Legal Business

Draining the swamp – Do NDAs represent a #MeToo problem for the profession?

A light has lately shone on a legal document which, by definition, should never bask in the sunshine. The saga, which was to trigger reverberations concerning abusive behaviour in many industries – and lawyers’ role in drafting gagging orders – began in October 2017, with disclosures by British producer Zelda Perkins (pictured).

In written evidence to MPs, Perkins called the gagging order she signed nearly 20 years ago with her former boss Harvey Weinstein amid sexual harassment allegations ‘stringent and thoroughly egregious’.

Legal Business

A&O matches Magic Circle’s sluggish gender pay gap progress after finally releasing partner pay stats

Allen & Overy’s (A&O) response to criticism over its failure to disclose the pay gap between male and female partners has revealed slow progress on a par with its Magic Circle peers.

The UK pay gap report for 2018, published today (6 September), for the first time includes the disparity between A&O’s female and male partnership and reveals men at the firm are overall paid on average 61.2% more than women. When taken on a median basis, the 2018 disparity is reduced to 39%.

A&O’s latest report also says female partners – which make up just 20% of the partnership over the last two years – are paid on average 15.9% less than male counterparts this year, an improvement on the 19.7% gap in 2017.

The Magic Circle firm was singled out by MPs recently over its failure to disclose its 2017 partnership pay figures when prompted to earlier this year.

The Business, Energy and Industrial Strategy Committee’s report, published on 2 August, singled out A&O’s inability to publish partner gender pay gap data: ‘The exclusion of the highest paid people in organisations makes a nonsense of efforts to understand the scale of, and reasons behind, the gender pay gap.’

Sacha Hardman, A&O’s global HR director, told Legal Business the decision to publish partner pay disparity now was not in response to criticism levelled at the firm over failing to do so earlier: ‘It has always been our intention to report the data in a more timely fashion, in line with our annual financial results.’

The report states: ‘Our overall gender pay gap is more pronounced when we include our partners because we have a much higher proportion of men than women in our partnership, as well as a higher number of men in the most senior partner positions. We are focused on reducing this year on year and know that achieving real progress relies on improving the gender balance at the most senior levels of our business.’

A&O’s latest report includes 2017 figures comparable with those Magic Circle counterparts have already disclosed. These show that for the 2017 financial year, the overall gap between male and female pay was 65%, a disparity which narrowed to 42.1% on a median basis.

On a like-for-like basis, Linklaters’ 2017 gender pay gap, including partners, stood at 60.3% and Clifford Chance’s was 66.3% in favour of men. In a similar vein, Slaughter and May admitted an average 61.8% pay gulf and Freshfields Bruckhaus Deringer a 60.4% disparity.

Hardman was upbeat about the A&O’s prospect of addressing the problem of having too few women in the partnership: ‘The concerns are being tackled on all management levels, not just on [senior partner] Wim [Dejonghe] and [managing partner] Andrew [Ballheimer’s] level. It’s a real challenge and leadership is very focused on achieving this.’

A&O made up only two women in its last promotions round in April, despite the same month ramping up its diversity drive, including opening a so-called ‘hub’ office in southwest London’s Vauxhall to facilitate remote working. Dejonghe simultaneously set a target for 30% of partnership candidates to be women, starting by 2021.

The firm has also taken the unusual step of reporting the pay gap based on ethnicity, relating to the 14% of A&O’s UK partners and employees which are Black, Asian or Minority Ethnic (BAME). The average pay gap between BAME and non-BAME employees was 21.6% in 2018 but swung the other way in favour of BAME employees on a median basis to -26.8%. This marks a slight improvement on 2017 when BAME employees represented only 12.8% of the workforce and the average pay gap stood at 22.8% (-14.8% on a median basis).

nathalie.tidman@legalease.co.uk

Legal Business

A&O Fuse start-up among first to take space at Barclays’ law tech lab

A start-up from Allen & Overy’s (A&O) Fuse innovation hub is one of the first 17 companies to join banking giant Barclays’ legal technology lab.

Deal platform Legatics, which has been in Fuse for each of A&O’s first two cohorts, has taken up residence at Barclays’ 100-person LawTech Eagle Lab in London’s Notting Hill. AI provider ayfie, contract generator Ginie AI, and document collaboration platform Annotate are the only other start-ups in the lab to have been named.

The bank’s law-tech space was first announced in April with backing from 13 law firms and several other industry players including the Law Society, PwC, start-up community Legal Geek, as well as the University of Liverpool and University College London.

