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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This week:
1. A new dawn for HSBC: Succeeding leadership team appointed by the bank
After much speculation around who will replace Stuart Gulliver in the top role at HSBC, it was announced yesterday (12 Oct) that Chief Executive of Retail Banking and Wealth Management John Flint will be appointed as CEO.
Various names had been tipped to be contenders for the position, including Lloyd’s boss Antonio Horta-Osorio, and ultimately it was a further HSBC lifer that chairman Mark Tucker selected.
The global bank has a track record of promoting long-standing employees to its senior ranks, and Flint’s background of 14 years with the bank’s Asia business, followed by a further 13 years at HSBC in London, is no different.
Flint began his career in the global markets business and in 2010, shifted over to head up HSBC Global Asset Management. He subsequently led the institution’s retail banking and wealth management arm, after a period as Group Treasuer upon his return to London. This contribution to the bank, and well-rounded exposure to the business, put Flint in good stead for his new role. It will be interesting to see how the new leadership team progresses, as he goes forward alongside new chairman Mark Tucker, who is the result of a rare external hire by HSBC.
Tucker previously ran Asian insurance firm AIA, where he “spearheaded AIA’s record-breaking IPO on 29 October 2010” according to the insurer. He is the first chairman to be appointed externally since HSBC was founded in 1865.
The appointment of John Flint coincides with a period of a rising share price for HSBC since June 2016, and the potential end of the Deferred Prosecution Agreement (DPA), which, if unextended, runs until the end of this year. The bank has also nearly completed its phase of extensive restructuring, which involved over 87,000 job losses and a slimdown of its investment banking division.
The leadership duo have a solid platform on which to build their upcoming strategy, and with their combined experience in Asia, investors are expecting strong growth in the region, as well as a return to overall growth for the bank.
HSBC beat estimates for H1 2017, reporting a pre-tax profit of $10.24 billion, five per cent higher than the previous year, whilst revenues fell 11 per cent to $26.6bn during the period.
2. PwC Launches Flexible Lawyering Arm
PwC becomes the first accountancy firm to foray into the contract lawyering service with the launch of Flexible Legal Resources, a flexible lawyering service for large in-house legal teams.
Competing with the likes of Axiom and Lawyers On Demand, the service will help clients with their staffing needs by providing temporary lawyers for in-house teams during abnormal spikes in workload.
PwC expects the service to be used by clients requiring increased resources for tasks such as large-scale contract review, disclosure exercises during investigations, and other implementation challenges driven by regulatory changes. Initially focussing on the financial services sector, PwC’s pool of contract lawyers will eventually cover clients from all sectors.
“The contingent workforce is an attractive option. It allows clients to ramp their legal teams up and down depending on changing business demand, gives them access to a rich talent pool, but still allows them to drive efficiencies in overheads” PwC Legal services Director Anne-Marie Botha told Legal Week.
The service is part of PwC’s New Law offering, which aims to help large in-house legal teams work more efficiently, with a particular focus on the effective use of technology. This is spearheaded by former Radiant Law partners Andrew Giverin and Jason McQuillen who joined the accountancy firm in April.
Much has been made recently of the expansion of the accountancy firms into the legal sector, and the impact this has had on an already highly competitive marketplace.
The Big Four’s formidable brand strength, client base and ability to offer multidisciplinary services has helped them take market share from traditional law firms. Deloitte, EY, KPMG and PwC have invested heavily in their legal services arms in recent years – particularly in Europe – and now collectively employ about 8,500 lawyers globally.
PwC Legal is the largest legal arm of the Big Four, having 2,500 lawyers, which makes it the world’s sixth-largest legal services provider by that measure – up there with the likes of Clifford Chance and Jones Day. As the legal arm is fully integrated with the accounting firm’s UK business, the firm also has offices in 85 countries – far more than any other law firm. Earlier this year, PwC sealed an innovative five-year deal to take on the in-house tax law department of General Electric, including 600 staff, and last month opened its first office in the states with the launch of ICL Legal.
A report this week by legal market research company Acritas, also named PwC as the legal market’s second-strongest brand of alternative service provider, closely behind Thomson Reuters.
Although the revenue of the accountancy houses is yet to catch up with traditional firms, with the work of the Big Four centered around lower-value work associated with their audit and tax practices, market leaders would be foolish not to consider these firms a threat through their ambition to consider the broader needs of clients, and develop smarter, more flexible and cost-effective legal services.
Indeed, it will be interesting to see the traction PwC’s flexible lawyering service has on the legal market, especially in light of its scale and visibility as a leading professional services organisation.
Movers & Shakers of the week
Panel Watch
Legal & General puts panel review on hold
Appointments
Allen & Overy creates new eDiscovery role with EY hire
Hyundai Heavy Industries appoints new GC
Tunstall Real Estate Management appoints first GC from client Goodwin
Peter Martyr achieves six consecutive term as Global Chief Executive at Norton Rose Fulbright
Co-op interim consumer services GC leaves after double appointment to divide up role
Moves
Linklaters boosts Frankfurt base with Allen & Overy’s former Germany senior partner
Linklaters has hired senior banking partner Neil Weiand from Allen & Overy (A&O) in Frankfurt.
Bakers capital markets head exits for Jefferies Bank in-house role
Baker McKenzie capital markets head Edward Bibko has left the firm to join Jeffries Bank as EMEA head of investment banks legal
Former Linklaters financial regulatory partner joins BLP after Latham move falls through
Daniel Csefalvay joins Berwin Leighton Paisner after a previously announced move to Latham & Watkins in March
Clifford Chance hired Latham’s Asia head of Tech in Singapore
Luke Grubb, head of technology, media and commercial joins CC’s Singapore office
Long-serving Norton Rose Fulbright competition head leaves to join the CMA
Global head of antitrust and competition Martin Coleman leaves the firm to become non-executive director at the Competition and Markets Authority (CMA)
Hogan Lovells further bolsters finance practice
Energy, infrastructure and projects partner Arun Velusami departs Norton Rose
Osborne Clarke further builds Private Equity Team
OC hires UK private equity head Tim Hewens from Squire Patton Boggs
Mergers & Alliances
Linklaters strengthens Middle East offering with Saudi Arabia alliance
DAC Beachcroft’s New Zealand offices join Australian alliance partner
Office Openings & Closings
Squire Patton Boggs closes Kiev office
Charles Russell Speechlys partners break off to launch sports law boutique
Linklaters strengthens Middle East offering with Saudi Arabia alliance
Former Gibson Dunn partner joins with UAE firm for London launch
Hogan Lovells to close Mongolia office as managing partner exits to launch local firm
Partner Promotions
White & Case promotes seven to London partnership including two female lawyers