European In-House Counsel Summit: key takeaways

Author: IFLR Correspondent | Published: 29 Jan 2016
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       How to position yourself during M&A activity

  • M&A was at record levels in 2015 and is expected to continue this year, with smaller consolidations than those seen last year
  • The rising popularity of warranty and indemnity (W&I) insurance was discussed by speakers, who were split over its worth
  • Around 25% of deals last year featured W&I insurance, with roughly 45% of private equity-driven M&A including it
  • Some doubted the value of W&I, citing its high costs, and the poor record of payouts
  • Speakers also discussed the importance of post-merger integration, and the need for early integration planning ahead of closing
  • Regulators are thought to be increasing their focus on post M&A integrations, with additional attention being paid to assess deals after close.

      High yield: debt options

  • The high-yield market in 2015 saw issuance levels down on 2014. There was a distinct split between first half and second half of the year, with levels never truly recovering after the summer
  • There has been a rise in US issuers coming to Europe and issuing in euros
  • Volatility in the US leveraged finance market has meant that terms are not as good as those available in Europe
  • Some issuers are increasingly conducting pre-marketing, often taking the form of a non-deal roadshow, where they meet with potential investors to discuss deal
  • This offers issuers real-time market feedback from those buying the bonds rather than the advisors, on where their bond will price and the terms that may attract attention
  • But speakers warned that those parties pursuing the method should flesh out timelines, and make disclosures early on to avoid conflict later in the marketing process.

      Competition law

  • The overlapping powers of Britain’s 10 antitrust authorities – plus the European Commission on top of that – is putting significant pressure on legal and compliance teams, and making it harder to make long-term business decisions
  • Management can be confused by the significant differences between each regulator’s processes and rules (including regarding confidentiality)
  • The CMA has a weak enforcement record, but has ramped up its caseload over the past few months
  • A CMA study from last year found poor awareness of competition law among UK corporates. This, coupled with tougher CMA enforcement, makes compliance and training particularly important and difficult
  • Training should use real-life examples (especially if they involve the company), mock raids and audits. Competition compliance should also be a standing item on management agendas
  • It is in-house counsel’s responsibility to be approachable and have an open-door policy to provide advice when needed
  • Compared to other types of illegal activity, cartels and bid-rigging may not feel intuitively wrong. In-house must bear this in mind when training staff.

      Disputes resolution for the in-house lawyer

  • The importance of dispute resolution clauses can’t be overestimated, but commercial pressures to get a deal done means they may be sub-optimal
  • It’s advisable to not choose the counterparty’s courts as the forum as they are likely to be weighted in favour of a home-grown company – even in European countries
  • Litigation and ADR clauses aren’t mutually exclusive, for example you may pursue arbitration but also need to apply for injunctive relief
  • Despite growing use of ADR, there are situations when litigation is the best avenue – including because of time pressures and because arbitration/mediation carries downside risk
  • When facing a dispute, it’s important to get external counsel involved as early as possible
  • Including a fair and reasonable assistance clause in employment contracts can make it easier to get the input of ex-staff
  • Counsel are wary of the growing number of no-win-no-fee solicitors trying to build class actions against corporates.


  • No law protecting whistleblowers existed in the UK until 2004, when it became clear that employees who had raised concerns had suffered detriment. In the US it took the Enron scandal for legislation to be introduced
  • There has been a definite shift from scepticism to most viewing it as being positive
  • PRA and the FCA now demand that financial institutions have a designated whistleblower champion and must publicise events through annual reports
  • The FCA’s regulations go beyond that in the US. Cases in the US are tried before a jury as there are no employment tribunals
  • The SEC frowns upon companies that add disclosure requirements related to whistleblowing to internal contracts on the basis that it could impede employees from confidentially reporting to the government
  • In a whistleblowing case, key stakeholders (HR, compliance and legal) must be coordinated effectively 

      European labour reforms 2015: greater flexibility and longer working

  • 2015 saw a huge amount of labour reforms across Europe including in Italy, Poland, Austria, Spain, the Netherlands and Norway
  • In Italy there has been a definite shift towards more employer-friendly legislation
  • Recent ruling by the European Court of Human Rights which found a Romanian employer did not breach employees’ rights by monitoring his instant messages was significant
  • If faced with a similar issue, make sure it is contained in contracts that the employer has the right to monitor messages
  • How you go about it is important. Decide if the issue is business-critical and if not, think twice

      FCA as a competition authority: two worlds collide?

  • The FCA’s probe into competition in investment banking has scared the industry. Its silence should not be mistaken for inactivity, especially considering the vast scope of information requests made
  • In cases where the FCA cannot find a breach of its hard rules, it will sometimes use its broad 11 principles, for example, doing business with integrity, to penalise. This was demonstrated in FX spot trading cases
  • Most cartel cases have grey areas and that makes it hard to know what to report to the authorities
  • International gateways between regulators do exist and companies must bear this in mind. It is still unclear the extent to which these are used

      Corporate governance planning and compliance

  • Too often stakeholders forget the issue of privilege. When issues arise internally be careful about sending emails without involving general counsel. Privilege is vital
  • In cases where regulators have been notified early on, panellists found them approachable and cooperative. Maintaining a good relationship with them is essential
  • The best way to deal with international regulations is to look at all the jurisdictions you operate in, take the most stringent regime and make that your default position – though watch out for contradictions in national legislation
  • Regulators are now seeking to assess not just the training for employees, but its effectiveness – though unclear exactly how this will be done
  • The future holds higher fines, broader global enforcement, more regulation, and more investigations into money laundering related to terrorism. The DoJ is leading the way as most stringent on most counts
  • Businesses are moving towards transparency, overall making more ethical decisions. If your sole focus is on profit then behaviour will go in that direction

       Data protection issues    

  • Data protection issues are now gaining increasing importance
  • The conflict between anti-terrorism and the campaign of civil libertarians means companies must balance the ways in which the store their data and deal with regulators
  • The General Data Protection Regulation started journey in 2012. After much discussion and many drafts, the final version arrived in December 2015
  • But we are waiting for the European Council and Parliament to pass it. It will then take two years to implement: we are looking at first half of 2018
  • There will be no need for implementing legislation
  • Main message from this session: the GDPR imposes a large number of obligations on people who process large amounts of personal data
  • The GDPR enhances the toolkit available to the DP authorities to deal with breaches. The consequences could be quite significant if you get it wrong (2% to 4% of revenue)
  • The good news is that you have two years to plan. This should be plenty