Latham & Watkins has promoted two City lawyers to partner in a global round of 31.
The firm has made London associates Charles Armstrong and Huw Thomas to its finance and corporate practices respectively.
Armstrong joined Latham in 2014 from Milbank Tweed Hadley & McCloy but has also worked at Baker McKenzie. He trained at Clifford Chance.
Thomas was an associate at CMS Cameron McKenna, where he spent time on secondment at BP. He joined Latham in 2011 and has since also been on secondment to Deutsche Bank.
The pair account for half of Latham’s European promotions. Two lawyers also made the cut in corporate in Düsseldorf and Milan, while lawyer Olga Ponomarenko was Moscow’s sole partner promotion.
Virtually all of the other new partners have been promoted in the US – a total of 24. Corporate accounted for 45 per cent of promotions, while litigation saw 11 promotions (equivalent to 35 per cent).
The biggest US cohort come from the New York office, with San Francisco and Washington DC fielding four partners each.
Charles Armstrong, finance, London Huw Thomas, corporate, London
Natalie Daghles, corporate, Düsseldorf Giancarlo D’Ambrosio, corporate, Milan
Olga Ponomarenko, corporate, Moscow
Kristen Smith Grannis, corporate, Boston David Tolley, litigation, Boston Rick Offsay, corporate, Century City Laura Washington, litigation, Century City Enrique Rene, tax, Chicago Johanna Spellman, litigation, Chicago Matthew Warren, finance, Chicago Sean Denvir, corporate, Los Angeles Josh Holt, finance, Los Angeles Benjamin Cohen, corporate, New York Blake Denton, litigation New York Jason Hegt, litigation, New York Kristin Mendoza, corporate, New York Reza Mojtabaee-Zamani, corporate, New York Peter Sluka, corporate, New York Lilia Vazova, litigation, New York
Julie Crisp, tax, San Francisco
Kirsten Ferguson, litigation, San Francisco Marcy Priedeman, litigation, San Francisco Gregory Sobolski, litigation, San Francisco
Michael Bern, litigation, Washington DC
Matthew Conway, tax, Washington DC
Andrew Prins, litigation, Washington DC
Cory Tull, corporate, Washington DC
Marcus Lee, corporate, Singapore Nozomi Oda, corporate, Tokyo
The Lawyer is launching an e-learning course on contract drafting. Course leader and ex-Freshfields partner Ben Staveley talks about why the subject is a passion of his.
Staveley: Contract drafting is at the heart of what lawyers are paid to do, so why don’t we spend time refining our skills?
What’s your background – why are you so interested in contract drafting?
I was a tax lawyer at Freshfields for 20-odd years. I joined the firm straight after university and was a partner from 1987 until 2002. Before then I studied English, and I suppose a love of language drew me to a heavily technical subject like tax law and its intricacies.
During my practising life I became increasingly intrigued by how contract drafting was done, as part of a wider interest in the written product that lawyers create for their clients.
“I have seen quite a lot of contract drafting which, even if it (just about) ‘worked’, was expressed in such obscure language it couldn’t possibly be understood first time”
And you felt that there was a problem when it came to drafting prowess?
I formed the view that the profession didn’t always live up to the standards it thought it was setting itself. I have seen quite a lot of contract drafting which, even if it (just about) “worked” and didn’t contain howling errors, was expressed in obscure language that the user of the contract couldn’t possibly be expected to understand first time: indigestible, old-fashioned, elaborately drafted, not set out sympathetically, over-reliant on old precedents that nobody thought to question.
Talking to lawyers in my post-practice life, I’ve continued to be surprised by how little time they typically spend reflecting on how to refine their contract drafting skills – a set of skills that everyone knows to lie at the heart of what lawyers are paid to do. I have tried in an academic kind of way to work out how to categorise the drafting errors that lawyers tend to make. I have been looking closely at the many contract dispute cases that arise each year: what has happened which led to those cases ending up in court? What could and should the lawyers have done differently to prevent their clients getting into a dispute?.
