HSBC
General counsel (UK): Hugh Pugsley
Team size: 60
Major law firms used: Allen & Overy, Freshfields Bruckhaus Deringer, Addleshaw Goddard, Eversheds Sutherland, Hogan Lovells, Pinsent Masons
The UK government’s rules for the ring-fencing of retail and wholesale banking activities will require all UK banks with more than £25bn in deposits to set up a separate legal entity handling core deposit-taking activities by 2019. For the legal team of any of the UK-headquartered clearing banks, this is a big job.
Matthew Cottis of Hogan Lovells comments: ‘The experience and unflappable demeanour of [general counsel (GC)] Hugh Pugsley and his team have helped HSBC rise to the very formidable challenge of ring-fencing. They have shown themselves to be an indispensable part of the bank’s senior leadership at a very difficult time for the sector.’
A 60-strong team led by Pugsley supports HSBC’s high-street operations in the UK, including lending to commercial and corporate customers, and private banking services. Pugsley was previously GC for group legal at Lloyds Banking Group, where he worked on the 2015 initial public offering (IPO) of TSB. Though the pre-IPO legal work relied on a similar court process to lift and shift parts of the business into TSB, Pugsley says the current ring-fencing work at HSBC is of an entirely different magnitude.
‘HSBC’s legal team have been an indispensable part of the senior leadership at a very difficult time for the sector.’
‘In terms of both the legal issues we are encountering, and the operational and infrastructural complexities that it entails, the scale of the ring-fencing work is pretty much unprecedented. This has been a huge amount of work for the whole organisation.’
Alongside this, Pugsley and the team have been overseeing the separated high-street bank’s move to new offices in Birmingham. This has given Pugsley the opportunity to bring in new talent and develop one of the UK’s outstanding financial services legal teams. ‘If you look around the global legal executive committee, which I sit on, all of our lawyers could be GCs at any financial institution. That is unusual. They have the skills, experience and general gravitas to handle a front-line advisory role.’
Paul Holland of Dentons agrees with this assessment. ‘The team is small compared to its peers and needs to be very efficient. The quality of lawyer is therefore very high, and each member of the team shows an excellent understanding of what is required by in-house counsel in one of the most highly regulated and challenging environments for any lawyer.’
John Pitt, who heads up the retail banking and wealth management team, and Adam Coleman, who joined from The Co-operative Bank in 2017, were cited as standout performers within the team.
The Carlyle Group
General counsel (Europe): Heather Mitchell
Team size: 12 (four in the UK)
Major law firms used: Allen & Overy, Freshfields Bruckhaus Deringer, Latham & Watkins, Linklaters
The London-based legal team of The Carlyle Group – a global alternative asset manager with $195bn of assets under management and one of the largest private equity firms in the world – is comprised of three senior lawyers who work alongside Carlyle’s global GC for investments and head of Europe, Heather Mitchell.
The London team works alongside colleagues in the US and Asia on Carlyle’s various funds across the globe, meaning the team is involved in investments that cover the full spectrum of geographies, sectors and deal structures – from primary deals in Africa to high-profile and market-leading auction processes. With each lawyer running around five deals at any one time, the volume of work handled is highly unusual. ‘We outpace other in-house teams in this space and I would venture to say that even some partners at top-tier firms don’t handle this volume of complex work every day of the week’, says Mitchell.
The team’s uncommonly-flat structure means that its UK based-lawyers – Nicholas Rushgrove, Louise Dumican and Nick Reid – are each embedded within different funds. They work alongside their respective funds on all of their investments, acting as what Mitchell describes as ‘a mini GC’. In part, this reflects the company’s ‘One Carlyle’ approach, with a heavy emphasis placed on fostering a shared culture. Reid, who joined Carlyle in 2017 after eight years at Linklaters, comments: ‘What differentiates Carlyle is the degree of involvement its lawyers have in deals. The investment teams don’t want to consign lawyers to administrative tasks. Instead they want us to add our experience on a deal, from the inception through to the final negotiations.’
‘Even some partners at top firms don’t handle this volume of complex work.’
