The finished product

When Laurie Adams joined ABN Amro, he set about restructuring legal and compliance to align it with the rest of the business. Now, it is a reliable safety net. Husnara Begum reports



Laurie Adams, ABN Amro’s head of legal and compliance for the wholesale client business, joined the Dutch investment banking giant in November 2000 after 10 years at Citigroup. Since his appointment, Adams has implemented a wave of changes to ABN Amro’s legal and compliance function for its wholesale client business.

Immediately after joining, Adams overhauled ABN Amro’s legal and compliance group to align it with changes that were being implemented in the bank’s various business divisions. When he arrived, ABN Amro was moving from a global country to a global product structure, in common with other investment banks. Adams says: “When I joined we used to be run by countries and regions, but the business moved to a global product structure. At the time, we didn’t have a global product-driven legal structure.”

Adams set out to restructure the legal and compliance function along the same lines. Now, ABN Amro has senior product lawyers and senior compliance heads for each of its major products, including corporate finance (which includes a joint venture with Rothschild), equities and global financial markets (including lending and private equity).

Adams also reorganised the legal and compliance function so that staff are centrally managed. He explains that, under the old structure, legal and compliance staff were employed locally, whereas now this is managed out of London. Under the new system Adams has the ability to hire, fire, reward and train staff.

ABN Amro’s legal and compliance department comprises around 280 people, including lawyers and compliance and support staff, employed across 47 different countries. The bank’s main hubs are in Amsterdam, Chicago, Hong Kong, London, New York, São Paulo and Singapore. Adams says that the headcount dipped slightly because, as a result of the continued economic downturn, people who have left the legal and compliance department have not been replaced. In addition, three lawyers and compliance people were made redundant last year after the bank shut down its equities business in the US. “I think these market conditions have been testing. Like many other institutions we’ve reduced the size of staff, and we’ve let some people go in legal and compliance too,” says Adams.

There has also been a change in personnel in ABN Amro’s Asian hub. As first revealed on www.the lawyer.com/ lawyernews (12 May), the bank’s Hong Kong head of legal and Asian compliance chief Carmel Breadner quit and is due to relocate to Portugal with her family after two and a half years in the role. Adams reveals that Tony Corcoran, ABN Amro’s head of legal in the Asia Pacific, has been selected to take over Breadner’s responsibilities in the interim. He adds that the bank has not yet decided whether it will find a permanent replacement for Breadner.

ABN Amro originally hired Breadner to support the legal and compliance aspects of its equities business in Asia. After the bank restructured its business, Breadner was put in charge of compliance issues for all products throughout Asia, as well as being promoted to Hong Kong head of legal.

In addition to restructuring the bank’s legal and compliance function, Adams also instigated a review of its relationship with external lawyers. When Adams joined, the bank had more than 30 law firms on what he describes as an “informal panel”. Adams says: “Based on my previous experiences, we took a review with all the senior business heads and we reduced that number to a panel of six firms. I think the trend has been to try to reduce the number of firms we use so we build better and deeper relationships. The challenge for the law firms is obviously to provide that quality service consistently. We have to ensure they have the opportunity to understand our business goals.”

Since then, Adams has refined the panel so that the bank now has a global panel comprising Allen & Overy (A&O), Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters. He says: “The obvious advantage of global law firms is that they can ensure that their overseas offices provide a good service to us and it’s a one-stop shop of proven quality.”

The bank also has country panels in each of its major national markets: Ashurst Morris Crisp, Davis Polk & Wardwell, Denton Wilde Sapte, Norton Rose, Slaughter and May and White & Case as well as the global advisers all have a place on the UK panel. White & Case and Davis Polk advise the bank on UK and US law respectively.

Adams says ABN Amro has set up its first ever employment panel to provide employment law advice to the bank’s HR function. A&O, Simmons & Simmons and SJ Berwin have all won places on that panel.

Adams declines to disclose ABN Amro’s exact annual legal spend, but says it runs into tens of millions. “Fees, I think, are always going to be scrutinised carefully,” he says.

Last year, ABN Amro also launched a legal risk committee, which is chaired by Adams. With lawyers from around the world, the committee aims to consider legal risks that are affecting the bank. It has been looking at a number of initiatives, such as standardising documents and the best methods to deal with litigation.

On the compliance side, Adams’ recent focus has been internal and external conflicts. Towards the end of last year, ABN Amro launched a crackdown on the conflicts disclosure procedures of its external lawyers, amid rising client concerns that professional advisers are failing to declare potential conflicts. The bank now insists that its external lawyers must declare in writing that each mandate has been cleared by the firm’s internal conflicts system. ABN Amro was recently at the centre of a high-profile conflict in connection with the takeover battle for Safeway. It is understood that A&O was acting for both ABN Amro, the financial adviser to Morrisons, and Dresdner Kleinwort Wasserstein, the financial adviser to Asda.

In order to manage internal conflicts more effectively, ABN Amro launched a control room that bankers and management can call 24 hours a day to obtain conflicts clearance. Adams explains: “The purpose of the control room is to identify and to manage actual and potential conflicts of interests across the products and services we offer to our clients.” The control room, which is based in London, but which comprises people based in Amsterdam, London, New York and Hong Kong, is headed by Siân Dalrymple, the bank’s head of compliance for corporate finance and client coverage.

In a separate move, ABN Amro this month followed the lead of other investment banks and revamped its research process following widespread criticism of analysts’ work during the dotcom boom. Under the bank’s new system, analysts must rank companies relative to the rest of their sectors. A ‘buy’ means a stock will be expected to outperform its sector by 15 per cent, while a ‘sell’ means the stock will be expected to underperform by 15 per cent. Consequently, there should be a closer balance between buys and sells than has traditionally been the case.

Finally, Adams sums up the role of ABN Amro’s legal and compliance function by referring to a comment once made by one of the bank’s Brazilian heads, who likened legal and compliance to the brakes on a car. “The better the brakes on a car, the faster you can drive safely,” he says.

Laurie Adams
Head of legal and compliance for the wholesale client business
ABN Amro

Statistics
Organisation ABN Amro
Sector Banking
Head of legal and compliance for the wholesale client business Laurie Adams
Reporting to Chairman of the wholesale clients Wilco Jiskoot
Main law firms Allen & Overy, Ashurst Morris Crisp, Clifford Chance, Davis Polk & Wardwell, Denton Wilde Sapte, Freshfields Bruckhaus Deringer, Linklaters, Norton Rose, Simmons & Simmons, SJ Berwin, Slaughter and May and White & Case