to the bank’s £45bn public bailout.

The trial was due to open on 22 May, but was adjourned until 7 June for settlement negotiations following the last-minute offer.

The claim was launched in 2012 by around 27,000 retail investors who claimed they were misled about the bank’s financial health. It sought £12bn from investors in 2008 for a rights issue during the financial crisis.

Eighty seven percent of investors, represented by Stewarts Law, Mishcon de Reya, Quinn Emanuel Urquhart & Sullivan and some of Signature Litigation’s clients, had already settled with RBS for around £800m in total in December 2016 and April this year, at 41p and 43.2p per share respectively.

Over 9,000 claimants remained in the action after the majority of claimants settled with RBS for 41p per share in December 2016. In April 2017, 40% of the Signature Litigation Group also settled with RBS for 43.2p per share.

The original claimants included RBS staff and pensioners, institutional investors such as Wells Fargo, Boeing pension fund, Bank of America Merrill Lynch and Bank of Ireland. Some UK local authority pension funds, including Bedfordshire County Council, Essex, Nottinghamshire and the London Borough of Merton, also joined the litigation.

The remaining claimants have been represented by Signature Litigation partners Graham Huntley and Julian Connerty. RBS is represented by Herbert Smith Freehills, led by partners Simon Clarke, Adam Johnson and Kirsten Massey.

Goodwin, who was listed as a witness in the trial, is represented by Clifford Chance (CC) litigation partner Dorian Drew. K&L Gates head of litigation John Magnin is advising London and Northern Capital Partners (LNCP), owned by the majority funder in the litigation Trevor Hemmings.

Litigation boutique Hausfeld, led by partner Lianne Craig, represents asset recovery and private equity firm Hunnewell Partners (BVI).

RBS and the Shareholder Action Group have both declined to comment at press time.

georgiana.tudor@legalease.co.uk

Legal Business

‘Surprising to some’: RBS shareholders encouraged to accept late offer to avoid litigation risks

‘Surprising to some’: RBS shareholders encouraged to accept late offer to avoid litigation risks

The board of the 9,000-strong Royal Bank of Scotland (RBS) Shareholders Action Group has endorsed a settlement to claimants of 82p per £1 offer made by RBS on the evening of the trial, although the sum is below original estimates.

In a letter to theshareholders published on 27 May, the group said: ‘We have decided to accept the offer of 82p per share on behalf of our membership, [a decision] fully supported by our legal advisers. Taking into account all of the relevant factors, we have come to the conclusion that it is in the best interests of all claimants for us to accept the 82p per share offer.’

Acknowledging that the decision may be ‘surprising to some’ claimants, as the offer was ‘slightly below the previously advised ranges of damages, being 92p per share and 234p per share’, the group said accepting the offer would avoid the practical and legal risks involved in a full trial.

The statement adds that ‘a substantial claimant in the action’ is funding the case and has chosen to accept the offer, leaving no available funding to take the matter to trial. All corporate claimants have indicated their acceptance of the offer. Settlement would also lessen legal costs, which would be deducted from the total damages the claimants receive.

 ‘This is a significant sum and is effectively double the amount that was paid to the other settling claimant groups,’ the statement noted.

The next step is for at least 70% of the remaining claimants, some 9,000 retail investors, to agree to the settlement individually before 1 June. The case will then return to the High Court on Thursday, where Mr Justice Hildyard will hear any representations from the parties.

The trial was due to open on 22 May, but was adjourned until 7 June for settlement negotiations following the last-minute offer. The claim was launched in 2012 by around 27,000 retail investors who claimed they were misled about the bank’s financial health before it sought £12bn from investors in 2008 for a rights issue.

Over 9,000 claimants remain in the action after the majority of claimants settled with RBS for 41p per share in December 2016. In April 2017, 40% of the Signature Litigation Group also settled with RBS for 43.2p per share.

The original claimants included RBS staff and pensioners, institutional investors such as Wells Fargo, Boeing pension fund, Bank of America Merrill Lynch and Bank of Ireland.

Some UK local authority pension funds, including Bedfordshire County Council, Essex, Nottinghamshire and the London Borough of Merton, also joined the litigation.

The remaining claimants have been represented by Signature Litigation partner Graham Huntley. RBS is represented by Herbert Smith Freehills, led by partners Simon Clarke, Adam Johnson and Kirsten Massey. Former RBS CEO Fred Goodwin, who was listed as a witness, is represented by Clifford Chance (CC) litigation partner Dorian Drew. K&L Gates is representing London and Northern Capital Partners (LNCP). Hausfeld is representing Hunnewell Partners. 

geoorgiana.tudor@legalease.co.uk

Legal Business

RBS rights trial judge highlights ‘unparalleled’ defence costs, as trial stayed on new offer

RBS rights trial judge highlights ‘unparalleled’ defence costs, as trial stayed on new offer

The judge hearing the Royal Bank of Scotland (RBS) £4bn rights issue damages case – currently stayed pending settlement negotiations – has highlighted the bank’s ‘extraordinary’ £129m costs in the case, in a preliminary judgment published on 23 May.

