City solicitors are taking up secondments at bodies such as the Financial Services Authority to develop their skills and gain knowledge of how such organisations work, reports Paula Rohan
One of the first rules of business is to always be aware of what the opposition is up to, as all lawyers worth their salt will know. That could explain why City solicitors have been flocking to take advantage of secondments offered by the likes of the Office of Fair Trading (OFT), the Financial Services Authority (FSA) and the Pensions Regulator.
Both lawyers and regulators have discovered that the arrangements can be mutually beneficial: solicitors get a valuable insight into the way organisations work and can offer better advice to clients as a result, while regulators get to deal with lawyers who know how they operate and what their thinking is. They say this results in increased all-round efficiency.
Most secondments are arranged on the basis of specific projects, where the regulators need specialist legal advice on issues because their own legal teams do not have the necessary expertise. FSA spokeswoman Eleanor Hughes explains: ?At any one time, we have about 20 lawyers on secondment to the FSA. They could work in our enforcement division on a case where we need a particular skill or expertise, or they could sit in our general counsel division and work on writing new policy or guidance, or provide us with advice on interpretation of legislation.
?Secondments are particularly useful for the FSA to help with project work where we need the skills and expertise of a particular lawyer for a fixed period of time. It is an effective use of our resources to draw on external talent when we need it, and the law firm will benefit from the experience and knowledge of the FSA that the secondee will develop.?
The OFT also arranges secondments on the basis of particular cases or policy issues, but its staff have noticed that there are wider benefits. ?The secondees get the significant experience of working for the primary competition authority in the UK, which clearly enhances their knowledge of the system and its procedures,? says Brian McHenry, head of legal at the OFT. ?They learn much more than simply sitting across the table at a meeting here. They go back to their firms with greater knowledge of how the OFT operates on a day-to-day basis. It is good that more private sector lawyers have this ?inside? understanding of the OFT. This can only help us in our regular contacts with City and other firms.?
One solicitor who has benefited is Nicolas Atkinson, an associate in the litigation and dispute resolution practice of magic circle firm Clifford Chance. ?The FSA actually approached Clifford Chance about a secondment,? he remembers. ?They were putting together the code of market conduct and were having to respond to a wide-ranging consultation exercise. I was offered the secondment, subject to being interviewed. I had just finished a long-running case involving market manipulation, and this was no doubt a factor in my selection.?
He recalls: ?I had only dealt with [regulatory] enforcement before going on secondment. To work alongside supervision and other market-facing departments gave me a real insight into the internal mechanics of the FSA.
?Equally, to work with enforcement was an eye-opener. I had a lot of dealings with them on issues on which we had a common interest and I therefore got a very good idea of the way individuals there thought.?
Despite the knowledge gained, one thing that does not appear to emerge from these placements is secondees using the opportunity to spot loopholes in the system, and exploiting that information to get around the regulators? rules.
?It is the other way round,? insists Phil Ashford, secondment partner at the Pensions Regulator, which also has a steady stream of City lawyers through its doors. ?It makes them more likely to comply with the regulators and produce more of an efficient process.?
Mr Ashford explains that as well as many secondments being arranged on a specific case or issue, the actual recruitment of the solicitor is also very selective. He approaches firms for secondees, but they will need to submit a CV and go through two interviews. Salaries are also negotiated on an individual basis.
The FSA has a different system whereby the law firm continues to pay the solicitor?s salary, but later invoices the FSA, while the OFT shares the costs with the firm.
David Mayhew, a partner at City firm Herbert Smith who was also seconded to the FSA, says there is often room for negotiation about the salary and timescale of the secondment. He enjoyed his time at the authority: ?It gives you a great opportunity to do something different and experience life in a different organisation; it is a great learning opportunity.?
However, he has a few practical warnings. ?You really have to look at any conflict issues, especially if the regulator you are going to is regulating your firm?s own clients,? he says.?You have to be careful that you don?t get involved with any cases that your firm is involved with. It all has to be kept completely separate.?
He advises that lawyers going on secondments make a clean break with any ongoing cases and hand them over to someone else before they leave. ?You really need to shield the individual from being on the other side of the Chinese wall.? His other advice is to retain good relations with the regulator you are working with. ?You are dealing with a body that is still going to be there tomorrow; it is not like dealing with a commercial party.?
Mr Mayhew agrees that there are big advantages to seeing how the other side works. ?One thing I learned is how public law plays such a large part in how the regulators operate. The FSA derives its power from statute so it is governed by public law, which puts a different slant on things as most private practice lawyers are not used to that.?
However, Mr Atkinson is quick to point out that his seven-month experience was not all fun and games; he was expected to fit in with the rest of the FSA legal team, which sometimes proved difficult given that he is used to working from the other side of the fence. ?The secondment took me into some unfamiliar territory ? outside my comfort zone ? which was both educational and stretching.?
But overall, the view of secondments from both sides is positive. ?My secondment gave me a real insight into the way the FSA works, in particular the interplay between enforcement and other divisions, and the FSA?s culture. It also gave me detailed experience of the FSA?s market abuse regime,? Mr Atkinson says.
?Both have helped in advising clients since I returned. The secondment also gave me a different perspective on how things can be done, and developed different aspects of my skill-set. For example, it involved taking leading roles in meetings and giving presentations much more than my job at Clifford Chance did at the time. In other words, I was a better, more all-round employee when I came back from my secondment.?
As Mr Ashford points out, having a secondment under your belt is a ?unique selling point?. He explains: ?It?s a great marketing tool when you are approaching potential clients.?
Mr Mayhew would also definitely advise more lawyers to get in on the secondment act ? for the wider benefit of the firm. ?It becomes far different from looking at the regulator?s activities from the outside and trying to read the tea leaves,? he says. ?And then you can go and spread the knowledge through the rest of the firm.?