It has now opened with its first four companies, which each pay between £150 and £350 a month for access to the space. Packages range from a hot-desking option for six days a month to a private office year-round.

Legatics head of business development Daniel Porus (pictured) told Legal Business the start-up’s growing team – soon to be ten staff – had taken up a desk with Barclays it will use at least once a week. The company had been impressed by the Eagle Labs space and was looking to move its entire operation there post-Fuse.

Fuse has capacity for about 30 people, with seven companies resident there after an eighth, Bloomsbury AI, in July joined social media giant Facebook in a deal reportedly worth between $23m and $30m.

Porus commented: ‘One of the things we really appreciate about Fuse is how valuable it is to physically sit next to other legal technology companies, and it’s the same for Barclays. It’s a lot more useful sitting next to someone else who’s going through similar challenges to you.’

A&O was among the firms which signed up to the Eagle Lab law-tech initiative, alongside Baker McKenzie, Brethertons, Capital Law, Clifford Chance (CC), Clyde & Co, DWF, Gowling WLG, Latham & Watkins, Norton Rose Fulbright, Simmons & Simmons, SO Legal and TLT.

Porus added that there had been a strong level of engagement from the firms who had partnered with Barclays: ‘It has been great to see various law firms come together in Eagle Labs to discuss technology that Barclays is interested in.’

Ayfie is the most established of those joining the law-tech Eagle Lab, first founded in the US in 2009 and boasting more than 500 customers. It has developed a tool which combines natural language processing and linguistics to enable law firms to analyse unstructured data without having to train machine learning algorithms with large document sets.

Ayfie EMEA senior vice president of business development Peter Richards said: ‘Ayfie’s experience and technology combined with direct access to UK law firms and other technology vendors will uncover opportunities for both ayfie and the firms.’

The lab mirrors a network of other Eagle Labs Barclays has across the UK, originally converting old bank spaces to help start-up businesses. Barclays has already hosted three law-tech companies in its Eagle Labs, including Wavelength Law, Prose, and Aalbun.

It also builds on similar initiatives launched at law firms, including the aforementioned Fuse, Mishcon de Reya’s MDR LABS and Denton’s Nextlaw Labs and Nextlaw Ventures.

Barclays UK general counsel (GC) Stephanie Pagni commented: “Now that the first residents have moved into our LawTech Eagle Lab, we look forward to working with our partners to facilitate supporting their growth by providing them with an environment in which they are able to collaborate and learn fast.’

hamish.mcnicol@legalease.co.uk

Legal Business

‘Strong pipeline’: pay bump for A&O trainees and associates amid 80% retention rate

Allen & Overy has become the latest Magic Circle firm to announce pay increases for its trainees and newly qualified associates (NQs), alongside a slightly reduced September 2018 retention rate.

The salary for NQs has risen to £83,000 from £81,000, while second year trainees can now expect to take home £50,000, up from £49,000. First year trainees will earn £45,000, compared with the previous £44,000 salary.

A&O has held onto 37 of its 46-strong intake this year – or 80% – having offered jobs to 40 trainees. The percentage is slightly down from last year when the firm kept 85% of its intake of 47 trainees.

On the trainee retention figure, A&O graduate recruitment partner and training principal Claire Wright said: ‘This is a good result and one which demonstrates the consistently high quality of the trainees here at A&O. We are fortunate to have such a strong pipeline of talented young lawyers and I look forward to seeing their careers develop and progress.’

Last week, Clifford Chance (CC) said it would increase compensation for NQs to £91,000, up more than 4% from £87,300 last year. It also raised trainee pay by 4%, with first-year salaries up from £44,800 to £46,600 and second-year remuneration increased from £50,500 to reach £52,500.

Meanwhile, Freshfields Bruckhaus Deringer has kept its NQ salary at £85,000 but increased its trainee compensation. First year trainees will take home £45,000, up 5% on last year’s salary of £43,000, while second year trainees will earn £51,000, a 6% increase on last year’s £48,000.

Slaughter and May will pay first year trainees £44,000 and second years £49,000.

The salary increases come on the back of a moderate year of growth for the Magic Circle in 2017/18, notwithstanding their financials failed to make as much of a splash as the previous year’s performance.

nathalie.tidman@legalease.co.uk

Legal Business

MPs accuse legal profession of making a ‘nonsense’ of gender pay gap reporting

The UK’s top law firms, particularly Allen & Overy (A&O) and Clifford Chance (CC), have been condemned by MPs for their gender pay gap efforts.

