Star legal writers: corporate

How UK law firms approach risk management differently and M&A in the Asia Pacific: our top corporate briefings.

Willis: Risk barometer: a study on how attitudes and approaches to risk management differ between UK law firms

By Martin Ellis

The legal landscape in the UK is changing at a faster pace than ever before in its history. The reforms implemented by the Legal Services Act have resulted in many law firms expanding their footprint into new markets and taking advantage of opportunities to grow by acquiring other practices. Many firms have embarked on joint ventures or set up wholly owned subsidiaries, some offering non legal but complementary services to clients.

Legal disciplinary partnerships and alternative business structures have provided businesses (not all of them law firms) with creative options to increase their clients’ routes to obtaining legal advice and associated services. Law firms no longer need to be owned or managed just by lawyers. For many innovative firms the traditional law firm model is unsuitable and outdated with many moving to a more corporate structure. The consolidation within the legal market shows no sign of slowing down and globalisation remains at the top of many large law firms’
strategies.

Against that back-drop, clients continue to become more demanding and sophisticated, as well as wanting more for their money. There is ongoing uncertainty and frustration over the regulation of the profession, its framework and its cost to firms of all sizes. Add developing risks involving cyber security, information and data management, EU-US sanctions and the use of social media into the mix, as well as the potential difficulties of managing a business evolving through a recessionary climate into a period of economic growth, and it is an exciting but challenging time to be involved in the legal sector.

Bearing all those factors in mind, it should come as no surprise that the risk and compliance function within law firms is one of the most arduous roles within the business, especially given the personality traits of the lawyers required to buy into a risk management culture and its processes.

No matter what size or structure a law firm is, many of the risks they face acting for clients are still the same. Willis is pleased to have partnered with The Lawyer Research Service to produce this sector-wide survey and report on how attitudes and approaches to risk management vary between UK law firms. We hope that you find the results interesting and thought provoking.

Cyber-risk rising up the agenda but still not recognised by small firms

From company accounts and planned M&A deals to personal finances and detailed contact information, law firms hold huge volumes of sensitive client data. It is therefore no surprise that UK firms are increasingly targeted by criminals and hackers. Many firms do not realise they have been subjected to a cyber attack and those that have often do not report so. Although this makes compiling data on the number of attacks tricky, our survey data reveals this is a risk of growing importance.

Some 19 per cent of surveyed law firms with more than 100 partners identified cyber attack as their greatest risk, making it the joint-second most frequently cited risk behind claims risk.

So what are law firms doing to mitigate this risk? Encouragingly, 87 per cent of surveyed firms with more than 100 partners are currently strengthening internal data protection and client confidentially systems related to human processes. This is an important initiative given that the majority of cyber attacks can be prevented with the implementation of relatively simple best practice procedures. In  addition, anecdotal evidence suggests large firms are starting to take out specific cyber insurance because professional indemnity insurance does not typically cover first-party losses resulting from a cyber attack.

Minter Ellison: Asia Pacific: Record first quarter for M&A transactions

The first three months of 2015 were the strongest on record for mergers and acquisitions in the Asia Pacific according to Mergermarket data released this week.

The value of announced deals in our region in Q1 2015 totalled $171.6bn (£121bn) – an
increase of 45.5 per cent on the same period last year.

Minter Ellison deals chair, partner Costas Condoleon, said these results show there is growing confidence in the market reflecting conducive macro-economic settings for M&A activity. “It’s pleasing to see that this latest quarter was the highest valued quarter for deals on Mergermarket record.

“In Australia, deal activity is being driven by the low Aussie dollar and low interest rates, as well as buyers looking for consolidation opportunities. We are also seeing foreign investors targeting sectors facing structural or cyclical pressures.”

“While those conditions remain, and given the government privatisations underway particularly in Victoria and New South Wales, we’re likely to see continued deal activity in Australia.”

According to the Mergermarket data, the consumer sector was the best performer in the region over the period, recording $48.4bn worth of deals and a 145.8 per cent increase on Q1 2014 deal values.

Deals in the energy, mining and utilities sector were down – just 56 deals were announced compared with 82 in Q1 2014. The value of private equity exits in the first three months of 2015 also decreased.

Partner Jeremy Blackshaw noted that 2014 had been a record year for private equity exists, with funds focused on selling out of their remaining pre-GFC investments and closing further rounds of fundraising.

“They’re now cashed up and ready to go. I think we’ll see private equity active across the Asia Pacific region and particularly in Australia for the rest of 2015 as managers look to drive growth in their portfolios.

“While listed companies are generally well-priced, a number of sectors are likely to offer opportunities, including manufacturing and mining services,” he said.

Minter Ellison performed strongly in the Mergermarket Q1 2015 M&A Legal Advisor rankings:

• First in Australia / New Zealand by number of announced deals
• Second in Australia / New Zealand by value of announced deals
• Fourth in the Asia Pacific (excluding Japan) by number of announced deals
• Eighth in the Asia Pacific (excluding Japan) by value of announced deals.

Underlying our strong performance are transactions such as the TPG/iiNet merger, Federation Centres’ takeover of Novion Property Group, Morgan Stanley’s acquisition of Australian ChildCare Projects, and Cromwell Group’s acquisition of  Valad (Europe).

Ones to watch

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The Grant Thornton/ICAEW UK Business Confidence Monitor suggests that businesses are starting 2016 with optimism. This article will look at developments in law and regulation which are expected to impact lenders in the year ahead.

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On 22 December 2015, the London Stock Exchange published AIM Notice 43 setting out changes to the ‘AIM Rules for Companies’.  This briefing looks at investing companies and AIM Rule 15 cash shells.

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‘2016 updates to BVI Business Companies Act’ by Robert J D  Briant and Anton Goldstein

In its continuing effort to keep the BVI Business Companies Act at the forefront of offshore company law legislation, the BVI Government, in direct consultation with the

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*Featured star writers are compiles from April-June 2015 data.