Legal Business

FSA slaps Pru with £30m fine before its split

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The Financial Services Authority (FSA) handed out its last penalty before being split up after fining companies in the Prudential Group (Prudential) a total of £30m.

According to the watchdog, the fine relates to Pru’s failure to inform the regulator that it was seeking to acquire AIA, the Asian subsidiary of AIG, in early 2010.

Stephenson Harwood and Freshfields Bruckhaus Deringer landed roles advising on the fine.

The Pru turned to Freshfields’ head of financial institutions David Scott for advice on the fine.

Tony Woodcock, commercial litigation partner at Stephenson Harwood landed a role acting for Tidjane Thiam, the insurer’s chief executive.

‘Prudential, led by Thiam as CEO, failed to give due consideration to its obligation to inform the FSA of this transaction, which would have had a huge impact on the ground had it gone through. That was a serious error of judgement for which the Prudential is paying the price,’ said Tracey McDermott, FSA director of enforcement, in a statement.

According to the FSA, the Pru failed to inform it at the earliest opportunity to allow them to approve or reject the deal on regulatory grounds.

The FSA issued record fines in 2012, totalling £313m after issuing 57 penalties. Compared to 2011, the FSA handed out £65.5m in fines although the Libor scandal was a major factor in the exponential rise in penalties last year. Already this year, the FSA has handed out over £135m in penalties, with the Royal Bank of Scotland getting hit with an £87.5m fine over the Libor issue in February this year.

This was the last fine to be handed out by the FSA, as it was split into two parts becoming the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) on 1 April.

Slaughter and May corporate heavyweight Charles Randell, is the only City lawyer to be appointed to either of the new regulation bodies. Randell will sit on the PRA’s board.

But if the change in name of the organisation may have caused some to think that the level of fines might drop, one partner at a Magic Circle firm is not convinced.

‘My expectation is that fines will continue to increase. The FSA was moving towards a tariff system, which increased fines in line with a company’s revenue. Although until Prudential no one was criticising the FSA for level of fines,’ they said.

Despite Martin Wheatley, chief executive of the FCA, publicly stating that level of fines will not change companies’ behaviour, many think it will be business as usual for the regulator. One City partner said: ‘The FSA is always trying to hold senior management to account, as seen with the targeting of Prudential’s Thiam.’

A new name perhaps but it looks like financial regulatory partners will be kept busy for the future.

david.stevenson@legalease.co.uk

Legal Business

Freshfields latest to promote new partners with 14 making the grade

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Freshfields Bruckhaus Deringer has appointed 14 new partners, with just under half of the promotions made in London.

The Magic Circle firm made up six associates in the City, boosting partner headcount in its corporate, finance, dispute resolution, employment and tax practices.

Freshfields made the unusual move of promoting into its high-yield practice after it promoted Denise Ryan to partner. The firm bolstered its high-yield practice in 2010 after hiring Gil Strauss from Simpson Thacher & Bartlett. But Strauss, who headed up the practice, left for Weil Gotshal & Manges last year.

The Magic Circle firm has also beefed up its international disputes practice, appointing five new partners across its Hong Kong, New York, London and Paris offices.

Freshfields has moved to boost its financial institutions disputes practice in the City, appointing Christopher Robinson as a partner. The firm also made up two disputes partners in its New York office, making up international arbitration specialist Elliot Friedman and white-collar and global investigations partner Kimberley Zelnick in the Big Apple.

Meanwhile, over half of the firm’s promotions for 2013 – eight – come outside of London. Freshfields added three new partners in Germany, two in New York while Vienna, Hong Kong and Paris each got one new partner.

Senior partner Will Lawes said: ‘Our class of 2013 partners are all highly talented lawyers whose outstanding qualities will help us to enhance our market-leading offering and exceptional client service.’

Other UK firms to promote new partners include, Berwin Leighton Paisner, Olswang and Slaughter and May.

david.stevenson@legalease.co.uk

Legal Business

Freshfields to provide scholarships for aspiring black lawyers

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Freshfields Bruckhaus Deringer is launching a scholarship with the Stephen Lawrence Charitable Trust (SLCT) to help students from black and ethnic minorities gain access to the profession.

