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DEFENDING AGAINST THE RISING COST OF LITIGATION

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Simon Price

Simon Price, UK managing director of Recommind, looks at the impact of high-profile legal cases on the financial services sector and what organisations can do to defend themselves from the soaring cost of litigation.

In a post-recession world, policy makers are taking a much tougher stance with organisations that fail to prevent fundamental failings in financial controls. As governing bodies concentrate on creating more controlled markets, a series of extraordinary events – including Libor, the mis-selling of Payment Protection Insurance (PPI) and breaches of compliance sanctions – have strengthened the regulators resolve to create a viable industry that protects clients’ interests.

However, the new regulatory drive to hold financial institutions to account is causing legal costs to spiral. The mainstream litigation found within most financial institutions has been compounded by a series of cross-border investigations into allegations of malpractice. As a result, analysts at JP Morgan Cazenove have predicted that despite UK banks already setting aside £30 billion to cover legal costs and settlements over the last three years, new litigation will require another £15 billion to be spent over the next three. Reflecting this trend, Barclays more than doubled its litigation provisions for the last fiscal year and both the Royal Bank of Scotland and Lloyds Bank have set aside more than £3 billion to cover rising legal costs in 2014 alone.

Scaling investigations

Simon Price

Simon Price

Part of the challenge that financial organisations face in satisfying the regulator’s demands is the huge scale of investigations required. Often, the information that investigators are looking for won’t be contained within a single document but hidden within a sequence of events prior to certain transactions. For example, investigations into the manipulation of Libor required banks to examine the communications of traders over a period of approximately 23 years. One large bank estimated that its internal probe into Libor retrieved 100 million documents, of which 18 million were reviewed using 1,000 search terms. In addition, the investigation extended beyond millions of archived documents to faxes, emails, instant messages and audio conversations.

Being able to piece together different bit of information to gain a better understanding of what happened has become a huge eDiscovery exercise that is complicated by the size of investigations mandated. Whilst in the past, reviewing individual documents would have been outsourced to legal teams, financial institutions are starting to recognise that it is imperative to develop smarter ways of working that can help resolve high-profile legal cases within squeezed budgets.

Understanding information
Given that legal cases are won or lost on the back of the information available, it’s important that banking organisations have the ability to understand the massive volumes of data available and understand human interactions that point to potential illicit activities.

It’s no longer feasible for a single human to go through thousands of documents and find a pattern. The volume of data involved means that financial institutions need to move away from the linear process of manually assessing each individual document to understand what has happened and build a robust defense. Instead, organisations need to rely on new tools that are capable of identifying the hidden connections between people, documents, messages, timelines, conceptual topics and more. Such tools provide an entirely new way of analysing large amounts of data to discover the patterns and relationships in unstructured information flows.

Visualising connections
Increasingly, banks are relying on tools that visualise the connections between multiple sources and types of information in a single interface. By using visual interfaces to identify the hidden patterns or information hidden within large data sets, key stakeholders within legal cases can start to experiment with hypotheses, grasp the big picture at a glance and drill into the details that may otherwise have gone unnoticed. For example, it’s possible to uncover which people have been having conversations, what these discussions are about and whether it its relevant to the defense of a certain case.

Adopting this approach also means that organisations no longer have to review every piece of information. By combining powerful machine learning capabilities with graph analysis and advanced visualisation, financial organisations are able to gain much earlier insight into the data that they hold. They are also able to accurately pinpoint where information is contained and identify the most relevant documents that need to be reviewed. This prioritises the review process and allows firms to create a strong seed set using the most relevant and responsive documents, so they can then simply sample the remaining data to double-check that no crucial evidence has been missed.

Early case assessment
Ultimately, litigation costs are a challenge for financial institutions to execute on strategic plans as they put significant pressure on the capital base. As a result, organisations need to manage the cost of litigation more effectively by adopting a calculated approach to the procurement of systems and services that help them prepare for legal cases.

Increasingly, there is a trend for in-house counsel or forensics teams to purchase systems themselves so they can collect the relevant data and do a focused review of evidence internally. Only after this stage, do financial institutions collaborate with law firms to develop an initial case strategy and formulate a preliminary discovery and litigation plan that is essential to winning a case. This approach not only allows for the focused review of evidence in the early stage, it also enables in-house counsel to invest in building repeatable processes that make it quicker, cheaper and easier to manage growing litigation costs in the long-term by gaining control of processes and becoming more proactive with information.

