Inside job

Lured into an in-house role for Barclays Capital after retiring from the partnership at Clifford Chance, Andrew Taylor is more than happy
with the change of scenery. Kathryn Hobbs reports

Barclays Capital (BarCap) is the investment banking arm of Barclays Bank, and for its in-house legal team, the principal task is risk management. This is something of a wide-ranging remit for a company whose every venture necessitates taking risks of all shapes and sizes, and for the most part involving vast sums of money.

As part of the Barclays Group, BarCap has access to the balance sheet of a bank with assets of £316bn, capital resources of more than £21bn and an AA credit rating. Its in-house team is there to make sure that this position does not fall foul of the numerous risk elements associated with a top-tier investment bank.

BarCap is debt-focussed, acting internationally as
intermediary and adviser to corporate and financial institutions, governments and supranational organisations. It concentrates on servicing the telecommunications and media, transportation, oil and gas, utilities and technology sectors.

Its activities can be apportioned to two main areas: rates and credit. Between them, these two groupings encompass sales, trading and research relating to government bonds, money markets, foreign exchange and commodities, and origination, trading and research relating to loans, securitised assets and corporate bonds.

In the senior Eurobonds markets, BarCap is ranked at the top for the year to date, having lead managed 68 deals totalling euro26bn (£15.8bn) in fixed and floating rate forms, and across a wide base of issue nationalities.
Of all the Barclays Group components, Barclays Capital has the largest legal capacity and budget. It contains a third of all the lawyers in the Barclays Group and accounts for half its legal spend.

In terms of the in-house hierarchical structure, former Clifford Chance partner Andrew Taylor presides over the legal teams in London, Japan and Hong Kong; both Taylor and Guy Dempsey, general counsel for US operations, report to the business risk director Frank McGarahan.

Taylor originally retired from private practice about six months ago, but just as he closeted his suit, put his feet up and learned to recognise his children, he was tempted back to work by Barclays. Following a campaign of assiduous attention, BarCap snared its man. “I couldn’t help also being flattered by BarCap’s energy in identifying me, although I’d never worked with them, and in tracking me down in retirement and being very flexible in their offer.
After all, I didn’t even want a job,” says Taylor.
His masterplan involves a five-year in-house tenure, expressing his full legal personality, before really and truly retiring, perhaps this time for good. “BarCap and I had common views on the use of legal resources and tools as part of a fully-integrated framework of risk management,” he says. Not the most glamorous wooing strategy, but it worked. Taylor liked the fact that BarCap shared his thoughts on approaching the in-house function as an advance means of managing risk, rather than using the ‘mop-up men’, who are called in after problems have occurred.

Taylor’s in-house philosophy is therefore the identification and management of legal risk to Barclays arising from BarCap’s business. His definition of legal risk extends from risk that business will not be conducted in accordance with applicable laws and regulations, to the risk that Barclays will be liable for damages to third parties harmed by the conduct of its business. For any organisation, such potential risks are not to be taken lightly, but in BarCap’s case, considering the sums involved in BarCap’s daily business, these risks are rather more formidable.

Consider the figures. Among other deals this year – and for now this is only within the syndicated loans sector – BarCap arranged the largest syndicated loan ever completed (Vodafone), the largest syndicated loan completed in the Asian markets (PCCW-HKT) and the largest Continental European loan ever completed (France Telecom). This list gives an indication of BarCap’s undertakings over the past year. The risk factor is phenomenal.

Taylor remains unfazed by the magnitude of possible disturbances to BarCap’s progress. He believes that his team possesses the right mix of confidence and expertise to handle its risk management agenda. Through a combination of education within the in-house team and within BarCap as a whole, creating new procedures to ensure checks and balances are not only in place but correctly deployed, and the maintenance of effective relationships with external counsel, BarCap’s in-house team has measures to ward off the spectre of legal risk – or at least to keep it to a minimum.

Technology is an inevitable concomitant of any investment bank, and BarCap is no exception. In-house at BarCap, technology has come to the fore in the form of its internally-developed database Libra. Perhaps unusually, this database has been generated and developed by and for the in-house team. This proactive approach to technology as part of an overarching in-house legal capability is something that Taylor believes sums up the whole in-house attitude.

Libra comprises four main functions that allow the team to track the negotiation of agreements, from instruction and drafting to negotiation and closing. It compiles and filters information to run ‘what if’ credit risk scenarios, all of which is logged on its comprehensive database. Although principally used in the area of derivatives, there are plans to extend its use into other compatible areas.
BarCap actively promotes a long stay for its in-house counsel, right from trainee to senior adviser. There is a high retention rate which is thanks in part to the variety of the work undertaken. Taylor noticed this straight away, acknowledging that his time as a banking lawyer in one of the City’s busiest banking practices had barely touched upon the full range of legal matters endemic to an investment bank.

“I’d worked with investment banks from the outside for 20-odd years, but I’d never worked in one, even as a secondee,” says Taylor. “I was sure that it would be different, but I was immensely curious as to how and where it was different.” He now knows and is more than happy with his discoveries. “For a debt-based rather than equity-based investment banking lawyer, this has to be one of the plum in-house jobs in the UK. BarCap’s product set and geographical coverage were so closely matched by my own professional experience that it would have seemed almost perverse not to try it,” he adds.

Taylor is a convert to the in-house cause, lured out of retirement and ensconced in an environment in which he clearly thrives. Speaking of his role, with all the zealous enthusiasm of a man relishing his work, he offers this observation: “As a senior in-house lawyer, my job is far more concerned with strategy, leadership and management than with process, but the environment of an investment bank – or this one at least – means that I have the authority, tools and support to enable me to fulfil those functions far more effectively and efficiently than I ever found possible in private practice.”

With this in mind, it is not difficult to understand why Taylor likes to keep as much work as possible in-house. He has a team and systems in place, so external legal advice is sought only on specific, often academic rather than commercial, queries. The general advisory panel is made up of Allen & Overy, Clifford Chance, DLA, Linklaters & Alliance, Lovells and Simmons & Simmons.

Ever the diplomat, even to the point of managing the risk of offending his colleagues in private practice, Taylor gave these names in alphabetical order.
Andrew Taylor
Head of legal
Barcleys Capital

Organisation Barclays Capital
Sector Banking
Employees 4000
Legal Capability 61
Head of legal Andrew Taylor (and Guy Dempsey for US operations)
Reporting to Business risk director Frank McGarahan
Main location for lawyers London
Main law firms Allen & Overy, Clifford Chance, DLA, Linklaters & Alliance, Lovells and Simmons & Simmons