A&O was specifically criticised for its failure to disclose its partnership pay figures when prompted to earlier this year, while fellow Magic Circle firm, CC, was for its ‘painfully slow’ progress on female representation.

The Business, Energy and Industrial Strategy Committee’s report, published today (2 August), singled out A&O’s inability to publish partner gender pay gap data: ‘The exclusion of the highest paid people in organisations makes a nonsense of efforts to understand the scale of, and reasons behind, the gender pay gap.’

A&O, and the rest of the profession, were not obliged to include partner pay statistics in the last round of reporting, but the committee recommended such data should be included in next year’s reports.

For their part, A&O has pledged to publish its gender pay gap statistics for 2017/18, including the partnership, by September.

Regarding CC, the committee criticised the firm’s progress on its target of reaching a 30% female partnership, with the percentage having only increased from 16.5% to 21% since 2009.

‘It is clear for legal firms, including those claiming that gender diversity had been a strategic priority for many years, it will take many years at the present rate of progress before they begin to look anything like gender-balanced at the senior, rather than more junior levels,’ the report said.

Law Society vice president Simon Davis (pictured) commented: ‘Because partner pay is structured differently from salaries, a new reporting method will be required to ensure data is meaningful and helpful for addressing inequalities in pay. We will work with government and other professional and business services to develop an approach that is comparable across firms and industries.’

Freshfields Bruckhaus Deringer came out on top among its Magic Circle peers earlier this year, when it unveiled it pays male staff on average 13.9% more than female fee-earners.

The gap at Linklaters was 23.2%, while it was 19.8% at A&O and 14% at Slaughter and May. CC opted to publish the total earnings of its partnership, including bonus share or profit share entitlements, which showed a 27% gap in partner earnings in favour of men.

tom.baker@legalease.co.uk

Legal Business

Shearman wins McKimm from Freshfields as Penn returns to A&O from Cleary

Two standout moves in June and July saw the Magic Circle and the Wall Street elite each lose and gain one in partner reversions in London.

Ward McKimm, one of thestra most upwardly mobile partners the City has seen, made good on a long-rumoured defection to Shearman & Sterling’s capital markets practice, having previously worked there for some 14 years, becoming partner in 2005 and co-head of its corporate group in 2010.

Legal Business

#MeToo: MPs slam ‘utterly shameful’ inaction on sexual harassment amid calls for an overhaul of NDAs

A parliamentary select committee has blasted employers and regulators for failing to tackle sexual harassment in the workplace and has called for a clamp-down on the use of non-disclosure agreements (NDAs).

The report by the Women and Equalities Committee on sexual harassment in the workplace published today (25 July) is the culmination of an enquiry launched by MPs in the wake of the #MeToo movement that saw the legal profession’s handling of these situations thrust into the spotlight.

The enquiry saw City Allen & Overy in the firing line for its conduct in the Weinstein saga after it emerged that employment partner Mark Mansell had been responsible for drafting a gagging order for the disgraced Hollywood mogul in 1998.

But it was not only employment counsel given cause to squirm as a string of sexual harassment allegations within law firms emerged, some involving NDAs.

Commenting on the report, Maria Miller, chair of the Women and Equalities Committee, said: ‘It is utterly shameful that in 2018, unwanted sexual comments, touching, groping and assault are seen as an everyday occurrence and part of the culture in many workplaces. Government, regulators and employers have been dodging their responsibilities for far too long.’

The report sets out a five-point plan to ensure that tackling sexual harassment is at the top of the agenda for employers, including a recommendation to ‘clean up the use of non-disclosure agreements’ by requiring the use of ‘standard, plain English confidentiality clauses that set out the meaning, limit and effect of the clause and by making it an offence to misuse such clauses.’ It deems that whistleblowing provisions should be extended so that disclosures to the police and regulators such as the Equality and Human Rights Commission are protected.

These steps follow the committee’s grilling of Mansell in March when several aspects of the NDA he drafted for Weinstein were questioned. A&O had in 1998 represented the producer after Zelda Perkins, who had worked at Weinstein’s company, Miramax, alleged knowledge that Weinstein had sexually assaulted a colleague at the company. Weinstein denies that he engaged in non-consensual sexual acts.