Does the profession recognise there is a problem?
I think it’s fair to say that if you ask the people in charge of law firms, most would acknowledge that the standard of contract drafting produced by their firm as a whole is patchier than they would like.
The people who rise to the top of a law firm tend to be effective drafters. Lawyers promote the most able practitioners to high positions. Those people will recognise that their firm doesn’t always produce drafting that is Premier League standard. They know that this causes a reputational and financial risk for their firm, but not one that it’s very easy to mitigate.
“The lawyerswho realise drafting is tough to get right are those who tend to be good at it, as they realise that subtle differences in language can lead to material differences in meaning”
Below that, most lawyers, even at quite a junior level, tend to have quite a lot of confidence in their own drafting. In fact, sometimes the most confident are those who should be most worried. The lawyerswho realise drafting is tough to get right are those who are good at it in the first place, as they are sensitive enough to realise that subtle differences in language can lead to material differences in meaning. The weakest drafters are often oblivious that they have a problem.
In between the two extremes, there are plenty of lawyers who take pride in their professionalism and who would love to have time to polish the contract drafting skills that they’ve developed over their careers so far. They’ve typically developed them in a slightly haphazard way, learning as they go and without having had the time or the opportunity to reflect on techniques more advanced than the ones they learned when they started out in law.
When it comes to old-fashioned and over-elaborate drafting, is that lawyers attempting to preserve the mystique of the profession?
Although I’m sure most lawyers wouldn’t deliberately choose obscure language, the law is by nature a conservative profession, and it somehow feels safer for lawyers to stick to familiar language – however unappealing it is to a non-law reader – than to have the courage to launch out into something simpler and clearer.
You have looked at disputes that have arisen due to contracts that have ambiguous drafting – what have you found?
One overriding conclusion is that when contracts go wrong, there is usually a failure at a number of levels. One of the hardest things about being a contract drafter is that you have to create a contract that is clear at several different levels.
“When contracts go wrong, there is usually a failure at a number of levels”
That involves – first of all – thinking about the way the contract works overall. When looking at a contract like that, the drafter is working like an architect – planning the overall structure. Then you get to the level of drafting a particular clause, where the drafter is working more like a bricklayer or a plasterer creating a room within a house. And below that level again, drafters have to use language at a very precise level. To extend the metaphor, they are working like an electrician doing the fine bits of wiring to make sure the house doesn’t burst into flames.
So drafters have to think at those different levels all the time, and a failure at any of them can cause the contract itself to fail. It’s genuinely difficult for anyone to keep all those aspects in mind when handling a contract of any complexity.
My other conclusion is that what is interesting – and a bit alarming – is it’s usually not just the particular few words that end up being the crux of the dispute. There are often a number of other things in the contract that look as if they could have given rise to a dispute but, for whatever reason, didn’t.
If that’s right, there are many more contracts that could end up in disputes but never do – the ones we see are the tip of the iceberg. If that’s right, it reinforces the point that time spent reflecting on drafting issues may be even more important in reducing risk than most of us have traditionally thought.
Are there particular mistakes that crop up a lot?
There are various categories of things that go wrong. Let me just mention a couple.
One of them is to do with linguistic or grammatical issues. It is very often the rules of the way the English language operates that trip lawyers up – lawyers sometimes draft things which are linguistically ambiguous, and they haven’t identified that the words are capable of being interpreted in two different ways. Problems of this type are easy to miss, but the chances of picking them up are greater if you’ve spent time analysing situations in which they are most likely to arise.
Another thing that crops up quite often is that lawyers don’t make it clear enough how the various provisions in a contract interrelate – if two clauses overlap and partly contradict one another, for example. Or where a particular provision is clearly expressed, but seems to fly in the face of the commercial rationale of other provisions. Which is to prevail? With modern judges believing it is their duty to interpret drafting firmly within its commercial context, it can be playing with fire not to nail down issues like this with extreme care.
What other challenges do lawyers face when it comes to drafting?
