DLA Piper misses out as bank sets out new categories
Barclays picked a raft of firms, including Clifford Chance, Ashurst, Simmons & Simmons, Hogan Lovells and Reed Smith, as the banking giant overhauled its global roster last month and slashed its number of go-to advisers by over 60%.
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The Serious Fraud Office (SFO) has secured a major win today (4 July) after three former Barclays traders were found guilty by a London jury of conspiring to fraudulently manipulate global benchmark interest rates.
In a warning to junior bankers, Jay Merchant was convicted unanimously at Southwark Crown Court of manipulating the key financial rate while Jonathan Mathew and Alex Pabon were found guilty by majority verdict after a ten-week trial. The trio will be sentenced on Thursday.
However the jury was unable to reach a verdict in relation to two other defendants named Ryan Reich and Stelios Contogoulas after nearly two weeks of deliberations. The SFO will now have to decide whether to seek a re-trial.
In January a UK jury acquitted six City brokers who were alleged to have helped manipulate the Libor, just months after the high profile conviction of former banker Tom Hayes. The men – former ICAP traders Colin Goodman, Daniel Wilkinson and Darrell Read, former RP Martin brokers James Gilmour and Terry Farr; and former Tullett Prebon broker Noel Cryan – were accused of conspiring with former UBS and Citigroup trader Hayes to rig a key lending rate used between banks for rewards such as takeaway curries and drinks. The trial constituted a major defeat to the SFO which this year requested an additional £21.1m to bankroll ongoing cases through to the end of the financial year.
On the convictions, Corker Binning partner David Corker said: ‘Questions do remain though about the way in which the Libor prosecutions were brought after loud political pressure. They were about conduct widely condoned or encouraged at the time in a broken, poorly regulated system and these defendants were foot soldiers for the most part in a global financial system beyond their full understanding.’
‘The convictions strike the harshest of warnings for those operating at relatively junior levels in financial markets and in other fields of commercial life where the way in which business is routinely done may sometimes, years later, be characterised as criminal by those with 20/20 hindsight and a massive banking crisis for which politicians wanted to find someone to blame.’
The watchdog’s future has been a topic of debate since Home Secretary Theresa May has emerged as the clear frontrunner in the race to succeed David Cameron as Conservative leader following the Brexit vote. May has previously voiced her preference to abolish the SFO and roll it into the National Crime Agency.
sarah.downey@legalease.co.uk
After much speculation, a raft of firms including Clifford Chance, Ashurst, Eversheds, Mayer Brown, Reed Smith, Simmons & Simmons, Hogan Lovells, Pinsent Masons, DWF and Bond Dickinson have won places on banking giant Barclays’ reduced legal roster, however DLA Piper has lost its spot following the global panel review.
The bank started informing all law firms they were on the panel last week, with a deadline to inform everyone by the end of Monday (27 June). The current panel ran from 1 July 2014 to 30 June 2016.
It is believed that the total number on the bank’s roster is around a third of the previous total of 350 – 400 firms. The review was led by Stéphanie Hamon, the bank’s head of commercial management who joined the bank in December from King & Wood Mallesons.
A DLA spokesperson said: ‘The firm has enjoyed a strong working relationship with Barclays for a number of years, across a wide range of legal services. We are disappointed that we have not been appointed to their panel, but look forward to working with them again in the future.’
It is understood Clifford Chance’s role since the last panel review has been reduced. The Magic Circle firm refused to comment.
According to one law firm partner the key themes of the panel review were ‘delivering excellence, thought leadership, collaboration, team work and value for money.’
The bank also asked some firms to price work according to a different rates for strategic work, medium and flow, covering everything from high end mandates to process driven work.
In its last panel review Barclays cut its legal roster by around 30% and moved to a streamlined two-tier system of ‘preferred’ and ‘approved’ firms in a move which general counsel Bob Hoyt said was to ‘provide the broad range of expertise and in-depth knowledge of Barclays required to support our business lines globally.’
