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Continental Breakfast: your daily update on what’s happening in Europe.
U.K. law firms continue to position themselves in an attempt to tap into the fast-growing financial technology market, with Addleshaw Goddard the latest to announce that it will offer free legal advice to startup companies.
Addleshaws, a national midmarket practice with three U.K. offices, will provide up to 500,000 pounds ($620,000) of mentoring and legal advice to fintech startups over the next 12 months. Companies selected for the program, which will launch next week, will also be able to attend the firm’s training and networking events.
Fiona Ghosh, head of Addleshaws’ fintech practice, said the initiative would enable the firm to “offer guidance and support, rather than just [provide] hard-edged legal advice.”
Law firms providing free advice to new fintech companies is fast becoming a trend. Earlier this year, London-based Simmons & Simmons launched a 100,000 pounds ($123,000) fund to provide free lawyering to fintech startups, while Slaughter and May will this month start selecting fledgling U.K. fintech companies that will each receive up to 30,000 pounds ($37,000) of complimentary legal and other services.
Firms aren’t doing this out of the goodness of their hearts, of course. If even one of the startups goes on to become large enough to hire the firm as a paying client, those fees will more than justify the initial outlay. Investing in a client in the hope that it will generate returns down the line is a tried-and-tested approach. Slaughters provided free advice to U.K. chip designer Cambridge Silicon Radio when the company was first founded in 1998, and then acted on its $2.4 billion sale to U.S. chipmaker Qualcomm in 2014, for example.
The recipients of Slaughters’ assistance will be chosen by a panel comprising the firm’s head of technology and outsourcing Rob Sumroy and financial services partner Ben Kingsley, and senior executives at Santander, artificial intelligence company DeepMind Technologies, and seed-focused venture capital fund LocalGlobe.
The panel will also include Mike Lynch, the co-founder of U.K. enterprise software company Autonomy. Slaughters has a close relationship with Autonomy, having advised the company on its hugely controversial $11 billion sale to Hewlett Packard in 2011. The firm recently signed a deal with new artificial intelligence software company Luminance, which is backed by an investment fund founded by Lynch and other members of the Autonomy senior management team.
Artificial intelligence is becoming increasingly widespread in Big Law, with growing numbers of major U.S. and international law firms turning to machine learning technology in an attempt to cut costs and improve efficiency. Baker & Hostetler; Clifford Chance; DLA Piper; Dentons; Latham & Watkins; Linklaters; Slaughter and May; and Wachtell, Lipton, Rosen & Katz are among those to have signed deals with AI software providers such as Kira Systems, Luminance, ROSS Intelligence and RAVN Systems.
A group of U.S. and U.K. scientists recently created AI software that can accurately predict lawsuit results.
Berlin Claims Success In Luring Post-Brexit Business From U.K.
Shortly after the Brexit vote, Germany’s Free Democratic Party paid for a van to drive around London emblazoned with a huge placard reading: “Dear start-ups, keep calm and move to Berlin.”
It seems that some may have been listening, with Berlin city officials reporting that five London-based tech startups have relocated to the German capital since the referendum result and that a further 39 companies are currently considering the move.
The co-founder of web design firm MBJ, one of the five startups to have moved from London to Berlin, told the Financial Times that he was concerned Brexit would limit the company’s ability to hire staff from EU countries. “Brexit imposes a certain risk of visa requirements for non-Brits,” said Julian Baladurage. “Our team is very international so we can’t risk having to apply for 100 visas.”
A number of European countries have been attempting to lure companies from the U.K. following the Brexit vote. France has introduced significant tax breaks for expatriates and simplified the process of registering financial companies, Germany is considering changing its labor laws in order to help the country win business from Britain, while Spain has launched a campaign boasting of its sunny climate, affordable and plentiful office space, and flexible labor laws.
There are fears that the Brexit vote could result in banks and other companies—including global law firms—shifting business away from London to other European cities. Financial institutions are particularly concerned about a potential loss of access to the EU single market, which many rely on to run European trading operations out of London. Russia’s VTB Bank recently became the first major financial institution to announce that it will relocate its European headquarters from London due to the U.K.’s decision to leave the EU.
U.K. prime minister Theresa May has indicated that the country will withdraw from the European single market as part of a so-called “hard Brexit.” May had previously announced that she would trigger Article 50, which starts a two-year deadline for an EU member to complete its exit from the political bloc, by March 2017. But that has now been thrown into doubt after last week’s landmark High Court ruling that the Brexit process must be subject to a parliamentary vote. U.K. politicians, the majority of which wanted the country to remain within the EU, could theoretically delay or even block the process.
A group of claimants initiated legal proceedings to demand that all elected politicians—and not just the prime minister—decide on the triggering of Article 50. The government has said it will appeal, with the case set to be rushed into the U.K. Supreme Court in early December.
Dechert Boosts London With Dual Hire
Dechert has continued to expand its London office with the hire of Kirkland & Ellis finance partner John Markland and White & Case private equity partner Ross Allardice.
The move reunites the pair, with Allardice spending nine years at Kirkland before joining White & Case in 2013. They will soon be followed by Clifford Chance litigation partner Stephen Surgeoner and DLA Piper finance partners Philip Butler and David Miles, who are set to join Dechert by the end of the year.
Dechert currently has around 130 lawyers in London, making it the firm’s second-largest office. Dechert CEO Henry Nassau told Law.com’s U.K. sister title Legal Week that the firm is focusing its growth on New York and London—“depending on Brexit”—and is seeking to expand its U.K. base to more than 200 attorneys. “If we can find good lawyers, the sky’s the limit,” he said.
Dechert is one of a number of U.S. firms to have ramped up its investment in London over the past 12 months. Latham & Watkins has been particularly active, with Allen & Overy M&A partner Edward Barnett the latest in a long line of senior partners to join the firm in London this year, while White & Case has made a number of hires in the U.K. capital since introducing a new strategy to expand its office in the city to more than 500 lawyers by 2020—something no other U.S. law firm has achieved. White & Case recently brought in Clifford Chance banking co-head Patrick Sarch as its new London corporate chief.
As I wrote in my column last week, U.S. firms have been systematically poaching partners from U.K. rivals for decades, but their dominance of the London recruitment market now appears almost absolute. American firms’ higher profitability, more flexible compensation systems and greater access to U.S. markets and clients has helped them outmuscle U.K. rivals when it comes to lateral hires.