Deals tend to move so quickly these days that lawyers find it hard to carve out the time to reflect on the draft contracts they’re dealing with in anything other than a bit of a rush. That may encourage the trend I mentioned, of sticking to language that’s been used before because it seems safer. But there’s no guarantee that whoever came up with the language had any more time for reflection.
Another issue is specialisation. As a qualified lawyer you will specialise in a particular area, and while you will keep up to date by looking at developments in the law in that area, you won’t ever stray far outside that. The last thing you are likely to have time to do is read a case from a completely different practice area where there’s some dispute relating to drafting.
“I try to help lawyers learn from experience across the profession, in a way that modern methods of practice don’t otherwise often encourage”
That’s a bit of a shame, because questions of drafting tend to cross practice boundaries. If there is something that goes wrong in a lease, say, the same error might well cause something to go wrong in loan agreement but a finance lawyer might well never read a case about a lease. One of the things I try to do in talking about contract drafting issues is to help lawyers learn from experience across the profession, in a way that modern methods of practice don’t otherwise often encourage. The ideal would be for the profession to develop a culture of learning openly from its own mistakes, in the way some other industries have done (think airline safety). The number of contract drafting cases reaching the courts suggest that there’s a long way to go before that happens.
To find out more about our new e-learning course, please contact us at training@thelawyer.com
Testimonials of Ben Staveley’s course
“Ben’s drafting course was probably one of the best bits of training I had at my first firm”
Competition lawyer, Lloyds Banking Group
“Ben’s drafting skills are first rate and his ability to articulate that expertise in a practical and useful manner has always impressed me”
The first thing to note is that this story emerged from a hack of documents from a reputable law firm.
Jeremy Cape
This has largely been overlooked by the mainstream media and few (including, if I’m honest, me) have made the point with sufficient force that the protection of lawyer-client communications and advice exists for a reason, and we erode it at our peril.
The second thing to note is that so far there appears to be little of revelation in the leaked papers about the role of offshore, or the role of offshore advisers.
The case of the Queen and her investments seemed to conflate a number of largely unremarkable observations – the Queen is wealthy, private equity funds are structured offshore to avoid an additional and economically unsustainable level of tax, some investment portfolios contain shares in companies whose business model one may question – and to conclude that this is damning for the offshore sector.
Some of the papers suggest a variety of other different scenarios – whizzy remuneration schemes of the type that gave Jimmy Carr a degree of notoriety, possible shortcomings in the implementation of structures, differing interpretations of taxing statutes by revenue authorities – but there appear to be no smoking guns at the time of writing that would fundamentally change the way in which we see the offshore sector operating.
Moreover, there have been, and continue to be, major reforms in the way in which the offshore sector operates and the way in which it interacts with the rest of the world. If the public is expecting the Paradise Papers to reveal stories of briefcases full of laundered cash arriving on tropical islands, they are likely to be disappointed.
The UK Chancellor is delivering his Budget on 22 November 2017. I would expect him to mention the leaks in passing, noting – correctly – that the UK is a world leader in clamping down on tax avoidance.
Will he announce fundamental changes to the taxation of offshore funds, or trusts, or non domiciles? I suspect not. The debate about international tax is not just a debate in which experts should participate, but the discussion needs to be non-hysterical and properly informed.
Doing that off the back of a hack of a law firm does not seem to be a great starting point.
Jeremy Cape is a tax partner at Squire Patton Boggs
No5’s experienced and specialist child practitioner Michele Friel has become Birmingham’s first qualified barrister to offer Arbitration for private law children issues.
Arbitration is confidential and allows the parties to determine how their dispute will be determined and by who. Arbitration is quicker, flexible and more cost effective than the court process.
Stewarts achieves outstanding results in the Chambers 2018 UK guide and Chambers 2017 High Net Worth guide
The firm is listed for 14 of its practice areas and its lawyers hold 49 leading lawyer rankings, some across multiple departments.