In deciding RBS’s application for £11.6m security for costs against the claimant litigation funders Hunnewell Partners (BVI) and London and Northern Capital Partners (LNCP), Justice Hildyard noted the ‘sheer size’ of the defence team’s legal costs had resulted in the prospect of securing adequate after-the-event (ATE) insurance cover ‘difficult, if not impossible’.

Hildyard said: ‘the extraordinary (indeed, in my experience, unparalleled) amount of the costs apparently incurred in this litigation by, in particular, the defendants has in the past caused me, and continues to cause me, very great concern.’

The 9,000 claimant shareholders maintain they were misled about the true state of RBS’ finances when it issued its prospectus for a £12bn Rights share Issue in 2008.  

The trial was due to open on 22 May, but is currently stayed until 7 June for negotiations following an 82p per £1 settlement offer from RBS on 21 May – the evening before the trial. The offer is double that of previous settlements in the claim. Herbert Smith Freehills acts (HSF) for RBS.

In noting the ‘magnitude of the costs’, the excess of which was over the ‘already huge’ estimates originally given, Hildyard referred to RBS’s defence having instructed 13 counsel in and ‘serried ranks of solicitors and paralegals (probably over 20)’.

This contributed to ‘a present overall estimate of costs on the defendants’ side of nearly £129 million, must be a prohibitive context in which to seek adverse costs insurance’ he added.

An RBS spokesperson said: ‘This is a substantial and complex case and the manner in which it has been pursued has resulted in the bank incurring substantial legal costs.

‘We have a duty to act in the best interests of all of our shareholders, including the UK taxpayer. We believe we have strong defences to this claim and will defend ourselves vigorously in court,’ she added.

The legal claim was launched in 2012 by around 27,000 retail investors. There are currently 9,000 remaining claimants in the action, after all claimant groups except 60% of the Signature Litigation Group settled with RBS for 41p per share in December 2016. In April 2017, 40% of the Signature Litigation Group also settled with RBS for 43.2p per share.

The original claimants included RBS staff and pensioners, institutional investors such as Wells Fargo, Boeing pension fund, Bank of America Merrill Lynch and Bank of Ireland. A number of UK local authority pension funds, some of which were Bedfordshire County Council, Essex, Nottinghamshire and the London Borough of Merton, also joined the litigation.

The remaining claimants are represented by Signature Litigation partner Graham Huntley.  

RBS is represented by HSF led by partners Simon Clarke, Adam Johnson and Kirsten Massey.

Former RBS CEO Fred Goodwin, who is listed as a witness, is represented by Clifford Chance (CC) litigation partner Dorian Drew.

HSF and Signature Litigation Group declined to comment.

Georgiana.tudor@legalease.co.uk

 

 

Legal Business

Deus ex machina: Linklaters signs up Lloyds and RBS to ring-fencing software

Deus ex machina: Linklaters signs up Lloyds and RBS to ring-fencing software

Linklaters has launched a pair of artificial intelligence (AI) products in the latest innovation push for the Magic Circle firm, including a tool to navigate ring-fencing reforms for core banking clients.

Both Lloyds Banking Group and The Royal Bank of Scotland (RBS) have used the firm’s LinkRFI software, which is used to classify thousands of customer names in a fraction of the time it would take a human to complete. The classifications are needed to help ensure separation between banks’ retail and investment arms, to comply with ring-fencing reforms introduced by the Bank of England.

The tool is now being used by the firm’s main banking clients ahead of a January 2019 deadline for implementing reforms. However, Linklaters would not confirm which banks were using the product.

The software was developed under banking partner Benedict James, relationship partner for RBS. Other lawyers taking a lead in its development were partner Tom Wells and key Lloyds relationship partner Edward Chan (pictured), who also manages the firm’s approach to the use of AI.

In addition to its banking tool, Linklaters has been developing its own AI platform, named Nakhoda, for data extraction and document analysis using legal logic. The firm has formed a new collaboration with London-based AI firm Eigen Technologies to roll out the product.

The firm’s AI working group has been headed up by Chan, with Linklaters announcing it was working with provider RAVN Systems last May.

Chan told Legal Business: ‘We are looking at several third-party products and are also building our own platform. A lot of the tools are quite optimised for one task. No single product works in all situations, so we might end up with some kind of toolbox, rather than a single killer application.’

According to one senior lawyer at RBS, the bank was set to sign a licensing agreement for the continued use of LinkRFI and had been exploring other AI options, such as using due diligence tool Kira.

matthew.field@legalease.co.uk

See the feature: ‘The arms race – City rivals ramp up AI tech for the battles ahead

Legal Business

Deus ex machina: Linklaters signs up Lloyds and RBS to ring-fencing software as firm develops brace of AI products

Deus ex machina: Linklaters signs up Lloyds and RBS to ring-fencing software as firm develops brace of AI products

Linklaters has launched a pair of artificial intelligence (AI) products in the latest innovation push for the Magic Circle firm, including a tool to navigate ring-fencing reforms for core banking clients.

