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Risk management and professional indemnity survey 2013: Getting it Right

Following successive years of regulatory change, including the introduction of outcomes-focused regulation, COLPs and COFAs, risk teams are now in a phase of assimilating those changes. Legal Business tracks progress so far

After five years of reporting on the torrent of regulatory change that has swept through law firms, this year’s Legal Business/Marsh risk management and professional indemnity survey finds risk managers within law firms looking to assimilate those changes. In our sixth annual report on the market, the buzzword is ‘embedding’ – ensuring the upheaval caused by the introduction of outcomes-focused regulation (OFR) and the new high-profile risk management roles (the compliance officer for legal practice (COLP) and the compliance officer for finance and administration (COFA)) are properly implemented.

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Risk management and professional indemnity survey 2013: Same Old Fears

Despite renewed focus on outcomes-focused regulation, IT security and conflicts remain the key threats keeping risk teams awake at night.

This section of the report analyses the likely impact of various risk scenarios on law firms and the likelihood of those situations occurring. Typically those situations that potentially have the most serious impact on a firm’s business are the least likely to occur, and vice versa. ‘Legal Risk Profile’ tables show the mean scores for impact and potential as separate indices.

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Risk management and professional indemnity survey 2013: Finding the Balance

New reporting requirements under the SRA’s outcomes-focused regulations have put additional pressure on risk teams’ resources but finding the right individuals for the new COLP and COFA roles has been the top priority.

Risk teams have been pulled in many directions in the last few years but top of their agenda throughout 2012 was going through the process to appoint the compliance officer for legal practice (COLP) and the compliance officer for finance and administration (COFA). The new roles were introduced as part of the Solicitors Regulation Authority (SRA)’s push into outcomes-focused regulation (OFR) but for some the process has been painful and protracted, while some firms were still waiting for the individuals they nominated for the COLP role to be approved.

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Risk management and professional indemnity survey 2013: Counting the Cost

While the end of the assigned risks pool may encourage more insurers into the market, professional indemnity insurance for law firms is as competitively priced as ever.

As law firms experience constant pressure to rein in costs, the pricing of professional indemnity insurance (PII) is high on the agenda. As PII is typically law firms’ third-largest expense, after staff and premises, that 76% of respondents said that they found PII generally to be reasonably priced (a marginal increase on 71% last year) is good news for firms generally. But despite widespread reports of an increasingly soft market, the number of respondents saying their insurance is over-inflated has increased from 7% to 17%.

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Europe in Union

The ravages of the global recession and the European sovereign debt crisis have threatened to turn the long boom law firms have enjoyed into a painful bust. But Europe’s resilient full-service firms are weathering the storm, and many are finding that economic turmoil is bringing opportunities as well as challenges.

In law’s long boom years, it seemed to many that the bumper revenues and profits from an ever-rising tide of transactions would last forever; there was always another wave of deals to be done. But since the collapse of Lehman Brothers in 2008 and the global financial crisis, law firms that once thrived on a seemingly insatiable demand for everything M&A have faced the painful realisation that this lucrative era is over.

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Switzerland – Being Prepared

Swiss arny knife

In most markets, it wouldn’t qualify as news but in the conservative Swiss legal community, the creation last April of Meyerlustenberger Lachenal via a merger between Zürich’s meyerlustenberger and Geneva’s Lachenal & Le Fort is still making waves. Currently listed as one of the largest law firms in Switzerland, it is present in Zug, Lausanne and Brussels, in addition to Zürich and Geneva.

The roots of Lachenal & Le Fort date back to 1882, while meyerlustenberger was established in 1975. According to Christophe Rapin – a Lausanne-based partner at the combined firm – an important driver behind the merger, which created a 30-partner practice, was to ensure national coverage of the Swiss market, particularly for the firm’s international clientele.

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Litigation market polarised as Jackson reforms take effect

With the Jackson reforms recently instigated, the market is divided about how the introduction of damages-based agreements (DBAs) will impact the litigation market.

Under the reforms, which came into effect on 1 April, litigators will be allowed to accept cases under DBAs for the first time. However, litigators say the lack of clarity about how the new rules work will inhibit their use.

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Latest US profits show positive early signs

The initial numbers to emerge from the US reporting season indicate a relatively resilient performance in 2012 for the world’s largest legal market.

A series of firms have so far posted headline financial results, including Latham & Watkins, Quinn Emanuel Urquhart & Sullivan and White & Case, with the majority achieving growth in profits and fee income.

Latham reported growth of 3.4% with the top five US firm’s revenue hitting $2.23bn, up from $2.15bn for the 2011 year. PEP also grew 7.4% to $2.44m and the firm reported an increase of 2.4% in revenue per lawyer, which hit $1.1m in 2012.

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Insolvency teams line up on high-profile failures

With HMV, Jessops and Blockbuster all entering into administration in the first few weeks of 2013, leading City firms have scored significant instructions.

Linklaters is involved in the administration of HMV, with restructuring and insolvency partners Richard Hodgson and Richard Bussell taking the lead. Linklaters had also been advising the lenders, The Royal Bank of Scotland and Lloyds Banking Group, to HMV Group since the beginning of 2011 and banking partner Chris Howard continues to advise the lenders. Continue reading “Insolvency teams line up on high-profile failures”

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DWF looks to acquire a stricken Cobbetts in pre-pack deal

DWF is set to acquire Cobbetts in a pre-pack deal, after the struggling Manchester-based firm called in administrators KPMG last month.

