Fieldfisher
Guy Usher
04 April 2017
Guy Usher, one of the masterminds behind Fieldfisher’s new legal documentation platform for securities finance and derivatives, explains what Condor Alternative Legal Solutions can do at a time of regulatory upheaval
Image: Shutterstock
What does the Condor Alternative Legal Solutions platform offer clients?
At this time, we have three main product offerings under Condor Alternative Legal Solutions. First, we provide outsourced contract negotiations for both buy- and sell-side participants. We do this using our offshore facilities in Belfast and Cape Town, along with the legal layer and quality assurance here in London. This aspect of our platform can provide overflow capacity or effectively take out existing headcount for a firm that is already doing this, but may be struggling with costs or space.
The second aspect of our offering is the often much larger scale documentation projects, which could range from a very simple Securities Financing Transactions Regulation (SFTR) outreach or an upgrade to contracts.
Recently, this has been very regulation-driven. For example, in the over-the-counter world, we’ve been involved in a project on the re-papering of credit support annexes for the new margin rules, and we’re bidding at the moment for some similar projects related to the second Markets in Financial Instruments Directive (MiFID II).
Finally, Condor offers data extraction and analytics, meaning taking various documents, identifying the key data points—for all the key stakeholders in a business—so that clients can reconcile documents internally to multiple systems and analyse them in a multi-dimensional way.
Who are your target demographic for this product?
In terms of the size of our clients, there are clear economies of scale available. On trading documents, we are servicing tier-two banks who don’t have their own service centres.
However, even large US-based investment banks are considering using our platform for additional support as their own teams are at capacity.
Large-scale out-reaches and data extraction lend themselves to tier-one institutions. It’s the same with buy-side firms.
What makes Condor stand out from the competition, specifically technology companies?
While a potential client could go directly to some of the business process outsourcing solutions that are already out there, there’s quite a lot of in-house legal work involved in those for the firm, and at the end they still have to take all the responsibility for contract negotiations.
This means it’s rarely a total solution, whereas we’re providing a package service that includes the use of third-parties, but also our legal expertise.
Again, with the data extraction there are some technology solutions that can do this up to a point, but our clients are telling us that it still requires a lot of work at their end because they are not legal solutions, they’re tech solutions.
Existing solutions are also not well equipped to create bespoke data models for documents that are not homogenous.
What were the drivers behind the creation of Condor?
It’s really the sheer volume of this type of work compounded by a lack of technology for clients to deliver on these internally.
Additionally, the cost model of bringing in a traditional law firm to do this work would be far too high due to the scale of the projects. For example, we were talking to one client that is looking to re-paper its terms of business on the markets side in the context of MiFID II for 50,000 clients.
The sheer scale of the regulation that’s being implemented at the moment and the tightening of timeframes for compliance means that we saw the demand for this product before we built it. Although we officially only launched in January we were already working on projects in 2016.
All of the main regulations are driving banks to make wholesale changes to documents and outreaches that they never had to do so quickly before. The timescale between final regulatory standards being completed to implementation is getting ridiculously small.
Luke Whitmore and I had been working on creating Condor since November 2015. We then brought in Christopher Georgiou last August to help with the platform’s construction.
Do you see Brexit as another reason for your product?
It depends on the client—Brexit is affecting a lot of people in very different ways. Part of the problem, which is similar to what we are seeing with MiFID II where the over-the-counter margin rules sucked out a lot of legal capacity until March, is that there are so many other issues immediately in front of people that it’s quite hard to allocate resources to further off problems.
UK-based firms are thinking about how Brexit may affect their passporting of services onto the continent and what they will do if that becomes difficult, but it’s hard to quantify a solution at this point because there are so many permutations.
Do you have plans to build the product out in the future?
There are non-financial regulations coming down the road that financial services haven’t had to deal with before, or at least on this scale. We’re already working on a new solution that focuses on the EU’s General Data Protection Regulation. It’s a non-core business line for Condor that has the same scale of outreach needed. Indeed, one of our clients that initially approached us for help on MiFID II-related challenges is now considering combining these two aspects as a single exercise.
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