Kevin Crosset: Gartmore
20 August 2007
24 November 2009
30 November 2009
12 June 2006
6 May 2008
5 June 2006
Asset management may not be at the cutting edge of the legal market, but Gartmore Investment Management general counsel Kevin Crosset has overseen plenty of change during his time at the company.
Having initially worked for Gartmore's former parent, US insurance giant Nationwide, Crosset was instrumental in setting up Villanova Capital, which became the US arm of Gartmore. Then, when Nationwide bought Gartmore UK in 2000, he was responsible for bringing the two arms of the investment house together.
That role intensified last summer when Gartmore's management completed a successful buyout of Nationwide's interest, backed by US private equity house Hellman & Friedman.
"Nationwide is a large insurance company and it didn't understand asset management," says Crosset. "On the management buyout [MBO] I worked with Nationwide and the management team, telling both sides what they could or couldn't do. I was the mediator between the two sides and I enjoyed the role."
For an in-house lawyer, something like a management buyout is both a dream come true and a nightmare. For Crosset the dream part of the job was being at the forefront of the restructuring of one of the UK's highest-profile asset managers, while the nightmare centred around the mountain of paperwork involved.
"I reviewed all the documents for the transaction and we did due diligence for over a year. I'd never seen due diligence like it," he says.
Although Crosset, at that time still employed by Nationwide, was involved at all stages of the MBO process, the bulk of the transaction from Nationwide's point of view was carried out by Freshfields Bruckhaus Deringer in a one-off instruction. Cleary Gottlieb Steen & Hamilton advised Hellman & Friedman, while Gartmore's management was advised by Crosset and his eight-strong in-house legal team.
A private equity buyout of a well-known financial services player always grabs the public's attention, but for Crosset the MBO was just one, albeit major, part of his job's focus. On a day-to-day basis Gartmore is in the business of running hedge funds as well as mainstream investment vehicles for the retail market. Although this work may seem pedestrian when compared with an adrenalin-rush buyout, for Crosset the challenges are just as real.
Currently Crosset is in the process of revamping the corporate governance of Gartmore's 23 hedge funds, which have a complicated Cayman Islands structure. Originally work on the documentation for the funds was divided between Dechert and Simmons & Simmons. However, as the funds are being moved across to a format where all 23 will have a shared board, Crosset is handing all the external legal work to Simmons.
"We're going through the funds to make sure they're all the same - it's a big job," he says. "We worked with both firms for about two years, but I like using one firm for one type of work. Some people feel having a choice gives a competitive edge because firms want to do better than each other, but I find it just results in things being done differently. For me that's inefficient."
Historically Gartmore used a reasonably long list of external legal advisers for each area of its business, but during Crosset's tenure the panel has been cut down to consist of Allen & Overy for employment law, Arendt & Medernach for offshore vehicles, Ashurst for private equity, Eversheds for open-ended investment companies, Simmons for alternative investment products and Stradley Ronon Stevens & Young for US funds.
"During the time I've been here we've gone through a number of firms. We retain them on a limited basis, evaluate them, then find a regular adviser and negotiate a reasonable fee," Crosset says. "The goal of our legal team is to add as much value as possible, so we like to partner with top businesses. Lawyers are a dime a dozen - we want those that will help us achieve our goal."
Crosset contends that hedge funds are at the "sexy" end of asset management, with plenty of room for legal innovation, but he points out that the retail market is where the bulk of his team's work comes from.
"We do most of the prospectuses for the retail funds in-house," he says. "We have two very experienced lawyers who've done that for years and it's cheaper to do it in-house."
As part of that the company has revamped all its fund prospectuses in a bid to avoid the potential for short-term trading. This has led to an unusually strong bond between Gartmore's legal and compliance teams, with the former relying on the latter's extensive knowledge of the Financial Services Authority (FSA).
"In most shops compliance and lawyers don't work hand-in-hand because lawyers generally think they're better than compliance officers," says Crosset. "But compliance officers know the FSA much better than we do, and there's a group in compliance that keeps us up to date with all regulatory matters, so it makes sense to run the two together."
Executive vice-president and general counsel
Gartmore Investment Management
|Organisation:||Gartmore Investment Management|
|Title:||Executive vice-president and general counsel|
|Sector:||International asset management|
|Assets under management:||£24.6bn|
|Reporting to:||Chief operating officer Les Aitkenhead|
|Number of employees:||400|
|Annual legal spend:||£1.1m|
|Global legal capability:||Nine lawyers|
|Offices:||London, Frankfurt, Madrid, Tokyo and Boston|
|Main law firms:||Allen & Overy, Arendt & Medernach, Ashurst, Eversheds, Simmons & Simmons, Stradley Ronon Stevens & Young|
|Kevin Crossett's CV:|