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The stories behind the legal sector news – March 3, 2023

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Cultural affairs – addressing the power dynamics in law firms

As 2023 hits its stride, the winds of change seem to be, if not exactly howling, then at least gently wafting through law firm offices. Long after the toxic work environment found in many firms has become the thing of Hollywood-movie cliche (see e.g. 1990s Al Pacino vehicle Devil’s Advocate for a literally diabolical legal practice), the Solicitors Regulation Authority (SRA) announced last month that it plans to crack down on horrible office cultures in the legal sector.

And not a moment too soon, as examples such as the Solicitors Disciplinary Tribunal hearing of sexual harassment allegations against former Gowling WLG lawyer Oliver Edward Bretherton so aptly demonstrate. Bretherton’s accuser, known only as Person A, claims that he pressured her into sending explicit pictures and videos of herself via WhatsApp and talking about her sexual experiences to him when she joined the firm at age 18. Bretherton was 36 and married at the time.

Whatever the truth of the situation – Bretherton is mounting a defence of mutuality, claiming that Person A was equally enthusiastic about the relationship and only became antagonistic when he refused to take things from the realm of fantasy into reality – the fact is that the power dynamic at play here is not unheard of at firms, but it does need consigning to history.

This is precisely what the new rules from the SRA are designed to tackle – law firm leaders will be forced to challenge those who abuse the power dynamic to bully, harass, discriminate against or otherwise mistreat other staff members. Although the SRA’s code of conduct  “already requires firms to ensure their managers and employees comply with our regulatory arrangements”, the regulator stated in its press release that “this will now extend to the new requirement for managers to challenge unfair treatment”.

It must be said that law firms are hardly unique in having some very unpleasant professionals doing and saying very unpleasant things to their colleagues and thereby fostering a toxic workplace culture – you only have to read the recent story about workplace bullying at Weetabix to see the truth of this. And some sections of the legal profession aren’t entirely happy with the SRA’s new rules: the Employment Lawyers Association (ELA) in particular is concerned about the regulator’s claim that the changes would “reinforce [the SRA’s] ability to take action against any case of unfair treatment”, with the ELA feeling that the rules around fairness will be “vague and hard to enforce”.

Still, I think we can all agree that this is essentially a very welcome signal from the SRA. As the mental wellbeing charity for the legal community, LawCare, stated: “We believe this is an important step forward to addressing the deep-seated challenges in the culture and practice of law”. For too long, law firm managers have been able to turn a blind eye to the bullying and general nastiness of some of their high-earning senior people. Putting the onus on those at the top of the respective organisation to take action against bullies, harassers and other ne’er-do-wells is an excellent starting point for making law firms better and happier places to work.

Putin it away for a rainy day

Swiss prosecutors have brought criminal negligence charges against four bankers, alleging that they helped Vladimir Putin squirrel away millions of Swiss francs. This is a landmark case, as it is one of the first ever prosecutions in the West relating directly to assets allegedly belonging to Russia’s president.

The accused quartet are all employees of Gazprombank’s Swiss subsidiary, and include its chief executive, Roman Abdulin. The indictment before the Swiss courts states that the bankers essentially turned a blind eye when they allowed accounts to be opened for Sergei Roldugin, a cellist and the godfather to Putin’s daughter, without asking any questions about where all the money flowing through them was coming from.

Prosecutors allege that the bank failed in its due diligence obligations, omitting to designate Roldugin a “politically exposed person” – which would have automatically triggered closer scrutiny – despite it being widely known that he has connections to the Kremlin and to Putin himself.

In fact, the bank’s official due diligence file on this alleged Putin crony contained nothing but a printout of the website for the Mariinsky Theatre in St Petersburg (where Roldugin was a conductor) and a single negative search result on the compliance database Worldcheck. Yet it was completely implausible for the vast sums of money being moved through the accounts via myriad shell companies to actually belong to Roldugin.

The case against the four bankers is a result of the Panama Papers leak from 2016. I’m very sure this won’t be the last prosecution against a Putin ally as the war in Ukraine drags on and the West continues to clamp down on those associated with Russia’s strongman president.

Buy now, pay later

In a story reported in The Financial Times, global law firms are warning that companies are looking for ways to cut their legal bills as they face the challenge of rising input costs and interest payments. Several global law firms told the FT that their corporate clients were requesting discounts on, and deferred payment of, their legal bills.

Several factors – the war in Ukraine, rising inflation and rising interest rates, increased material and production costs, etc. – are leading companies to review their cash flows, request writedowns on bills and pull some work due to budget constraints. Many corporate clients are also choosing to do more work in-house.

Firms including Reed Smith and Hogan Lowells are beginning to feel the pinch, with the latter reporting a  6.7% drop in revenue in the year to the end of December and 8.2% lower PEP. And according to a report by the Thomson Reuters Institute, average hours worked per lawyer across the industry fell to 119 billable hours per month in the year to the end of November.

It’s such a mixed picture out there right now. M&A work is slowing down and corporate law firms are beginning to suffer a bit – and yet the legal sector as a whole seems to be remarkably resilient, as we reported in Si’s Matters two weeks ago. What’s certain is that all we can do collectively as an industry is to keep adapting to the challenges of these strange times.

Poached to perfection

US firm Cravath Swaine & Moore has poached Shearman & Sterling’s dynamic finance duo Korey Fevzi and partner Philip Stopford for an estimated $4 million as the Wall Street behemoth pivots to offering English legal services for the first time in its 50 years in London.

This is a big move for Cravath, which has finally caved under the pressure to diversify in the City. Shearman will be reeling after losing two of its most talented – and hitherto most loyal – finance wizards. It’s all a sure sign that London’s legal leveraged finance market is in for a rocky ride as the global economy continues to groan under the seismic pressures of war, supply-chain woes and rising inflation and interest rates.

TBD turns five

Forgive me being sentimental for a moment, but TBD Marketing celebrated its fifth anniversary this week. I can hardly believe that what started as a hugely daunting ambition – the idea of going it alone after so many years in-house was mightily scary – has grown into such a successful reality.

Every Friday morning when I meet with my team via Zoom, I have to pinch myself a little: I feel a great sense of achievement, but also of responsibility, as we run through our to-do list, discuss upcoming projects, have a good giggle over our Zoom background challenge, and take turns at guessing which glamorous destination our very own digital nomad Chloe Christine is checking in from this week. I’m so very fiercely proud of what we accomplish as a team.

Five years of TBD Marketing – what a ride it’s been so far, and it feels like we’re just getting started.

Jobs of the week

Our friends at Chambers- and Legal 500- ranked Bellevue Law are hiring: founder Florence Brocklesby and her team of lawyers are looking for a paralegal and a senior consultant to join their expanding practice.

  • Senior Consultant: to read the full job specification and see if this is the right opportunity, please see here.
  • Paralegal: To read the full job specification and see if this is the right opportunity, please see here.

    I hope you’ve enjoyed reading this week’s edition.


    Si Marshall

    Legal marketing expert – I inspire lawyers to maximise the positive impact they have on the world

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