Litigation and Banking Litigation have both moved up a band within the guide and are now ranked in bands 4 and 3 respectively in London. In Banking Litigation we are described as “a very professional firm with an excellent eye for a client’s needs and requirements.” Litigation in Leeds holds its band 1 ranking.
NousCom, an oncology company developing neoantigen based cancer vaccines, announced the completion of a €42m Series B financing. The round involved a syndicate of leading transatlantic life sciences investors led by new investors Abingworth with participation from 5AM Ventures and the existing investors LSP and Versant Ventures.
VISCHER acted as counsel to NousCom. The team was led by Dr. Matthias Staehelin (Partner) supported by Luzius Zumstein (Associate), both Corporate.
Monarch has lost its battle to sell off its remaining airport landing slots after the High Court dismissed its appeal this morning.
Monarch’s administrator, KPMG, applied for a judicial review on whether the airline would be able to recover £60m from the slots, described as its last valuable asset.
Lord Justice Gross and Mr Justice Lewis found that the defendants, the Airport Coordination Ltd, did not have a duty to allocate the slots to Monarch and that in any event, the defunct airline fell outside the language of slot regulation.
“It is one thing to permit a ‘secondary market’ in slots,” the judges ruled. “It is another to extend it to companies in insolvency.”
They continued: “Whatever flexibility and discretion ACL enjoys in other circumstances to reserve (or postpone) a decision, it is no longer entitled to reserve its decision on the Summer 2018 slots on the facts of this case. That would be to sterilise or distort part of the market, to the potential detriment of third parties, for an uncertain period of time.”
Freshfields Bruckhaus Deringer partner Craig Montgomery and senior associate Jonathan Pagan acted for the airline, which ceased trading last month, leaving 110,00 customers stranded overseas and an estimated 750,000 bookings cancelled.
The firm instructed Fountain Court’s Bankim Thanki QC, insolvency specialist David Allison QC and Brick Court‘s Malcolm Birdling.
Rupert Earle at Bates Wells Braithwaite (BWB) instructed Michael Crane QC at the same set for Airport Coordination Ltd, the body that services the aviation industry and is responsible for slot allocation.
DLA Piper acted for Manchester Airports Group, an intervener in the case, instructing Fountain Court’s Akhil Shah QC and David Murray.
The court granted Monarch permission to apply for a judicial review but put off a decision on their request pending a full judgment on the case.
The legal line-up
For the appellant, Monarch Airlines Ltd
Fountain Court’s Bankim Thanki QC and David Allison QC, alongside Brick Court’s Malcolm Birding, instructed by Freshfields’ partner Jonathan Pagan
For the respondent, Airport Coordination Ltd
Fountain Court’s Michael Crane QC and Alexander Milner, instructed by Bates Wells Braithwaite partner Rupert Earle
DWF has promoted nine of its lawyers to partner in its latest round, with one promotion coming from its newly-opened Brisbane office.
Liverpool and London have each received two new partners, while Birmingham, Brisbane, Leeds, Manchester and Newcastle each received one effective 1 November.
The firm’s core insurance practice has been the most heavily strengthened with Eileen Pathiraja, Fiona Matthews, Giles Kellner, Paul Donnelly and Rhys Sanchez all being made up.
Christian Hellmund (energy), Jonathan Smith (commercial litigation) and Lisa Stavropoulos (corporate) complete the lineup.
The majority of the new partners did not train at DWF, joining the firm from a variety of outlets such as Weightmans, Eversheds and defunct firm Halliwells.
Eileen Pathiraja, insurance, London Fiona Matthews, insurance, Liverpool Giles Kellner, insurance, Liverpool
Paul Donnelly, insurance, Birmingham
Rhys Sanchez, insurance, London Christian Hellmund, energy, Leeds Jonathan Smith, commercial litigation, Newcastle
Lisa Stavropoulous, corporate, Manchester
Damian Hegarty, regulatory, Brisbane
DWF has emerged as the firm with the highest level of total borrowings in the UK 200, with the firm’s debt having increased each year since 2013 to the current level of £36.5m.