Both Lloyds Banking Group and The Royal Bank of Scotland (RBS) have used the firm’s LinkRFI software, which is used to classify thousands of customer names in a fraction of the time it would take a human to complete. The classifications are needed to help ensure separation between banks’ retail and investment arms, to comply with ring-fencing reforms introduced by the Bank of England.

Legal Business

RBS divisional GC leaves following legal team restructuring

RBS divisional GC leaves following legal team restructuring

RBS’ general counsel (GC) for corporate & institutional banking (CIB) Dan Williams has left the legal team of the banking group.

Announced at the bank’s last Town Hall meeting by GC Michael Shaw, Williams’ departure comes after RBS kicked off a review of its 400-strong legal team in July last year as a way of controlling costs and drive efficiency.

It is understood there will not be a replacement for Williams, as RBS’ GC for the Americas James Esposito will take on a combined role, incorporating the CIB remit which Williams held.

Having worked as an in-house lawyer for financial institutions for more than 17 years, Williams joined the bank in April 2008 as GC for equities from ABN Amro after RBS took over ABN in 2007. He has held five different positions within RBS since, including GC for Asia Pacific and Markets UK/EMEA.

In his most recent position, he led a team of 90 lawyers in the UK, EMEA and Asia Pacific. At ABN AMRO he was co-global head of equity capital markets and M&A Advisory, having joined ABN in 2002. He started his career as a solicitor at Clifford Chance in 1996.

Earlier in 2016, the bank appointed former Barclays’ deputy group GC Shaw as its group GC after John Collins resigned only 11 months into the job to join Santander UK.

RBS has also seen a host of senior legal departures in the last few years, with deputy GC Rushad Abadan having joined insurer Standard Life as its GC at the start of 2016. The British banking giant also lost its EMEA head of financial crime, Carolina Garces-Monterrubio, to HSBC at the start of 2015.

georgiana.tudor@legalease.co.uk

Legal Business

In-house: RBS loses divisional legal chief to property fund Valad Europe

In-house: RBS loses divisional legal chief to property fund Valad Europe

The Royal Bank of Scotland (RBS) has lost a senior member of its in-house legal team, with banking lawyer Robin Macpherson, who headed legal for large corporate and sectors for the UK and Western Europe, leaving the bank. He joins real estate fund Valad Europe as head of risk.

Valad Europe, part of real estate manager Cromwell Property Group, hired Macpherson as head of risk in a role which also comprises the position of general counsel and compliance officer.

At RBS, Macpherson led a team of more than 20 lawyers and responsibilities included co-ordinating the provision of advice from across the legal teams on product matters, and advising on capital portfolio trades.

He held several managerial roles at the bank, having joined from Travers Smith in 2009, including as senior manager (while on secondment from Travers) to RBS’s non-core division, and as senior manager for RBS Legal, where he advised on costs, negative LIBOR, Bank of England liquidity schemes and online gaming risk appetite.

Now at Valad, which manages under €4bn of real estate assets, Macpherson is responsible for legal advice and compliance support to the European business and for its corporate governance and risk management framework.

He reports directly to chief executive David Kirkby, and is a member of the company’s ten-strong executive management group. He also chairs its European risk committee and sits on the debt and investment committees.

Kirkby said Macpherson’s appointment demonstrates the company’s ‘commitment to implementing robust and transparent risk management procedures across the business particularly in light of increasing regulation facing the industry.’

As revealed by Legal Business in July, RBS’s legal division has undergone a reshuffle this year, after reviewing its 400-strong team to control costs and drive efficiencies – a move which was said to potentially lead to staff redundancies.

Other senior legal departures in the last few years has included deputy GC Rushad Abadan who joined insurer Standard Life as its GC in early 2016, while the British bank also lost its EMEA head of financial crime, Carolina Garces-Monterrubio, to HSBC at the start of the 2015.

Other recent moves in the banking industry this week includes Standard Chartered which hired top regulatory lawyer from Chris Allen from Barclays’ legal team. Allen, is set to join the investment bank as its new general counsel for clients and products.

sarah.downey@legalease.co.uk

Read more: ‘Client profile: Michael Shaw, The Royal Bank of Scotland’

Legal Business

Client profile: Michael Shaw, The Royal Bank of Scotland

Client profile: Michael Shaw, The Royal Bank of Scotland

The veteran corporate lawyer on memorable moments in deal making and untangling himself from Barclays

‘It was ambition that made me decide to leave Barclays,’ declares self-confessed deal junkie Michael Shaw, who resigned from his role as the bank’s deputy general counsel (GC) in the summer of 2015.