There was a more even split between US and UK firms, which was said to better reflect Barclays’ current business and legal spend. The bank selected five US firms: Boies, Schiller & Flexner; Cadwalader, Wickersham & Taft; Davis Polk & Wardwell; Latham & Watkins; and Skadden Arps, Meagher & Flom with whom it seeked to ‘deepen its relationship and concentrate spend over time.’
Last month Legal Business revealed that the bank was planning to extend the value account system it introduced in 2014, where law firms are required to pay a rebate if they fail to hit their value targets, to all external advisers.
kathryn.mccann@legalease.co.uk
Additional reporting by Madeleine Farman, Tom Moore, Matthew Field and Sarah Downey.
Barclays is planning to extend the value account system it introduced in 2014, where law firms are required to pay a rebate if they fail to hit their value targets, to all external advisers as part of its current panel review.
The value account scheme, officially called ‘relationship accounts’, works by giving firms an annual value of free legal services they must provide in return for volume of work – primarily through legal advice and secondments – with the downside being that firms must reimburse Barclays if they fail to meet those benchmarks.
The system currently applies to Barclays’ list of ‘preferred’ advisers, which includes Allen & Overy, Clifford Chance, DLA Piper, Freshfields Bruckhaus Deringer, Linklaters and Simmons & Simmons, but the bank is planning on expanding this system to include its second-tier group of law firms – its ‘approved’ advisers.
Barclays currently splits its panel law firms into two groups. The division between preferred firms, which take the bulk of the work, and ‘approved’ firms was made during the bank’s last panel review, in 2014, with Boies, Schiller & Flexner; Cadwalader, Wickersham & Taft; Davis Polk & Wardwell; Latham & Watkins; and Skadden, Arps, Slate, Meagher & Flom among the ‘approved’ firms.
The new rules mean that once a base level of legal fees is passed, the relationship account programme will be triggered. This will apply to all panel firms, with the objective to ensure that all law firms are treated fairly.
A City partner pitching for the Barclays panel told Legal Business: ‘The RFP [request for proposal] for the Barclays panel detailed that it will roll out its relationship account programme to a wider group of law firms. At the moment, it only effects a core group, but Barclays is looking to expand this so that an increased number of firms will have to repay Barclays if they don’t hit their value targets. It’s a good thing for the UK firms, as so far the US firms have got off scot-free.’
Barclays is expected to conclude its panel by 1 July. Earlier this year, the bank put a ban on its 600 lawyers accepting corporate hospitality during the course of the panel review. In a missive from Barclays’ general counsel office, lawyers were told that the ban has been put in place to ensure a fair evaluation of law firms during the course of the panel review.
tom.moore@legalease.co.uk
More firms set to repay bank if targets missed
Barclays is planning to extend the value account system it introduced in 2014, where law firms are required to pay a rebate if they fail to hit their value targets, to all external advisers as part of its current panel review.
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Barclays has restructured its legal team in preparation for ring-fencing reforms that will split the bank’s retail and investment arms.
In a reorganisation led by the bank’s chief executive, Jes Staley, two new divisions have been created: Barclays UK and Barclays Corporate & International. The bank’s group general counsel (GC), Bob Hoyt, will take on an additional role as GC for Corporate & International. Mark Chapman was appointed as GC of Barclays UK in March.
Reporting directly to Hoyt in his new role as legal head of Corporate & International will be Richard Hickson as GC for Barclaycard and Anjali Chhania as GC for the corporate bank. Mark Shelton will continue in his role as legal head for the investment bank and the Americas.
At Barclays UK, Chapman’s senior team comprises David McCahon as GC for personal banking, Helen Oldfield as GC for the newly-established wealth, entrepreneurs and business banking, Benjamin Frarin La Michellaz as head of legal in Europe and Rob Dinning as GC for operations and technology legal.
Shelton and Hickson will have joint accountability for the legal support to the Barclaycard UK consumer card issuing business, supported by the regulated products and Barclaycard legal teams.
Hickson and Chhania will also continue to participate in Chapman’s leadership team, as well as directly reporting to Hoyt.
