1 December 2003
F&C Management was created after Foreign & Colonial Management was taken over by Dutch financial services group Eureko in March 2001 and the latter’s asset management activities were integrated into the F&C brand. Currently, F&C manages more than £62bn in assets for both institutional and retail investors. It is therefore surprising that the London-based asset manager’s five-strong legal team handles 95 per cent of the company’s legal work in-house. This is one achievement of which F&C’s director of legal services Gillian Switalski is extremely proud.
“We’re very hands-on in the department. People don’t need to come to us, so we have to demonstrate that we’re on the ball, value for money and won’t rack up bills, and can give them the answers they need,” explains Switalski.
Before Switalski was appointed to head F&C’s legal function, the fund manager had only one in-house lawyer, so it farmed out most of the legal work to external advisers. But when Switalski joined F&C three and a half years ago, she decided to build a legal team from scratch. Today, she has three lawyers in London and one in Amsterdam who can work in English, Dutch, French and German.
“I completely changed things around so most of the legal work is now done in-house,” she explains. “We now draft all our own derivatives documents and investment management agreements.
“I’ve got a relatively young team and it’s really nice to see them developing and growing. And because they’re different nationalities we get a really good mix. It’s a great pleasure working with them.”
Recently, F&C’s in-house legal team handled the dissolution of a PVF trust in the Netherlands in order to segregate client money. To achieve this, F&C had to register individual funds and enter into new agreements with various banks. As a result, Switalski’s team had to draft a string of new derivatives documents.
“We had to disband the trust because the client money was in pools and, from a compliance point of view, we thought it was appropriate to segment the money for transparency. This wasn’t for a particular reason, but following the advent of more regulatory controls we felt we wanted to be ahead of the game,” says Switalski.
Switalski also brought intellectual property (IP) into her department. Previously, F&C’s small IP portfolio was handled externally and overseen by the marketing department. But Switalski argues that it needed to sit in the legal department. She adds that one of her greatest achievements in this area was successfully buying the ‘fandc.com’ domain name from a drugs company for significantly less than the $1m (£589,000) asking price.
Switalski, however, does not shy away from obtaining additional support from external lawyers on large-scale projects. “We should be able to do our day-to-day job, but if it’s a huge project it makes sense to talk to someone outside who’s an expert in that area,” she says.
Recently, Switalski instructed longstanding adviser Norton Rose to advise on a landmark outsourcing deal to transfer the institutional administration function of F&C’s £41.7bn business to Mellon Global Securities Services, the custody and investment arm of Mellon Financial Corporation.
“Because [Mellon] was such a huge project and done in such a tight timeframe, we essentially wanted another check. We wanted a risk log to make sure we hadn’t missed anything,” says Switalski. “The documentation also became a lot more complicated. We had 14 work streams that had to be factored into the contract. Then we had to make sure the work streams meshed together. So it wasn’t a simple transaction.”
She adds: “It was very helpful because they [Norton Rose] have quite good experience in outsourcing, so we worked very well together on that.”
The deal, which completed last month, enabled Mellon to take on the investment administration for all of F&C’s institutional business as well as the employment of 93 of F&C’s back office staff. The outsourcing mandate will cover pan-European-based fund administration, trade communication, reconciliation, data services and information delivery. The utilisation of a new multimillion-pound technology platform will form the basis of a new European business initiative for Mellon.
“Mellon wanted to get into that marketplace and we had some intellectual property that would enable them to hit the ground running,” says Switalski. “But in return we’re expecting investment from Mellon. It’s what you’d probably call a symbiotic relationship. We knew where we wanted to get to and we thought we’d get there quicker with Mellon’s support.”
F&C is now undertaking a similar project in the Netherlands with Switalski leading the legal team.
In addition to Norton Rose, F&C also has relationships with Freshfields Bruckhaus Deringer and Simmons & Simmons, which advise the fund manager on Dutch and emerging markets issues respectively.
Meanwhile, McDermott Will & Emery handles HR matters. “The relationship with McDermott is working really well, so there’s no need to change it,” states Switalski.
However, her preference is to instruct the bar because it is cheaper. Switalski does not favour any particular barrister or chambers, although she rates David Pannick QC of Blackstone Chambers. “My utter favourite in a crisis is David Pannick. He’s fantastic,” she gushes.
Switalski also admires Norton Rose corporate finance partner Robin Brooks. “Someone like Robin is also fantastic, because I can pick up the phone to talk about an issue and the meter won’t always be ticking,” she says.
Switalski has had a colourful legal career, which began at the Crown Prosecution Service. In 1988 she moved into the corporate arena and soon became Sony’s first female general manager. Then, after a stint at international management consultancy Proud-foot, she took on the role of director of corporate services for National Lottery organiser Camelot. Following that, Switalski advised a number of internet start-ups.
On top of all this, three years ago Switalski founded Legalpulse, an online service designed to deliver cost-effective legal advice and plain English documents.
That CV reflects the confidence Switalski exudes that has helped her turn around the balance of the legal work at F&C.
|Organisation:||F&C Management Limited (formerly Foreign & Colonial)|
|Assets under management:||Approximately £62bn|
|Director of legal services:||Gillian Switalski|
|Reporting to:||COO Tony Tomlinson|
|Legal capability:||Four lawyers in the UK and one in the Netherlands|
|Main law firms:||Freshfields Bruckhaus Deringer, McDermott Will & Emery, Norton Rose and Simmons & Simmons|