The involvement of Carlyle’s lawyers with its various funds also reflects the legal team’s commitment to developing systems and leveraging its strong relationships with law firms to help it handle hundreds of investments each year. The longest-serving member of the team, Dumican, has been particularly important in instilling this operational sophistication across the team since joining from Skadden, Arps, Slate, Meagher & Flom in 2015. ‘Our lawyers help negotiate deals and when a deal goes well they celebrate along with their deal team. It also means that we can be incredibly proactive and spot any potential issues at an early stage. The legal team has been responsible for saving a large number of deals through their restructuring efforts,’ says Mitchell.
It is a view shared by other senior figures within the company. Christopher Finn, managing director and chief operating officer of corporate private equity, highlights ‘the innovative approach taken by the in-house legal team in London in working closely with and counselling our investment teams, and ultimately our investment committees’, something he says has made ‘a significant contribution to helping Carlyle find value through investments others have shied from and facilitated the turnaround of underperforming investments.’
Lloyds Banking Group
General counsel: Kate Cheetham
Team size: 300
Major law firms used: Addleshaw Goddard, DLA Piper, Allen & Overy
Lloyds Banking Group GC Kate Cheetham is a frequently-cited name in the in-house community, and her legal team has received similar commendations after a strong year characterised by shrewd deals and fierce litigation.
The group comprises six different GC-led teams – three centralised teams: transformation, group legal and group litigation, and three customer-facing teams: retail, insurance and commercial banking.
The retail legal team, headed up by deputy GC Jennifer Nielsen, was heavily involved in Lloyds’ £1.9bn takeover of credit card firm MBNA from Bank of America in June last year. The deal reportedly increased Lloyds’ share of the credit card market from 15% to 26% and was the first acquisition it had made since the economic crisis in a sign of the bank’s increasing confidence.
‘The ops team are “the glue that holds the legal team together”.’
Tom Spender, GC in charge of litigation, was well occupied in 2017 by the high-profile HBOS dispute. The £600m case was brought by 5,800 investors to the High Court, after they alleged that Lloyds’ decision to acquire HBOS during the banking crisis was disastrous for investors. Overall, Lloyds set aside £865m in litigation provision in 2017, an indicator of how prevalent disputes were.
Lloyds is another major corporate embracing the deployment of legal operations professionals, with the bank boasting an eight-strong team that covers finances, resource planning and relationships with external law firms. Several of the legal ops team are non-lawyers. ‘They’re the glue that holds the legal team together,’ says Cheetham.
Dentons partner Paul Holland singles out head of legal for commercial banking Jon Alexander for praise: ‘He has a good track record which is not easy at a bank. He is innovative and open to new ideas. He does what he says he’s going to do. He understands what is required of in-house counsel and always has the interests of the bank in all decisions.’
PERSPECTIVES: Kate Cheetham, group general counsel, Lloyds Banking Group
How is the legal team structured?
We support the whole of Lloyds Banking Group. Not just the retail bank but also the commercial bank and our insurance division. The team provides legal work across the entire group. We have six different GC-led teams. Three of those are customer facing, while three of them are centralised teams.
One of those centralised teams is the transformation legal team, which is very heavily focused on digital growth, data, legal change and delivery. We also have a legal operations team, which is made up of eight people, several of which are non-lawyers. They ensure we are as efficient and effective as possible, covering finances, resource-planning as well as our relationships with our law firms. They’re really the glue that holds the legal team together.
How would you describe your team?
We have an experienced group of GCs who are responsible for the various divisions across the bank. Some of them have been here for a long time while others have joined more recently. They’re a lovely, diverse team.
Are there other in-house teams that you take inspiration from?
Look at our peers: the other big banks have very strong legal teams. Diageo is another example of a team that does a fantastic job in working out how the team operates and making sure they are doing interesting things. I really love going to round tables and seeing how people do things differently. It’s fascinating talking to GCs at start-ups, which are completely different organisations. I’ve had some really interesting conversations with start-up GCs.
How does GDPR and cyber security affect your legal team?
Both are areas of significant focus for the group. I talk a lot about the need for speed alongside the need for security. We need to make sure we are doing everything we can to ensure we are vigilant and efficient. Making sure our terms and conditions are compliant with GDPR is a substantial project, and we have made great progress here.
Cyber security is much more of an ongoing focus, but it’s something absolutely critical that we do. We invest a lot in it. We work with other industry groups to make sure that our cyber security is good but also that our customers feel safe that their data is well protected.
What have been some of the more interesting tech initiatives or innovations the legal team has been involved with?
