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Laurence Simons Newsletter October 2013

Posted by: Laurence Simons 28/10/13

Lawyer Under Fire

Former barrister and tax solicitor Paul Baxendale-Walker, who was struck off in 2007 for advising clients on his own tax schemes, showed what a man with a decent bank balance and an untrammelled ID can do when he decided to give up law and purchase a pornographic studio.

He now owns a number of mucky magazines, including Men Only, Mayfair and Club, as well as the ever-popular Loaded magazine, reports Roll on Friday.

Hopefully, not too many of the lawyers reading this are fiddling with the knot of their tie and wondering just how much it would cost to buy a medium-sized publishing company.

Anyway, the grass may not always be greener - Mr Baxendale-Walker is now being sued by glamour model and former concubine, Anastasia Eustace.

The perfectly-named woman is suing the former lawyer after he demanded she return a £300,000 flat in Walton-on-Thames and a Range Rover following the end of their 'relationship'.

Mr Baxendale-Walker told the court his gifts are "always conditional on my satisfaction with the relationship. As soon as I am no longer satisfied, the benefits are withdrawn".

Despite this romantic approach, the judge has refused to throw out the case and has suggested a period of cross-examination to assess the situation further.

He also noted the timbre of emails Mr Baxendale-Walker sent the former stripper during their halcyon days, which he felt has a "genuine ring" to them. You would think that working with lawyers every day would make it easier for Justice Males to spot insincerity, but there you go.


South America - an untapped market?

UK law firms are leaving no stone unturned in their attempts to find some income sources within emerging markets, as the ongoing slump in the developed economies of the west makes it harder for them to turn a profit.

While a great deal of focus has been placed on Asia, the investment potential of South America has not been given enough credence, according to a roundtable discussion at an American Bar Association fringe meeting dealing with UK legal services.

They are some 15 to 20 years behind their US counterparts when it comes to engaging with this market, reports the Law Gazette.

Given the fact that many Americans tend to treat their neighbouring continent like a younger, less successful brother (ignoring it when it asks for cash but calling it up when they're looking for a good time) this is understandable.

Jose Miguel Carvajal, partner at Santiago-based Morales y Besa, said: "Of our partners, 80 per cent have studied in the US or have had opportunities such as internships at New York law firms. That is something for UK law firms to work toward."

British legal services firms have proven more adept at building these kind of relationships with their counterparts in Russia, Asia and elsewhere, Mr Carvajal pointed out.

With plenty of mining investment likely to be seen in South America over the coming years, it could certainly be a lucrative market for UK firms willing to go the extra mile to compete with their US rivals in the region.

However, the long-standing links between the two continents mean Brits have plenty of catching up to do if they wish to get in the game ahead of their American cousins.

To find out more about the legal market in Latin America, contact our team in Sao Paulo.

Mid-sized law firms tipped to struggle

I'm loath to describe the British legal market as a jungle, because that implies a colourful landscape of parrots, wildebeests and exotic fauna, rather than a group of men and women in sensible suits with ink stains on their fingers.

However! The law of the jungle appears to be in effect across the law market, with mid-sized firms struggling to pick up business as the Magic Circle continues to dominate when it comes to engaging with clients.

Andrew Sheridan, partner at restructuring specialist FRP Advisory, told the Law Gazette these companies need to consider their plans for attracting new business in the light of the sale of London firm Manches to top-100 rival Penningtons.

While boutique organisations can get by on their particular area of expertise, and huge firms can survive through their international links, mid-sized competitors are facing a struggle to justify their existence.

Mr Sheridan warned the Manches situation is "likely to be one of many similar mid-sized UK law firm rescue deals over the coming year".

"Many UK law firms have struggled to find a profitable identity, amid fierce competition from both larger firms with greater reach, and scale and niche players," he explained.

For companies that do not wish to go the way of the dodo (which, I know, didn't live in the jungle, but this isn't a nature documentary and I will mix my metaphors if I want to), it is vital to focus on strong branding and generating links with new clients if they are to retain their place in the legal ecosystem.

Richard Collins of the Solicitors Regulation Authority - for which there is no jungle-related metaphor - admitted that companies always seen as safe bets have been exiting the market "in a disorderly way".

"It's no longer inevitable firms of a particular size will survive, the market will not let them," he added, possibly while staring towards the horizon as a storm thundered overhead with a lone wolf howling in the distance.

Gap exists 'between GCs and directors'

Like star-crossed Shakespearean lovers, general counsel (GC) and boards of directors are speaking at cross purposes and failing to make their meaning understood, a new report from law firm Berwin Leighton Paisner has indicated.

While this misunderstanding is unlikely to lead to the kind of body counts familiar to fans of Jacobean drama, it could increase the compliance difficulties faced by international businesses, the firm claimed.

Its research found there was general agreement on the top legal risk priorities within organisations - namely contractual issues, dispute management and legislative or regulatory conflict.

Although this sounds like everyone is singing from the same hymn sheet, the reality is that many directors do not wholly grasp what is meant by 'legal risks'.

Only 25 per cent of chief executives and directors felt they had a clear understanding of the concept, compared to 50 per cent of risk and compliance professionals, suggesting they are not getting their message across as strongly as they ought to be.