The top 40 UK firm announced its intentions to acquire Cobbetts almost a year after merger attempts by the two firms failed. At the time, a joint statement said talks had finished because of ‘continuing uncertain market conditions’.

Under the agreement, DWF will take on 419 staff, including partners, from the fallen firm in Leeds, Manchester, London and Birmingham. The DWF deal does not include Cobbetts’ debt recovery team, Incasso, while Walker Morris has taken the firm’s 24-strong financial litigation team.
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Barclays begins search for new general counsel

Barclays, one of the UK’s largest banks, has started its hunt for a new general counsel (GC) following the retirement of Mark Harding.

Harding’s decision to step down was announced in early February and comes after ten years at the bank. In a statement, the bank’s chief executive Antony Jenkins said that the rationale behind the move was ‘grounded in wanting to do what is best for the bank’.

Barclays is now looking for someone to replace Harding and to head up its group in-house department, which has over 200 lawyers. Because of the seniority of the role, Barclays said the process could take a considerable amount of time, however speculation is already rising over where the bank will find its next recruit. Continue reading “Barclays begins search for new general counsel”

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HSF sees more City departures but secures German launch

Herbert Smith Freehills (HSF) has been hit by a string of key departures from its lucrative disputes practice.

Simon Bushell, who co-chaired the corporate fraud and asset tracing group at HSF, is set to join Latham & Watkins’ City office imminently. His departure marks the fourth high-profile litigation exit since the start of the year after Martyn Hopper, who was head of the firm’s successful financial services regulation practice, and Nikunj Kiri both left for Linklaters in January.

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FFW and Travers Smith shake up senior roles

City firms Field Fisher Waterhouse (FFW) and Travers Smith have overhauled senior management, with each seeing new appointments to the top roles.

Head of technology and outsourcing Michael Chissick has been named FFW’s new managing partner, replacing Matthew Lohn, who will take up the re-introduced role of senior partner.

Chissick said: ‘I am leading the firm through a transformation. We want to move away from the negative market perception and create a firm culture that is modern and forward thinking.’

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Pinsents launches flexi-lawyer service for clients

Pinsent Masons is set to launch a contract lawyer service that will provide clients with access to lawyers on a temporary basis as and when they are needed.

‘Vario’ will offer in-house teams a group of freelance lawyers with a variety of experience to cover anything from fixed-term projects to maternity leave. The move follows clients’ increased demand for flexible lawyers and addresses the core issues of resource, cost and skills that often affect the in-house legal teams.

Pinsents partner Alison Bond, who heads Vario, said: ‘Clients are increasingly asking for access to flexible resources. However, we wanted to take the idea a step further and launch the next generation of this type of service. Continue reading “Pinsents launches flexi-lawyer service for clients”

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Leverage starts to resurface in dormant market

Liberty Global’s $23.3bn acquisition of Virgin Media and Dell’s proposed $24.4bn leveraged buyout have deal finance advisers asking whether this is a signal that leveraged buyout deals are making a comeback.

The pair of mega deals were announced last month within weeks of each other and have handed roles to a raft of advisers on both sides of the Atlantic.

Virgin Media turned to New York firm Fried, Frank, Harris, Shriver & Jacobson for M&A advice, with senior counsel Arthur Fleischer Jr on the US corporate side and London corporate partner Richard May on the UK aspects.
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Dundas departures reflect pressure on Scots firms

Dundas & Wilson has confirmed the departure of three more partners from the firm’s London arm. Corporate partners Julian Mathews and Simon Sale, along with banking and finance partner Michael Wrigley, have decided to leave the Scots leader, which has faced a difficult few years by any yardstick.

These moves, which were confirmed in February, compound an unsettled time for the firm’s London office. The City practice last year saw Martin Thomas, one of its top litigators, leave for Wragge & Co, along with banking partner John Pike, who quit for Osborne Clarke. More recent senior departures include TMT partner Paul Graham, who left for Field Fisher Waterhouse, while real estate partner Nick Padget left for Osborne Clarke. The latest departures have raised familiar questions about the firm’s London ambitions.

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Freshfields to provide scholarships for aspiring black lawyers

Freshfields Bruckhaus Deringer is launching a scholarship with the Stephen Lawrence Charitable Trust (SLCT) to help students from black and ethnic minorities gain access to the profession.

The scholarship will allow four successful male candidates committed to pursuing a career in the legal profession to receive a £3,500 annual contribution towards living expenses, as well as training, mentoring, work experience at Freshfields and a guaranteed interview for a training contract.

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Rising clout means a new kind of corporate politics for GCs

Oxymoronic as it sounds, news that Barclays general counsel (GC) Mark Harding is to depart has been received as startling and yet not entirely a surprise. Barclays had been engulfed in a series of escalating controversies in recent years spanning mis-selling, tax advice, and – most damagingly – allegations of rigging institutional interest rates. While there has been no suggestion that Harding or Barclays’ legal team shoulders any blame, incoming chief executive Antony Jenkins has gone out of his way to signal a total break with the culture under predecessor Bob Diamond, who last year stood down as the Libor investigation generated a record fine against the bank.

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Legal Business 100 2012: Interactive main table

From merger mania to profit manipulation – the LB100 in 2012 draws on familiar themes from 20 years of law firm financials.

If there’s one thing the last 20 years have taught us at LB, it’s that the legal profession carries on regardless. The UK may have entered into a  double-dip recession despite quantitative easing; the US and a number of European countries may have seen their credit ratings downgraded; M&A may have dried up and the global debt markets may be in stasis, but the UK’s top 100 law firms continue to post record growth and trend-busting profits. The industry has again showed its remarkable resilience and stability.

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