Several firms in this year’s UK 200: Financial Management report, which will be published next Monday (13 November) saw their total level of debt grow during 2016/17 while a number have seen it rise consistently since The Lawyer began reporting borrowings data.
Shoosmiths saw a 128 per cent increase in total borrowings from £7.6m to £17.3m in 2016/17 following a period of significant investment in its office network. The firm’s total lock-up is also longer than the majority of firms at 177 days, consisting of 125 days WIP and 52 debtor days, a rise of six days from 46 at year-end 2015/16.
According to the firm’s managing partner Claire Rowe, this is all part of a wider plan.
“The last two years have seen significant investment all to aid the delivery of our strategy,” said Rowe, who highlighted the firm’s move towards open plan and agile working in a phased office-by-office rollout in particular as a significant development.
“We’ve had a change programme but it’s never ending, every year you have to assume you’ll be enhancing your systems,” added Rowe. “And you need to fund it. But the investments and borrowings are planned to reduce over a period of time as we recoup that investment.”
Certainly the indications are positive at Shoosmiths, which saw a fifth consecutive year of turnover growth in 2016/17 and a 13 per cent rise in net profit.
“Productivity is improving and the trajectory is up,” said Rowe. “That’s reflected in our profit numbers.”
And while the firm’s total lock-up looks long at 177 days (125 days WIP and 52 debtor days, up by six from 46), director of finance Chris Stanton pointed out that the firm has always had historically higher levels of lock-up than most of its competitors.
“We have a good-sized clinical negligence practice and the quality of the work means those cases can take years,” said Stanton. “Our lock-up numbers outside of that are much more normal, in the region of two to three months.”
The firm with the highest level of total borrowings this year is DWF, which had £36.5m at year-end 2016/17. Net debt as a proportion of total firm-wide revenue has also been rising at DWF for the past five years. In 2013 it stood at 8 per cent. Last year, with its net debt of £33.8m on a total turnover of £201.2m, that had risen to 17 per cent.
Total borrowings have also been on the increase, from £14.5m in 2012/13 to £36.5m last year, or 157 per cent. Over the same period DWF’s total turnover has grown by 7 per cent from £188.2m to £201.2m.
Andrew Leaitherland
Andrew Leaitherland, DWF’s managing partner and CEO, has overseen an accelerated expansion programme over the past few years, largely focused on mergers, which has taken DWF’s turnover from £34m to £201.2m (the fastest period of growth was longer than five years ago while in recent years growth has slowed, despite the firm posting an 8 per cent increase between 2015/16 and last year’s £186.9m).
At the same time DWF’s focus and client base has also moved, shifting from being one that is exclusively focused on the UK to one that is increasingly international (albeit with a platform that, from a revenue generation perspective, remains primarily focused on the UK, with in excess of 90 per cent of turnover generated here).
Both the turnover growth and international expansion have required funding, as Leaitherland points out.
“Like all firms, we fund the business and our growth through a combination of external borrowings, capital, retained earnings and tax balances,” he said. “This year we have made some significant investments which continue to fuel strategic growth and expansion, and while these naturally take more than a year to demonstrate return, we take a long-term view of the value they will deliver for us and our clients.”
Leaitherland highlighted the fact that every firm will have a different mix of funding based on its overall funding strategy, where it is in its investment cycle, tax planning approaches and overall business and lockup performance.
“A comparison of individual elements of that funding with other firms, particularly when looking at a single point in time, cannot be truly meaningful,” Leaitherland claimed. “The metrics are so varied and there is no single barometer you can use, in isolation, to indicate financial health.”
This is an extract from the UK 200: Financial Management Report 2017. For more information about the content of the report please contact Matt Byrne on 0207 970 4558 or at matt.byrne@centaurmedia.com. To purchase the report please contact either Gilberto Esgaio on +44 207 970 4191 or gilberto.esgaio@centaurmedia.com or Letitia Austin on +44 207 970 4662 or letitia.austin@centaurmedia.com.
