- Lawyers cite enforcement and compliance as the most likely cause for litigious action
- Financial services firms need most legal support with AIFMD and FATCA
Kinetic Partners, the global professional services firm, has today released new research showing that 70% of lawyers polled expect enforcement and compliance to be the most likely cause for litigious action in the financial services industry over the next year. This was followed by insolvency and violation of fiduciary duties, each selected by over half (52%) of respondents as one of the expected driving forces behind litigation for the year ahead.
As part of its activities to support clients, as well as lawyers to help them advise their own clients effectively, Kinetic Partners conducted a survey among lawyers serving the financial services industry for its Perspectives on Financial Services 2015 report to assess what the main drivers for the industry would be in the coming year. The survey found 81% of lawyers polled said they expected demand for their firms’ services in the coming year to increase, compared to just 19% who said they expect it to decrease or not change at all.
When asked about the type of legislation they believed their clients would need support navigating, 88% of lawyers polled cited AIFMD and FATCA. In contrast, just five per cent of lawyers polled cited trade and transaction reporting as an area where their clients would need support.
On the topic of insolvency, 63% of lawyers surveyed indicated that, relative to the past year, they believed the number of fund blow-ups in 2015 would increase or stay the same.
Geoff Varga, Global Head of Corporate Recovery at Kinetic Partners comments: "Since 2008, regulators have demonstrated a commitment to enhancing their ability to monitor and deter harmful behaviour. The resulting enforcement actions have created a demand for litigation support in the industry. The fact that such a high proportion of lawyers polled believe that there will be just as many if not more fund blow ups in the coming year indicates that insolvency issues and cases are also likely to continue into 2015, despite progress made in the recovery from the financial crisis. This too will be a driving force behind financial services litigation looking forward."
When asked about the past year, over half (68%) of lawyers polled said their clients costs had increased due to global regulatory developments. The survey also revealed however, that 30% of lawyers believed that regulation had created more opportunities for their clients to grow in the past year.
Stephen Baldini, Head of Litigation at Akin Gump Strauss Haur & Feld LLP, said: "The regulatory regime, both in the US and abroad, gets more and more robust every year, and regulatory concerns are of the utmost importance for many of our clients. Regulatory exposure represents a real risk for fall-out litigation stemming from investigations and enforcement, particularly in the hedge fund space. To ensure they are not getting caught up in litigious action later on, many clients are proactively requesting training programs and advisory support on compliance topics. Regulation can be a big stumbling block for funds and other companies, and missteps in this arena can lead to costly litigation."
Julian Korek, Chief Executive Officer at Kinetic Partners comments: "It is important that as forensic and regulatory specialists we are attuned to the needs of both in-house and private practice lawyers such that we are able to assist them effectively in meeting client needs. This survey gives us insight into how lawyers believe the financial services industry will need specialist legal advice over the coming year and in turn how Kinetic Partners can help the legal fraternity deliver this."