The restructure comes amid the bank’s ongoing panel review, which will see law firms compete for places on Barclays’ legal roster for the next two years. It is being led by Stéphanie Hamon, the bank’s head of commercial management, who was drafted in last December to run the procurement process.
Barclays set aside £1bn in October to meet the costs of the Bank of England’s ring-fencing rules, requiring banks to separate their retail arms from more risky investment banking divisions. The post-Lehman reforms are intended to make it easier to contain problems in the banking sector.
Barclays’ shake-up comes as its rival UK banks gear up for equivalent reforms. Lloyds Banking Group in March appointed former Berwin Leighton Paisner partner Frances McLeman to oversee its ring-fencing process.
kathryn.mccann@legalease.co.uk
For more on the impact of ring-fencing reforms, see the Finance View
Pinsent Masons head of banking and finance litigation Michael Issacs, has been seconded to Barclays’ litigation and investigations team, led by Stephanie Pagni. The move comes as the bank is undergoing a panel view.
Issacs, who joined Pinsents in 2013 from Addleshaw Goddard, is the firm’s relationship partner for Barclays. He has prior experience as a lawyer in the bank, having completed an extended partner secondment in the global retail and commercial bank litigation team for six months in 2009. He worked under Jonathan Peddie and Pagni in Canary Wharf during this time. According to Issacs’ Linkedin profile, this allowed him to ‘experience first-hand, the variety and complexity of daily demands placed upon the Bank’s in-house team.’
At Pinsents, Issacs helps clients to avoid and deal with problems in retail, commercial and wealth banking, including operational issues, domestic and commercial lending and fraud.
Last month it emerged that Barclays has put a ban on its 600 lawyers accepting corporate hospitality, as it reviews its legal panel which is worth around £100m a year to law firms.
In a missive from Barclays’ general counsel’s office, lawyers were told that the ban has been put in place to ensure a fair evaluation of law firms during the course of the review.
Barclays asked that its law firms submit details of corporate hospitality spending for the first time in 2011 as part of a previous review. The bank said at the time that this was to prevent breaches of the UK Bribery Act, which came into force that year.
This current review will see law firms compete for places on Barclays’ legal panel for the next two years. It is being led by Stéphanie Hamon, the bank’s head of commercial management, who was drafted in last December to run the procurement process.
kathryn.mccann@legalease.co.uk
Barclays has put a ban on its 600 lawyers accepting corporate hospitality as it reviews its legal panel worth around £100m a year to law firms.
The UK’s second biggest bank informed its law firms at the end of February that corporate hospitality and entertainment is forbidden during the course of the panel review. The process is expected to conclude by 1 July.
In a missive from Barclays’ general counsel’s office, lawyers were told that the ban has been put in place to ensure a fair evaluation of law firms during the course of the panel review.
Barclays asked that its law firms submit details of corporate hospitality spending for the first time in 2011 as part of a previous review. The bank said at the time that this was to prevent breaches of the UK Bribery Act, which came into force that year.
This current review will see law firms compete for places on Barclays’ legal panel for the next two years. It is being led by Stéphanie Hamon, the bank’s head of commercial management, who was drafted in last December to run the procurement process.
Barclays currently runs a two-tier panel of ‘preferred’ advisers for big-ticket M&A and litigation, while ‘approved’ firms are typically used for low level work. Magic Circle firms Freshfields Bruckhaus Deringer, Clifford Chance, Allen & Overy and Linklaters are all ‘preferred’ advisers, alongside elite US firms Cleary Gottlieb Steen & Hamilton, Skadden, Arps, Slate, Meagher & Flom, Latham & Watkins and Sullivan & Cromwell. Other firms on the current line-up include Addleshaw Goddard, DLA Piper, Hogan Lovells, Simmons & Simmons, Eversheds, TLT and Shearman & Sterling.
A senior lawyer whose firm is on the current Barclays panel said: ‘With so many rugby and football tournaments on it’s a great shame that this policy has been introduced.’