One of the main ethical sticking points was a clause that read: ‘if any criminal legal process involving Harvey Weinstein or Miramax requires [Perkins] to give evidence, she will give 48 hours’ notice to Mark Mansell, a lawyer at Allen & Overy, before making any disclosure.’

When questioned by the committee on whether limiting disclosure could be seen as perverting the course of justice, Mansell said he could ‘see how people might view it that way’.

The call for clarity is also in response to claims that Perkins was left with the idea that the gagging order she signed meant a criminal investigation was more difficult to pursue.

The report also calls for regulators to take a more active role in tackling sexual harassment in the workplace. This should include ‘setting out the actions they will take to help tackle this problem, including the enforcement action they will take; and by making it clear to those they regulate that sexual harassment is a breach of professional standards and a reportable offence with sanctions.’

That recommendation came after the Solicitors Regulation Authority (SRA) was criticised following a second committee hearing in April when it was discovered that the regulator failed to investigate A&O’s conduct in the agreement when it had the chance last November. In the report, the committee states it was ‘particularly disappointed by apparent lack of rigour in the SRA’s approach to investigating whether there had been unethical practice by the lawyers involved in the Zelda Perkins case.’

In April, MP Philip Davis lambasted SRA boss Paul Philip for not pursuing the investigation sooner, labelling the regulator’s relationship with the Magic Circle firm as ‘like some sort of cosy old boys network kind of thing, where they’re scratching each other’s backs and not really taking anything seriously.’

The SRA in March issued a warning notice reminding lawyers of their responsibility to ensure that, among other things, these agreements are not used to prevent parties from reporting to the regulator or the police in the event of alleged sexual misconduct; shouldn’t prevent the person having a copy of the NDA or making a protected disclosure; and shouldn’t be used to prevent the person from co-operating with a criminal investigation.

The committee said it was encouraged by that development, and  hoped the Bar Standards Board and the Bar Council would follow suit. It also urged regulators to ‘demonstrate that members of the legal profession will face serious sanctions if they sexually harass clients or colleagues or if they misuse NDAs to silence victims of sexual harassment.’

Miller concluded: ‘NDAs have their place in settling complaints, but they must not be used to prevent or dissuade victims from reporting incidents as is clearly the case now. We expect proper regulation of NDAs and that any unethical practices lead to strong and appropriate sanctions.’

Nathalie.tidman@legalease.co.uk

 

Legal Business

Revolving doors: A&O makes New York push as DLA and Dentons add to European rosters

It has been lively couple of weeks for lateral hires, with Allen & Overy (A&O) making a significant play in New York as a host of firms recruited across the continent.

Hot on the heels of rehiring financial services regulation head Bob Penn in June, A&O has hired M&A partner Stephen Besen in New York from Shearman & Sterling.

Besen has 35 years of experience advising clients on mergers, tender offers, joint ventures, restructuring and private equity transactions. He also has pedigree in cross-border transactions, in areas including China, India, Latin America and the Middle East.

Richard Browne, A&O’s global co-head of corporate, commented: ‘His depth of experience and insight is a great fit for our international practice and a significant addition for our clients.’

Hogan Lovells made the sole UK hire last week, bringing in Nicola Fulford as a partner in the firm’s London-based privacy and cybersecurity practice.

Fulford, who arrives from Kemp Little, has in-house experience from working at UBS, as well as secondments at Google and IBM.

Eduardo Ustaran, co-director of Hogan Lovells’ privacy and cybersecurity practice, told Legal Business that his division now numbers around 100 lawyers globally. He commented: ‘We were looking for a true expert in the field and someone who had been involved in working with tech companies. Nicola has these qualities and will be a great cultural fit for us.’

DLA Piper was particularly active in Europe, firstly hiring partner Pierre Berger and his seven-strong team of lawyers from Baker McKenzie in Antwerp. Berger and his team have expertise in sectors spanning financial services and insurance.

DLA also strengthened its benches in Germany, hiring corporate partner Roland Maass from Latham & Watkins to its Frankfurt office. Maass had been with the US heavyweight since 2006, with his practice predominantly focused on capital markets transactions. Outside of Europe, DLA hired corporate partner Yang Ge from Shearman & Sterling to its Beijing hub.

Also in Germany, Dentons boosted its real estate practice with the hire of René Dubois from European outfit Noerr. The arrival of Dubois, who will be based in Munich, means Dentons can now offer real estate advice from all three of its German offices: Berlin, Frankfurt and Munich.