The group has recently announced its latest strategic review, which focuses on transforming the group for success in a digital world and our role is to consider how we best support the group. In that sense, the innovation piece is really important for us. An example of what we’ve achieved is a new system that analyses all the decisions that the Financial Ombudsman Service (FOS) makes. It allows us to scan a mass of decisions. We’re the first organisation to have a direct link to the FOS website, which has been really exciting for us.
Worldpay
General counsel: Ruwan De Soyza
Team size: 29
Major law firms used: Allen & Overy, Sidley Austin, Wiggin
Worldpay has established itself as a major player in payment processing, with the business attracting a buyout by US rival Vantiv for £9bn last summer.
The transaction, which was agreed in July, was formalised in August with Allen & Overy (A&O) advising Worldpay. The tie-up creates a payment-processing giant with a combined value of £22.2bn, with both companies saying the combination will create a global firm with a ‘strong position’ in the four core regions: the US, Europe, Asia-Pacific and South America.
Duncan Bellamy, who led for A&O on the deal, comments: ‘The Worldpay team is very strong and dynamic. There aren’t that many companies around that can readily provide talent in that space.’
Bellamy in particular praised GC Ruwan [Roo] De Soyza: ‘Roo is excellent, really enthusiastic. He blends the role of being a boardroom adviser along with doing BAU stuff brilliantly. He’s not afraid to get his hands dirty.’
‘Ruwan blends being a boardroom adviser with doing BAU stuff brilliantly.’
Such commendations are especially powerful for a GC that only took on the role in January 2017, after previous incumbent Mark Edwards departed for publicly-traded gaming company Playtech after two years in the role. Also cited by private practitioners is e-commerce GC Andrew Williams, described as ‘a very capable commercial lawyer’. Likewise, UK GC Kirsty Whitehead is defined as a ‘payment specialist’ while senior corporate counsel Wendy Patrick is also singled out for praise.
Other notable work throughout the year included launching My Business Mobile, a downloadable app that can turn a mobile phone into a contactless payment terminal. Senior legal counsel Lauren Woolford was instrumental in its introduction. Legal counsel Tom Fox played a key role as Worldpay rolled out its B2B card payment business Worldpay Total to EU markets.
In a major indication of the rapid growth that Worldpay has sustained, the company was sold by The Royal Bank of Scotland in 2010 to private equity houses Advent International and Bain Capital for £2bn. In 2015, Worldpay floated on the London Stock Exchange for £5.3bn, almost trebling its value in five years.
De Soyza concludes: ‘The Worldpay legal team was five years old in 2017. It has come from a standing start to what I would call an extremely highly-rated and high-performing function. It turns around a high quality and a high volume of work. Doing that through 2017 when we have the largest fintech merger of the year, Brexit, GDPR and new product launches – not dropping those balls makes us a standout team.
The Royal Bank of Scotland
General counsel: Michael Shaw
Team size: 300
Major law firms used: Herbert Smith Freehills, Clifford Chance, Linklaters, Allen & Overy
The Royal Bank of Scotland (RBS) GC Michael Shaw argues that banks always encounter more legal work than other industries and, based on the year RBS had, it is hard to disagree. Litigation and investigations in particular have been at the forefront for in-house banking teams since the financial crisis and that narrative remained consistent for RBS in 2017.
Shaw describes the growing influx of work as ‘an extraordinary rise, almost exponential’. Among the big cases the bank had to defend was the shareholder group action, which settled in June 2017. A group of 9,000 shareholders accepted a last-minute 82p-per-share out-of-court deal from RBS after they claimed they were misled about the bank’s financial health during the 2008 financial crisis. Will Luker, GC for litigation and investigations, and one of Shaw’s six deputy GCs, oversaw the dispute.
Shaw reveals that he is a supporter of the chief operations officer movement and notes the success that RBS has enjoyed since permanently appointing a director of legal operations. Previously RBS’s GC for corporate and structural activities doubled up as the director of legal ops, but Shaw removed the extra burden of that role after he was trying to do the additional work ‘off the side of his desk’.
‘The influx of work has seen an extraordinary rise, almost exponential.’
Since then the company has employed Suzanne Rodway full time. Shaw says: ‘We’re very happy with having a dedicated individual in the role. It’s taken some burden away from me and it’s great to have some fresh impetus in some of our projects like e-discovery. To have a representative from legal around a number of formal and informal forums around the bank, taking advantage of different people’s expertise, has been good.’