Barclays spent £12.2bn on misconduct, through regulatory fines and litigation, between 2010 and 2014 according to UK-based CCP Research Foundation. Even with the raft of disputes and regulatory investigations against the banks gradually coming to an end, the bank’s law firms have been hiring aggressively to grow their financial services regulatory teams as the EU and UK governments implement stricter regulation on the sector.
Barclays set aside £1bn in October to meet the costs of the Bank of England’s ring-fencing rules requiring banks to separate their retail arms from supposedly more risky investment banking divisions.
tom.moore@legalease.co.uk
Accountancy giant KPMG has triumphed at London’s High Court today (24 February) after an unprecedented judicial review taken by Holmcroft Properties was dismissed.
In a case which would have opened the floodgates for other firms unhappy with their compensation from the banks, the Big Four accountant was sued by nursing home operator Holmcroft along with the Financial Conduct Authority (FCA) and Barclays.
Holmcroft questioned KPMG’s role as an independent reviewer in the compensation process of mis-selling of interest rate swap products. The FCA reached an agreement with Barclays to set up a scheme to provide redress to certain customers who had been wrongly sold these products. The bank agreed that an independent party, KPMG, should oversee the implementation and application of the scheme and that Barclays would make no offers of compensation before KPMG’s approval.
Holmcroft argued it was made an offer by Barclays that was inadequate and did not satisfy the criteria because it did not include compensation for loss which it alleged was a consequence of the mis-sale.
The company also alleged Barclays did not fairly deal with its application for consequential loss and when KPMG acted in breach of public law principles by approving the offer it made to it by Barclays.
Heard over two days in late January, a judgment handed down today by Lord Justice Elias and Justice Mitting said: ‘It would in fact be immaterial whether KPMG had properly reviewed the case or not. But in fact there is clear evidence that they did carry out the task which they were required to do pursuant to the undertaking.’
The judgment added: ‘KPMG also expressly reviewed the offer again following the further letter from Holmcroft. There is no basis for saying that they were in breach of any public law duty, even assuming that they were subject to such duties…We dismiss the application.’
Brick Court Chambers duo Richard Gordon QC and Malcolm Birdling were instructed by Mishcon de Reya for Holmcroft while Blackstone Chambers pair Javan Herberg QC and Hanif Mussa were instructed by Herbert Smith Freehills for the KPMG.
Blackstone Chambers trio Monica Carss-Frisk QC, Daniel Burgess and Kerenza Davis were instructed by Baker & McKenzie head of financial services Arun Srivastava for the FCA and the set’s high profile silk Dinah Rose QC was instructed by Linklaters for Barclays alongside barrister Ben Jaffey.
HSF partner Andrew Lidbetter said the judicial review confirmed KPMG had not been carrying out a public function.
‘It is also pleasing because the court found that the review had been conducted in a “conspicuously scrupulous” way and that there was “clear evidence” that KPMG had carried out its task appropriately.”‘
sarah.downey@legalease.co.uk
In another round of musical chairs at Barclays, the banking giant has appointed Victoria Hardy as general counsel (GC) for the UK, Europe and Middle East region with immediate effect.
Hardy has been internally promoted to replace Simon Croxford’s previous role. Less than six months after returning to Barclays’ HQ in Canary Wharf, Croxford was selected in August 2015 to replace Barclays’ outgoing deputy GC Michael Shaw.
In the same month Barclays M&A chief Khasruz Zaman, exited the bank after a decade to join City firm Simmons & Simmons, while EMEA GC for Barclays’ investment banking arm Erica Handling switched to funds manager BlackRock early last year.
Hardy will be on the investment bank’s Global Legal Management Forum and will continue to be based in London, reporting to global GC and GC for America Mark Shelton.
Having joined Barclays in 2005 from Magic Circle firm Clifford Chance, Hardy served as an associate gaining broad capital markets experience both in London and New York. At Barclays, she has headed the group GC’s office and headed group M&A legal for seven years. Most recently, she was head of banking legal in Europe and Middle East and global coordinator for banking legal.
Hardy’s successor as head of banking legal will be appointed in due course.
jaishree.kalia@legalease.co.uk