Worryingly, 80 per cent of respondents felt their business could end up losing cash because of legal compliance risks. Shakespeare probably wouldn't knock out a sonnet about it, but as a corporate shareholder himself he'd understand the concerns.

Matthew Whalley, head of legal risk consultancy at Berwin Leighton Paisner, said: "We believe that organisations across all sectors would benefit greatly from taking a risk-based approach to their legal work."

Financial services organisations could be the most in danger from not understanding the regulatory climate, Mr Whalley concluded.

General Counsel 'no longer tasked with compliance'

The broadening role of the general counsel - particularly in the US - has been a major business trend over the last few years, as lawyers are asked to carry out more and more corporate functions and become increasingly crucial to their businesses.

However, a new report has suggested this could be reversing.

The 2013 Association of Corporate Counsel (ACC)/Corpedia Biennial Benchmarking Survey on Compliance Programs and Risk Assessments highlighted one thing - that lawyers should not be tasked with coming up with catchy names for abstruse research projects.

In addition to this, it suggested the number of companies that are separating the chief compliance officer from the general counsel's office is rising slightly.

James Merklinger, ACC's vice-president and GC, told Corporate Counsel: "There is still a significant number of chief compliance officers who do report to general counsel. But what I hear from members is more and more they are making compliance a separate function."

While compliance was once an intrinsic part of the role, many in-house lawyers now carry out more esoteric functions, meaning businesses have had to find new ways to ensure they remain on the straight and narrow.

For ambitious general counsel, that means broadening their skill-set is important, with Mr Merklinger admitting legal "has enough on its hands" in the current climate.

Regulatory and compliance environment 'still complex'

In some ways, it's inevitable the Association of Corporate Counsel (ACC) will warn that American companies are facing an increasingly difficult regulatory and compliance environment, in the same way it's inevitable a plumber will purse his lips and suck air in through his teeth when you show him what you need to be done.

The convoluted nature of corporate compliance is what makes in-house lawyers such an important asset, in other words.

However, if the ACC's research undertaken with Corpedia is correct this has not stopped budgets from shrinking, meaning counsel are being asked to prove their efficiency and ensure every last penny is accounted for.

Larger companies are still ahead when it comes to responding to the regulatory situation, as is to be expected.

Roughly 80 per cent of companies with revenues greater than $500 million (£310 million) maintain formal compliance programs; their counterparts with revenues under the $500 million mark were 22 per cent less likely to have such schemes in place.

Nevertheless, roughly two-thirds of survey participants admitted to having compliance and ethics budgets of $150,000 or less, indicating times are tight no matter where you're working.

"Legal departments and in-house counsel will always benchmark and seek alternative ways to accomplish company objectives more efficiently," said Erica Salmon Byrne, executive vice-president of compliance and governance solutions at Corpedia.

Clifford Chance criticised in Singapore

A magic circle law firm has found its prestigious name is not enough to avoid criticism in Singapore, where law minister K Shanmugam warned Clifford Chance had played a "clever word game" in claiming to offer "the first full-service, integrated law practice in Singapore".

Although he didn't specify what kind of word game he had in mind, Mr Shanmugam's sceptical tone suggests he has no time for cryptic crosswords, anagrams, acronyms, cryptograms and other forms of tomfoolery.

The minister (who probably doesn't know his name is an anagram of Magma Hunks, given his preferences as stated above) feels Clifford Chance is misleading Singaporeans about the nature of their business, reports the Lawyer.

Clifford Chance's alliance with Cavenagh Law "could be read to mean that a foreign law firm can now practice litigation in Singapore. That would not be accurate", added Mr Shanmugan.

He declared that the Singaporean government will not allow arrangements whereby a Singapore law practice is used as a proxy for a foreign firm, urging overseas investors to comply with the "spirit of the law" rather than find creative ways to circumvent it.

Officials from Singapore's government have also spoken to Clifford Chance in private to ensure the firm understands the gravity of its warnings, making this something of a rap on the knuckles for an organisation not used to hearing the word ‘no’.

However, a spokesperson told the news source the legal services provider has complied with all the laws associated with foreign law practices and will continue to do so as its practice on the Asian island expands.

Allen and Overy dealing with mice infestation

One would imagine that in the gleaming, high-powered world of the City of London there is nowhere for rodents to prosper, forcing them to move out to less salubrious parts of the capital in search of their lunch.

But this has been disproved by the news that Allen and Overy spent much of this month dealing with an infestation of mice.

An urgent email has been sent round the firm explaining that there have been repeated sightings of the creatures over recent days, according to a report in popular legal blog RollOnFriday.

A spokesman for the firm said: "Unfortunately it turns out some furry little friends had popped in for a bit of shelter from the cold. Obviously something we take seriously from a health and safety point of view, so the experts have been called in to put paid to the little pests."

This is not the first time a law firm has been taken on by the rodent world, with mice having been spotted in Hogan Lovells' London headquarters and the Paris office of Shearman & Sterling.

Perhaps the tendency for over-worked legal advisers to scoff their sandwiches in the office means there are more crumbs around for hungry rodents to snaffle, or maybe they're simply attracted by the stylish fittings and smell of money.

Some unkind pundits have speculated that they may be encouraged to check out law firms because of the similarities between themselves and the employees of said companies, which is witty but biologically unlikely.