Fides Weekly Update – 28th September 2018

Hello and welcome to the Fides Weekly Update. Take a look at this week’s key trends, moves and developments in legal and compliance.

Tweet us @Fides_Search to let us know your thoughts.

This week:

1). The Ince & Co and Gordon Dadds merger talks: What you need to know  

Yesterday the news broke that Ince & Co were in advanced merger talks with listed firm Gordon Dadds, sending shockwaves through the legal market. If the talks are successful, the two firms will merge under the name of Ince Gordon Dadds and will become the largest listed UK firm to date with combined revenues of around £114m.

Whilst the emergence of Gordon Dadds as a potential merger partner may have been surprising for some – with revenues just over £30m is around one-third the size of Ince – many in the market view it as a move of necessity.

Ince has been looking for a merger for some time and has taken drastic measures to secure financial stability, including a partnership restructuring, a redundancy round and a change in management earlier this year.

Gordon Dadds, in contrast, has grown rapidly in recent years, and become the second-ever listed UK law firm last year by way of a reverse takeover, earning an £18.75m valuation.

It also has a reputation for acquiring distressed firms and making them work under their business model. In 2014 it acquired administration-bound Davenport Lyons, and a year later Jeffrey Green Russell, as well as smaller regional practices such as Cardiff’s Thomas Simon and Bristol’s Metcalfes.

Whilst the acquisition of Ince’s name, brand recognition and international reach will serve to boost Gordon Dadds’ market position, the firms’ management credentials –particularly in the context of unsettled leadership at Ince following senior partner Jan Heuvels’ early resignation this summer – are also seen as a motivating factor behind the merger.

One source who has tracked the tie-up closely says: “Ince management will have concluded they need strong businessmen at the helm to make the difficult decisions. Gordon Dadds’ management team are businessmen. They view law firms as a commodity, and they’ll remove people they see to be underperforming.”

However, other corners of the market see the proposed deal as a sound commercial move for both parties. The two firms will likely maintain separate businesses that don’t compete, and there will be opportunities to make productivity gains through back-office synergies and cheap and easy access to capital.

Some even suggest that a conglomerate of firms may want to get in on the deal, as Gordon Dadds offers is an ability to incentivise staff on share capital rather than the distance hope of partnership.

Whatever the outcome of the partnership vote, we continue to observe with interest what will happen with these unlikely partners.

2). Danske Bank whistleblower revealed as UK authorities crack down on LLP’s involved

Howard Wilkinson, head of trading at Danske Markets in the Baltics from 2007 to 2014, has been revealed as the whistleblower who uncovered Europe’s biggest money laundering scandal.

Wilson agreed to come forward and confirm his identity according to Berlingske, the Danish newspaper that first reported allegations, and is now aiding investigations from the FCA, NCA and Danish authorities into the bank’s practices.

Mr Wilkinson was employed at Danske until April 2014, which is four months after he provided his first whistle-blower report to the bank’s top management.

In the release of its internal report last week, Denmark’s biggest bank admitted that a large part of about $235 billion that flowed through an Estonian unit between 2007 and 2015 may have been laundered. This amounts to 10 times the current gross domestic product of the Baltic state, and when the scandal hit its peak in 2013 accounted for almost half of all cross-border currency flows.

The non-resident customers came from countries including Russia, the UK and the British Virgin Islands, but the bank said it could not yet estimate how much of the total was illicit from overseas transactions.

According to Danske’s internal report, UK limited liability partnerships and Scottish limited partnerships (SLPs) were “the preferred vehicle for non-resident clients”, with the UK’s National Crime Agency now investigating suspicious entities with ties to the Estonia unit.

The bank’s Chief Executive Officer Thomas Borgen, who oversaw international banking from 2009 to 2012, resigned earlier this month facing allegations that he ignored warning signs of trouble. One of which came from Russia’s central bank in 2007, which stated that Danske customers “permanently participate in financial transactions of doubtful origin” estimated at billions of roubles monthly.

As well as the whistleblowing claims of Mr Wilkinson, both the bank’s internal auditors and Estonian regulators sounded the alarm to suspicious money laundering activity in 2014. Danske only began its own investigation last year.

3). Movers & Shakers

Panel Watch

Ten firms win roles on Lucozade’s inaugural panel

Appointments

Former RPC lawyer gets top legal job at Hargreaves Lansdown

SFO shakeups begin with first reshuffle of Osofsky’s reign

Moves

Arthur Cox hires Clifford Chance partner as project and infrastructure finance head

Clifford Chance banking and finance partner Matthew Dunn has joined Irish heavyweight Arthur Cox as head of its project and infrastructure finance group

Gide joins innovation push with triple hire for new tech-focused team

Gide Loyrette Nouel has created a new team, comprising both lawyers and non-lawyers, dedicated to advising clients on digital transformation from AMF, France’s stock market regulator

Pinsent Masons information law head makes move to Bristows

Pinsent Masons information law head Marc Dautlich has left the firm to join data protection team at Bristows

Freshfields corporate heavyweight leaves for leadership role at Fried Frank

Freshfields Bruckhaus Deringer has seen another senior partner departure, with corporate and capital markets partner Ashar Qureshi leaving to join Fried Frank’s London office as head of its EMEA transactions practice

SFO general counsel Alun Milford set to join Kingsley Napley

The Serious Fraud Office’s (SFO) general counsel Alun Milford is joining Kingsley Napley’s white-collar defence team in the latest exit from the regulator to a law firm

Slaughter and May corporate star Nigel Boardman to step down as partner

Slaughter and May corporate veteran Nigel Boardman will retire from the magic circle firm’s partnership next April, after 35 years at the firm

Mergers & Alliances

Bircham Dyson Bell and Pitmans to merge and transition to ABS structure

PwC seals major US firm alliance in next step up for Big Four’s ambitions in law

Fieldfisher enters Spain via local merger

Ince & Co in merger talks with listed law firm Gordon Dadds

Inclusion & Diversity

Addleshaws and Linklaters publish parental leave and pay policies to improve transparency

Innovation & Technology

BCLP puts together post-merger innovation team as firm combines US and UK resources

Clifford Chance and Pinsent Masons latest to join smart contracts initiative