As for use of tech, Shaw says that RBS is typical of its sector in that it has its own in-house product in addition to one sponsored by a third party. RBS’s proprietary product is called Bankline, which Shaw describes as a ‘commercial banking digital channel that we offer to our corporates small and big’. The platform has about 15 million customers, considerably larger than any other bank.
The third-party platform is Esme Loans, a new digital lending platform aimed at small businesses launched in conjunction with fintech company Ezbob. It allows clients to obtain unsecured loans of £150,000 for up to five years, regardless of whether they bank with NatWest or not.
In 2016 RBS rebranded its investment bank division as Natwest Markets and Shaw reveals that the headcount of that arm has therefore fluctuated heavily. ‘We have slimmed down the team enormously in recent years. But now the strategy is clear, the changes have come to a halt. We want to make sure that final state is as successful as possible.’
Bank of America Merrill Lynch
Global general counsel: David Leitch
EMEA general counsel: Sajid Hussein
Team size: 150-plus
Major law firms used: Allen & Overy, Clifford Chance, Shearman & Sterling, Skadden, Arps, Slate, Meagher & Flom, Linklaters, Freshfields Bruckhaus Deringer
Ask any financial services institution’s in-house team to name their main challenge of recent years and many will point to what the team at Bank of America Merrill Lynch (BAML) describes as ‘unprecedented levels of regulatory change’. It is in this context the BAML legal team of more than 150, servicing the business across 21 countries in Europe, the Middle East and Africa (EMEA), believe they have delivered in providing clients with financial services while protecting the firm and its shareholders.
The EMEA legal team, led by GC Sajid Hussein, chiefly supports global corporate and investment banking, as well as global markets, on a broad range of global transactions. Between October 2016 and September 2017, BAML advised private equity firms on 16 M&A deals valued at $45.5bn. It also acted as lead financial adviser to Actelion Pharmaceuticals in its $30bn acquisition by Johnson & Johnson and as joint global co-ordinator on the $13bn underwritten rights issue for UniCredit. The firm also supported a couple of major initial public offerings (IPOs), notably the £3.4bn listing of Allied Irish Bank and Abu Dhabi National Oil Company’s $851m multijurisdictional IPO.
But for BAML, formed following Bank of America’s $50bn acquisition of Merrill Lynch at the height of the financial crisis, regulatory change dominated during 2016 and 2017, made even more difficult by volatile markets. The list of new financial regulations is long, with BAML’s legal team pointing specifically to 11 pieces around financial products and other areas it has worked on with the business to understand their impact, notably the Market Abuse Regulation, the Markets in Financial Instruments Directive II and Brexit.
‘We try to give back to society.’
BAML established a technology review team in 2016 to look at initiatives, new tools and technologies that can help both the legal team and the wider business. Representatives from the EMEA in-house team sit on a global legal artificial intelligence (AI) working group, which is looking at AI and robotics, document automation tools, negotiation platforms, deal and document management, billing processes, policy management, and researching legislation and regulation.
The team, mostly based in London but with employees in Chester, Madrid and Paris, also points to its diversity initiatives. Hussein’s leadership team is 70% female, as are 68% of the region’s managing directors for the legal team. Overall, the in-house function is 62% female. It also supports Aspiring Solicitors, a programme that works with university law students from LGBTQ, black, Asian and minority ethnic (BAME) and socially-disadvantaged backgrounds, providing lectures, mentoring and networking events. Hussein’s team also puts an emphasis on diversity and inclusion with its partner law firms, annually assessing them on their BAME and gender statistics.
Hussein comments: ‘I am extremely proud of the EMEA legal team’s contribution to the success of [BAML], not just because of the sound counsel we provide across global banking and markets but also because of our efforts to give back to society through our diversity and community engagement initiatives, and our partnerships with the charitable sector.’
Barclays
General counsel: Bob Hoyt
Team size: 740
Major law firms used: Clifford Chance, Ashurst, Simmons & Simmons, Hogan Lovells, Reed Smith
Freeze the regulatory environment of today and Barclays group GC Bob Hoyt believes the 740-strong legal team would still have a lot of work to understand and safely operate the financial services giant within that legal framework. But add to that how dynamic the framework is, and how much regulation is changing in the US and UK, and that job gets even harder.
‘For an institution like ours that offers so many products and services across so many jurisdictions, it is remarkably complex.’