A Financial Conduct Authority (FCA) ban on former UBS and Citigroup trader Tom Hayes will not be enforced while his conviction for Libor rigging is reviewed, the Royal Courts of Justice has ruled.
Stephenson Harwood was appointed to defend Hayes in this action in March, following a number of changes in counsel.
Stephenson Harwood’s Sara George, who is defending Hayes, said: “The FCA sought to ban Hayes from regulated activity, and issued a prohibition order against him, despite the Criminal Cases Review Commission investigating his conviction. This is the first time that an application for a stay in FCA prohibition proceedings, where an individual has been sentenced for a criminal offence, has been successful.”
The former UBS and Citigroup trader was the first individual to face trial for manipulating the rate and was found guilty of rigging global Libor interest rates in August 2015, in what marked a victory for the Serious Fraud Office (SFO) in its stance against the banks.
The former trader asked the High Court to stay enforcement action by the FCA, which sought to ban him from working in the financial sector, pending the outcome of a separate investigation by the body that reviews suspected miscarriages of justice.
Hayes referred his case to the Criminal Cases Review Commission in January, alleging there were flaws in expert evidence that led to his conviction. The CCRC could refer his case to the Court of Appeal if it so chooses.
The FCA said in a statement: “The Financial Conduct Authority (FCA) has decided to prohibit Tom Hayes from performing any function in relation to any regulated activity in the financial services industry. The FCA considers that Mr Hayes is not a fit and proper person as a result of his conviction for conspiracy to defraud in relation to the manipulation of Yen Libor.
“Mr Hayes has referred the FCA’s decision to the Upper Tribunal. Therefore, the decision has not taken effect pending the determination by the Tribunal.
“Following the referral, the FCA applied to have Mr Hayes’ reference struck out, and Mr Hayes applied to prevent publication of the FCA’s Decision Notice and to delay the hearing of the proceedings on the basis that he has referred his conviction to the Criminal Cases Review Commission (CCRC).
“The Tribunal has decided to delay the proceedings pending the CCRC’s decision.”
Hayes added: “I welcome this decision. I can now concentration fully on the Criminal Cases Review Commission’s investigation into my conviction, and support it in any way I can. I’m pleased that the FCA has accepted my CCRC application is substantive and expects it to be considered seriously. I continue to maintain my innocence. There is a huge amount of new evidence available and I will fight my conviction until the truth comes out.”
In January, Hayes instructed Kaim Todner partner Karen Todner to appeal his conviction. He had also previously sought legal advice from Garstangs Burrows Bussin before it merged with Cartwright King. Hayes also used Fulcrum Chambers and 25 Bedford Row, as well as Charter Chambers in the jury trial.
In May last year, The Lawyer reported that UBS put pressure on Stephenson Harwood to not represent another Libor trader client, Arif Hussein, in relation to an FCA investigation. A senior lawyer at the banking giant reportedly phoned the firm to ask it to cease representing Hussein, who was embroiled in a similar Libor-manipulation scandal and was also represented by Sara George.
The bank is a longstanding client of Stephenson Harwood and often refers senior management individuals to the firm for representation. The firm was instructed Hussein in 2013 in relation to the FCA probe, which concluded in April 2016 with the blacklisting of “reckless” Hussein from financial services work.
A gang of drug dealers has been jailed for more than 120 years at Birmingham Crown Court following a joint investigation by the West Midlands regional organised crime unit and the National Crime Agency.
John Butterfield QC of No5 Barristers’ Chambers prosecuted the case together with Sarah Allen which also involved the sale of guns to organised crime groups across the West Midlands.
Mohammed Rafiq Khan, aged 29 from Bordesley Green and Michael Harkin, 54, from Yardley, were responsible for sourcing and supplying sawn-off shotguns to criminal associates across the West Midlands.
Khan was also the head of a drug dealing network which distributed class A drugs across the region.
Ogier has advised EN+ Group (EN+) on its initial public offering of shares representing global depositary receipts listed on London Stock Exchange . Ogier also advised Basic Element Limited as a selling shareholder of EN+.