Staying with Dentons, the firm also strengthened its Moscow base with the double partner hires of Vladimir Sokov and Sergey Klimenko from Russian firm Pepeliaev Group. Sokov is a corporate and M&A specialist while Klimenko will join Dentons as head of its Russian life sciences practice.

Finally, in France, King & Spalding has appointed a pair of partners to its Paris office. Laurent Bensaid, a corporate partner, has joined from Parisian outfit Hoche Avocats where he was co-head of the firm’s M&A department. Also arriving was Laurent Jaeger, an arbitration partner who joined from Orrick, Herrington & Sutcliffe.

tom.baker@legalease.co.uk

Legal Business

The Magic Circle packs tight in 2018 results as A&O follows peers with modest growth

The firm was a stand-out performer in 2017, but Allen & Overy (A&O) could not keep up the blistering pace for a second year as the London leader today (6 July) confirmed a solid but unspectacular 4% hike to its top line, sending revenues up £54m to £1.57bn.

The result was matched by a 4% increase in profit per equity partner (PEP), which hit £1.64m, while pre-tax profits were up 3% to £690m. The performance leaves A&O as the second largest Magic Circle firm in revenue terms.

The firm said that growth was led by its practices in Western Europe and the CEE region, as well as its ‘advanced delivery businesses’, which covers its large Belfast legal services centre and its New Law operations like Peerpoint and aosphere. Capital markets and tax were also highlighted for strong growth.

The results are comparable to the 2017/18 performances announced earlier this week by Clifford Chance and Freshfields Bruckhaus Deringer, in contrast to 2017 when A&O led its peers with a 16% increase in fees.

Even with less flattering exchange rate movements through the latest financial year, A&O saw some slowdown in growth, though it remains the most consistently expansive of London’s big four law firms.

But while A&O can take more cheer from its post-banking crisis form than most City rivals, the hard reality remains that many key US outfits continue to outperform the London elite on headline financial metrics while making threatening inroads into Europe.

As such, much attention will remain on whether A&O can make good on long-cherished plans to secure a credible US merger, with the Los Angeles-bred O’Melveny & Myers currently the focus of a merger bid.

alex.novarese@legalease.co.uk

Legal Business

Allen & Overy Fuse start-up Bloomsbury sold to Facebook for $23m

Allen & Overy (A&O) is unlikely to replace the start-up that has been snapped up by Facebook just two months after it joined Fuse, the magic circle firm’s innovation hub.

London-based Bloomsbury AI, which has built a tool that can read documents and answer questions about them, is joining the social media giant in a deal reportedly worth between $23m and $30m. Facebook has confirmed the move but would not comment on its value.

The deal will involve acquiring the 11-strong team at Bloomsbury in what is known as an ‘acquire-hire’: buying a company for the expertise of its staff rather than its offering. Bloomsbury’s founders have extensive academic backgrounds in AI.

The start-up was founded last year and had raised nearly $1.4m from various funds and angel investors, including musician Matt Bellamy from rock band Muse. While not specifically legal tech, Bloomsbury joined A&O’s innovation hub Fuse in May this year as one of the firm’s second cohort of companies in the hub.

The company was chosen from 80 applications, and the second cohort – also including well-known names Kira Systems and Neota Logic – had a strong AI focus. Fuse chairman Jonathan Brayne said A&O was unlikely to replace Bloomsbury in the cohort. A&O does not take equity stakes in its Fuse businesses.

He commented: ‘We are incredibly proud that one of our cohort has attracted the attention of Facebook, a company that will no doubt help it reach its full potential. We work very closely with the companies in Fuse, we get to know the people, the business and the ideas and so we feel confident that this is an excellent move for Bloomsbury AI and we wish them all the best.’

Fintech company Regnosys and AI business Signal Media were the other new names to join Fuse in May, while incumbents Avvoka, Legatics and Nivaura transferred over. Brayne added: ‘The seven remaining companies in Fuse continue to challenge, excite and inspire us and so we look forward to what these relationships will bring.’

It has been speculated Facebook is interested in using Bloomsbury to help combat fake news concerns on the social media platform. A Facebook statement said: ‘Their expertise will strengthen Facebook’s efforts in natural language processing research, and help us further understand natural language and its applications. The team will help us grow our AI efforts in London, joining a roster of strong engineering talent.’

Bloomsbury has not responded to requests for comment.

hamish.mcnicol@legalease.co.uk