Barclays has faced intense public scrutiny in recent years: from the Serious Fraud Office’s investigation into the bank’s £12bn fundraising at the height of the financial crisis, which resulted in criminal charges against the bank and former executives relating to a £2.3bn loan Barclays provided to Qatar, a multibillion-dollar legal battle with the US Department of Justice over allegedly-fraudulent mortgages and a New York currency trading probe that ended in a $150m settlement.
There have been other significant projects too, such as the industry ring-fencing reforms that saw Barclays take the decision in March 2016 to split into two divisions: Barclays UK and Barclays International. Hoyt says: ‘Structural reform is a massively legally-complex operation and we’ve had teams handling everything from the way it affects our customers, in particular our retail customers, but also effectively doing M&A work, moving things between entities smoothly.’ Brexit also creates a large volume of work for the in-house team, as it did the nuts-and-bolts preparation regarding where businesses might be best located, and how they would be moved there post Brexit.
‘Most law firms would be very happy to have that percentage of female leaders.’
With so much going on, it is easy to see why Barclays has such a large in-house team: 466 staff based in the UK, 167 in the US and the remainder dotted elsewhere. There was previously a team in Africa as well, before Barclays sold part of its stake in the African business for £2.2bn in mid-2017. Hoyt says he has a terrific leadership team and in the past few years has focused on the tier just below them to develop and identify talent internally. This involves lawyers working across different practice areas, giving them more varied experience, and provides a deeper pool of professionals with the type of background you would expect of a GC. The team is also 60% female and its leadership is 42% female. Hoyt remarks: ‘Most law firms would be very happy to have those numbers, but we know we have further to go.’
Technology is a big challenge for the team, both in terms of new banking products but also in upskilling its lawyers. It has a suite of technology in place that provides metrics on how the group is operating, from matter management to e-billing and time recording, and intends to study its processes and bring in new technology to drive efficiency.
The in-house team is supported by operations professionals Alison Gaskins, who is chief of staff; head of business management Jon Doyle; and head of commercial management Stéphanie Hamon. Hoyt says this has given Barclays a firm grip on both its internal and ‘very substantial’ external spend. ‘If you just step back and look at it as a commercial matter, a unit of the bank that manages this very large area of spend, it would be crazy not to have business professionals bringing cutting-edge practice to how you manage that.’
TransferWise
General counsel: Jenifer Swallow
Team size: Eight
Major law firms used: Allen & Overy, Paul Hastings, JAG Shaw Baker
Highlighted in last year’s GC Powerlist as a ‘company of tomorrow’, payments firm TransferWise has since grown to serve over two million customers, offering what it calls ‘the real exchange rate’. It unveiled a robust set of financial results last year, posting revenues of £67m for the year ending 31 March 2017, 140% up from the previous year.
TransferWise, which was given ‘unicorn’ status in 2016 for being a start-up valued over $1bn by analysts, has a legal function headed up by former Mind Candy GC Jenifer Swallow. She joined TransferWise in September 2015 and has since grown the legal function to eight staff, four with a legal background.
In 2017, the TransferWise legal team was involved as the company rolled out borderless accounts, which allow customers to pay and receive different currencies at a fraction of the cost of traditional high-street banks.
‘We want to know if we are helping the business be confident.’
One of the four non-lawyers in the legal team is Alena Danyliuk, TransferWise’s head of legal operations. Swallow describes her as a ‘finance powerhouse’ who has brought a new dynamic to the team. ‘When you talk to her about a problem, she gives you a different insight to someone with a legal background. Some of the best ideas come from non-lawyers.’
Another non-lawyer is Tom Hale, a former customer complaints officer who was persuaded to join the legal function as a privacy expert and is noted ‘awesome’ by Swallow. He is also the lead singer of the TransferWise band, where Swallow occasionally cameos as a backing dancer.
She says that a priority for 2018 is to continue to build out the legal function. TransferWise is in the process of recruiting a corporate lawyer to support Swallow, while an intellectual property expert is also on her wish list.
She believes that her legal team holds itself to a higher standard than most, measuring themselves on net promoter scores, an index that ranks how likely someone is to recommend their service to others. ‘We work in a way which is very congruent with the values of the company. This company got where it is because it was able to move fast. When legal teams are brought in, it starts to slow down because people get nervous. We want to know if we are helping the business be confident.’