Ogier advised on all Jersey law and British Virgin Islands’ law aspects of the IPO alongside lead counsel White & Case LLP.
EN+ is a vertically integrated power and aluminium producer with core assets located in Russia.
The Ogier team was led by Simon Dinning (partner and global head of corporate) advising on Jersey and BVI law, assisted by Michael Robinson (associate, Jersey law) and Wendy Walker (senior associate, BVI law).
Emma Hatley, partner in the Divorce and Family department has been named ‘Family Lawyer of the Year’ by Spear’s Magazine.
The Spear’s Wealth Management Awards acknowledges and honours entrepreneurs, philanthropists and others for their contribution to the wealth management world and beyond.
One Essex Court has welcomed Lord Neuberger of Abbotsbury to Chambers.
In confirming his arrival Lord Grabiner said: “I am delighted that Lord Neuberger, until recently the President of the UK Supreme Court, has, with immediate effect, joined our Chambers at One Essex Court as an arbitrator.”
Cedarlake Private Equity Fund I, advised by Rantum Capital, has acquired from Argos Soditic Funds the majority of BMF Group AG, the world’s third-largest ropeway manufacturer with more than 320 employees in Switzerland.
Vischer advised Cedarlake and Rantum. The team led by partner Dr. Robert Bernet comprised Dr. Peter Kühn, Sebastian Flückiger, Ruben Masar, Aron Waltuch, Janique Bourgeois (Corporate/M&A), Marc Ph. Prinz and Florian Schaub (Employment), Dr. Jana Essebier (Finance), Klaus Neff (Merger control), Adrian Gautschi (IP) and Lukas Züst (China Desk).
Lord Neuberger has joined One Essex Court as an arbitrator after announcing his retirement from the bench.
Lord Grabiner QC, a commercial barrister at the set, confirmed that Former Supreme Court judge Neuberger would join chambers with immediate effect.
Neuberger said: “I am very pleased to be joining One Essex Court, and, having retired from the bench, I am looking forward to what I hope will be an equally stimulating time as an arbitrator.
Judging and arbitration have much in common, but there are also a number of significant distinctions.”
Neuberger retired from the highest juridical position at the end of September, following a career that saw him preside over the landmark Article 50 case, in which the court ruled that parliament could not rely on royal prerogative alone to trigger Article 50 and must seek parliamentary approval.
Lady Hale graduated from Cambridge University in 1966 and qualified as a barrister. She practised family and social welfare law at the Manchester Bar but her main career was as an academic. She taught law at Manchester University until 1984, when she became the first woman to be appointed to the Law Commission, the statutory body which promotes the reform of the law.
She was appointed Queen’s Counsel in 1989 and in 1994 she became a High Court judge. In 1999 she was the second woman to be promoted to the Court of Appeal, following Dame Elizabeth Butler-Sloss, before becoming the first woman Law Lord.
Both cases are a huge step change from previous fine levels which have typically never exceeded £50,000. In both cases the fine was negotiated with the SRA and put to the SDT as an agreed outcome. In the case of Locke Lord an initial agreement between the SRA and the firm was of a fine of £250,000. This was increased by agreement to £500,000 when the SDT indicated it should be higher. These two cases have raised the tariff for all large law firms who are the subject of a SRA investigation.
In the past, all cases before the SDT where a respondent admitted the allegations would follow the same pattern. The case would be put to the SDT on an agreed basis by the SRA at a public hearing but without a penalty being suggested. The respondents would mitigate and the SDT alone would decide what penalty to impose. Both parties would be uncertain as to outcome, the reasons, and what might be said in open court and how that might be reported in the press.
More recently, the SRA has in some cases presented the SDT with agreed outcomes at a hearing. Sometimes these have been accepted by the SDT but, on occasion, the tribunal has felt unable to agree. Some SDT members have been sceptical about agreed outcomes partly because of under prosecution concerns, and partly because statutory powers rest with the SDT. However the informal agreed outcomes practice was put on a more formal footing by amendments to the SDT’s case management practice direction with effect from 1 September 2016, which also allowed for the case to be determined on the papers.