The scholarship will allow four successful male candidates committed to pursuing a career in the legal profession to receive a £3,500 annual contribution towards living expenses, as well as training, mentoring, work experience at Freshfields and a guaranteed interview for a training contract.

Legal Business

Freshfields partners with Stephen Lawrence charity to provide scholarships to aspiring black lawyers

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Freshfields Bruckhaus Deringer is launching a scholarship with the Stephen Lawrence Charitable Trust (SLCT) to help students from black and ethnic minorities gain access to the profession, in the latest of a string of diversity initiatives in law.

The scholarship will allow four successful male candidates committed to pursuing a career in the legal profession to receive a £3,500 annual contribution towards living expenses, training, mentoring, work experience at Freshfields and a guaranteed interview for a training contract.

Freshfields senior partner Will Lawes said: ‘The legal profession still needs to do more to encourage wider access and opportunities for progression for the very best talent. The purpose of this scholarship is to provide black and ethnic minority students from less privileged backgrounds with a genuine opportunity of building a successful career in the law and is a further demonstration of our commitment to making social mobility a reality.’

The first scholars will be selected in the summer this year. Eligible candidates will meet one of several criteria, such as being entitled to free school meals, having received a maintenance grant from a UK body, being the first generation to attend university in the candidate’s family or coming from a lower-income household.

SLCT founder Doreen Lawrence, the mother of black teenager Stephen Lawrence whose murder in 1993 galvanised the anti-racism campaign in the UK, said: ‘By providing gifted young people at the beginning of their career with a scholarship, we will establish lasting relationships that will mean there is a rich talent pool of candidates for top positions in the long term.’

Freshfields formed its relationship with the SLCT in 2012. The firm also provides pro bono legal advice to the body.

The City giant’s efforts are the latest in a string of diversity initiatives from commercial law firms in recent years, with the launch of the pan-industry group PRIME in September 2011 doing much to put the issue on the agenda of law firm leaders.

PRIME launched with 23 major law firm members to forge an independently-monitored scheme to guarantee meaningful work experience to school children from under-privileged backgrounds. Its membership has dramatically increased to around 90 law firms currently and a group of bluechip legal teams – including Google, Microsoft, Vodafone and Lloyds – have since become involved in the programme.

But while there is no doubt that social diversity has become a bigger issue for law firms, reliable statistics continue to demonstrate the huge scale of the challenge and, on some readings at least, the profession has grown more not less elitist over the last 20 years.

Given the scale of the challenge much cynicism still abounds – an attitude that has manifested itself in much private grumbling about Allen & Overy, a firm some rivals claim has monopolised the issue for publicity (a self-defeating refrain common when the profession attempts to tackle social issues). With such an intractable problem and ambivalent attitudes within the profession, City law will have plenty of opportunities to prove it is willing to rise to the moment.

jaishree.kalia@legalease.co.uk“>jaishree.kalia@legalease.co.uk

Legal Business

Two decades of consistency

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When we first published the gross fees of 35 leading firms with revenues over £20m in 1992, we were approaching the peak of the information age: the exponential rise of e-mail, the web and the mobile phone. Suddenly the way we went about our daily lives changed forever and we have rarely looked back. But as technology changed everything over the past two decades, the legal profession has remained a constant.

Legal Business

Magic Circle sees revenues up after muted financial year

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Turnover at Magic Circle firms rose by a modest 2.6% this year, with the UK’s five Global Elite firms pulling in over £5.2bn of fees and £4.2bn worth of profit in the 2011/12 financial year.

As the UK’s financial reporting season kicks off, Allen & Overy emerges as one of the top performers after another strong year that saw turnover climb by 5% to reach £1.18bn, up from £1.12bn in 2010/11. The firm is one of the best performing in the group over the past five years, growing revenues by an average of 3% each year since 2008. Much of that can be attributed to the firm’s network in emerging markets, with around 15% of A&O’s lawyers now based in Asia.