In London, the houses of Parliament on the river Thames (Patrice Gilbert/Legal Times)
Continental Breakfast: your daily update on what’s happening in Europe.
The European Union is to make a renewed attempt to wrench euro-denominated clearing business from London to the eurozone in a move that could cost tens of thousands of jobs in the U.K. capital.
Britain was last year forced to go to court in order to block a European Central Bank policy that would have required clearing houses to relocate to the single currency area. In a landmark ruling, the EU general court found that the ECB “does not have the competence necessary to regulate the activity of securities clearing systems.”
But the European Commission, the EU’s executive body, is now considering backing legal changes that would give the ECB control over the location of key market infrastructure, the Financial Times reports.
London currently dominates the clearing of euro derivatives, processing three-quarters of all transactions globally, worth around $570 billion each day.
Losing this business would be a huge blow for the city. A report produced last month by big four accounting firm EY stated that it cost London a total of 83,000 jobs over the next seven years, including 18,000 in legal and accounting services.
But don’t worry: Analysts at ratings agency S&P said last month that Europe is “unlikely” to seize euro-based clearing from London. And as we learned from the financial crisis, ratings agencies are never wrong.
U.K. Firms In Talks To Take On KWM Trainees. But What About Support Staff?
If the above story is all a bit gloomy for the run up to Christmas, here’s something to lift the spirits, with news that a number of firms are in talks to take on trainees from King & Wood Mallesons’ failing European business.
A management figure at one firm told The American Lawyer’s U.K. sister title Legal Week that firms are “looking at stepping in to make sure people are taken care of.”
It’s great news and nice to see the industry rallying to support trainees that have been left in the lurch through no fault of their own. (Let’s ignore the fact that many firms have exacerbated the situation at KWM Europe by poaching partners.)
But trainees aren’t the only KWM Europe employees facing an uncertain future.
While much of the recent focus has been on the actions and movement of KWM partners, it is the junior lawyers and support staff that are often most affected whenever a firm goes under.
Partners generally have client relationships, books of business and access to senior figures at other law firms, which makes it relatively easier for them to find new jobs. Any junior lawyers and support staff that aren’t picked up by the firms seeking to buy parts of KWM Europe via a pre-pack administration, on the other hand, will likely be thrown back into the recruitment pool and left to compete for roles as and when they appear.
I encourage firms to do what they can.