It is clearly advantageous for both law firms and the SRA to reach agreement on both outcome and not have a hearing. Uncertainty is removed. However, the dynamic of agreed outcomes is that the harder the law firm negotiates, the less likely the SRA or the SDT is to accept the agreement. This perhaps explains the huge fines that White & Case and Locke Lord were willing to pay. This process has also resulted in a step change in the level of fines. Under the old system firms received smaller fines.
So we now have a new norm. The White & Case and Locke Lord fine levels have raised the bar for everyone. The SRA will consider them a new benchmark against which future similar cases should be measured and will rely on them in negotiations and before the SDT. Law firms need to be aware that big fines are now very much on the agenda and that should give pause for thought as to how firms deal with the SRA and manage risk.
Iain Miller is a legal services regulatory partner at Kingsley Napley
Debt levels among some of the UK’s largest law firms rose significantly during 2016/17, exclusive research by The Lawyer has indicated.
Total borrowings last year among the 82 firms that provided data relating to debt for the UK 200: Financial Management report, which will be released on Monday (13 November) stood at £375.8m, an average of £4.58m per firm. The previous year 88 firms had total borrowings of £349.2m, an average of £3.96m per firm.
While direct comparisons cannot be made, as the number and identity of firms that provided data differs marginally year on year, the overall trend appears to be up (the full report includes specific and attributed data on individual firms’ debt and lock-up profiles).
In contrast to the rising debt trend a number of firms reported cash stockpiles that have been growing in recent years. For the first time this year The Lawyer asked firms to report the level of cash they had at year-end. A significant number of firms that had borrowings also had cash in the bank at year-end, with many posting a cash surplus.
Osborne Clarke, which had total borrowings of £2.3m but a net debt of £27.5m, had the highest cash surplus of all of the firms in the UK 200 sample in 2016/17, with £29.8m in the bank at year-end.
Managing partner Ray Berg said that while the use of technology was important in terms of financial management, the key was human interaction.
“We work very closely with the finance team, pay close attention to some key metrics, and encourage our people to speak with our clients,” said Berg. “It’s part of the client relationship management process, a fundamental part of it. Also we simply don’t want to be indebted. We took out a small loan for fit-outs and amortised the lot, but we don’t want to be borrowing to pay drawings. That’s the start of a slippery slope.”
Berg added Osborne Clarke requires a minimum cash balance before it can pay out drawings, which he described as part and parcel of being “a prudent business”.
“We also need to invest to innovate so we need cash to invest in tech, infrastructure, people, that’s what we’ve been using the money for, though we take a relatively considered approach to investment,” added Berg. “We’re custodians for the next generation of people.”
The total cash that the 92 firms which provided data had in the bank at the 2016/17 year-end was £290.5m. The total net debt across the 95 firms that provided data stood at £107.1m last year.
The UK’s largest law firms are slimming down on the amount of office space they allocate to each staff member, as agile working sweeps the legal market.
Exclusive research carried out for The Lawyer Workspace Trends 2017 report, released this week, shows that while the total amount of space occupied by UK 200 firms has risen, and the cost of space has also gone up, the average space per person has shrunk by 8 per cent year-on-year.
In 2015/16 the average space per staff member was 187sq ft. Last year this dropped to 172sq ft, with many firms increasing headcount while making no changes to their office space occupancy.
These firms include Shoosmiths, which plumped for hot desking across the entirety of its new Manchester office when it moved in June, despite cutting down on the amount of space it occupies in the city.
The amount of office space allocated per person ranges within the sample from just 17sq ft for dispersed firm Keystone, up to 297sq ft at London pensions boutique Sackers.
Across the 104 firms which provided data on their office space for the last year, the total occupancy was 7.37 million sq ft with an average occupancy of 70,887sq ft – up from 69,086sq ft in 2015/16. The average cost rose from £2.69m in 2015/16 to £2.97m, an average cost per sq ft of £42.79.