Simon Price is the Managing Director of Recommind’s UK operations, based out of the London office. Mr. Price has over 15 years of experience in sales and management within the software industry, managing relationships with many of the world’s largest professional service and corporate organisations. Mr. Price is responsible for overseeing the expansion of Recommind’s London operations and the support of its growing UK and European client base. Prior to joining Recommind, Mr. Price served as a Sales Manager at Aderant Inc., a leading provider in finance and practice management solutions and previously as Sales & Marketing Manager with Chambers & Partners publishers.

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Covid-19 can reboot belt and road initiative towards a sustainable future

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Covid-19 can reboot belt and road initiative towards a sustainable future 1
  • A new CMS report reveals that Covid-19 has boosted Chinese enthusiasm for adopting the principles of BRI 2.0, leading to an increased focus on sustainable and environmentally friendly projects such as smart cities and renewables & hydro
  • The appetite for an improved ‘Health Silk Road’ has significantly increased among the majority of both international and Chinese senior executives involved in BRI
  • Meanwhile, the research uncovers a clear mismatch in sentiment between Chinese and non-Chinese towards BRI and the success of projects

As global economies strive to build back better and greener from the global pandemic, global law firm CMS’s 2020 Belt and Road Initiative report reveals that the pandemic has boosted Chinese enthusiasm for adopting the principles of BRI 2.0, which will pivot it towards an environmentally friendly future.

BRI 2.0 is a new phase of BRI intended to encourage international involvement, which was announced in April 2019 by President Xi Jinping at the second Belt and Road Forum for International Cooperation in Beijing.

The study was conducted in partnership with global research firm Acuris and TianTong Law Firm and included a major survey of 500 senior executives from both Chinese and international participants in BRI projects. Their views were sought on a range of issues around BRI, including likely future involvement and obstacles they have encountered to date.

Increased enthusiasm for sustainable projects

The research found that nearly two-thirds of both Chinese (63%) and international (62%) executives agree that it is important that their BRI projects should be sustainable and environmentally friendly. Furthermore, the majority (84%) of Chinese respondents believe that sustainability and environmental considerations will be given greater importance when planning and completing BRI 2.0 projects.

Enthusiasm remains for traditional sectors like logistics, roads and rail, and now, particularly among Chinese executives, there is growing interest in relatively new sectors like energy networks and power grids, smart cities and renewables & hydro. For international respondents, the emphasis on sustainable projects is also increasing, with only a handful (13%) previously involved in renewables and hydro but nearly three times as many (34%) planning to target the sector for future opportunities.

Importantly, CMS’s research reveals that Covid-19 has given a boost to the ‘Health Silk Road’, which aims to increase medical infrastructure and public health in BRI countries. Nearly all the international executives (93%) and 85% of Chinese respondents see Covid-19 as a major catalyst for it.

Munir Hassan, Head of CMS Energy Group, said: “It’s clear that interest in more ‘modern’ and sustainable sectors, such as smart cities, healthcare and renewables has increased in significance. Renewables projects typically require less capital commitment, are quicker to complete and are likely to be judged at lower risk, which will be attractive to international and Chinese participants. As efforts to limit climate change intensify, there will be a major role for BRI investments to play.”

Mismatch between Chinese and non-Chinese views

The research reveals that general sentiment towards BRI has declined in the last 12 months and one reason for this is geopolitical uncertainty, particularly among international participants. The survey has also uncovered a clear mismatch between views of Chinese and international executives that are involved in BRI projects.

Over two-thirds (69%) of international respondents said they found the process of participating in BRI related projects more challenging than they had expected, compared to just 40% of Chinese respondents. Likewise, only 37% of international participants said they were satisfied with the process and outcome of their involvement, compared to the majority (75%) of Chinese equivalents.

International participants have experienced difficulty with transparency, information flow and equality in partnerships and for many, this had impacted their view of BRI. But there are signs that more projects are now being structured to accommodate these concerns providing attractive opportunities for those international participants still keen on BRI involvement.

Regarding future partnerships / JVs, Chinese respondents are more enthusiastic than non-Chinese, with 77% likely to consider them, compared to just under half of non-Chinese (48%).

Munir Hassan added: “A key area of growth is likely to lie in projects that meet the trends of the future. Affordable projects, embracing modern technologies and methods, as well as the “open, green and clean” approach of BRI 2.0, will be those that stand the greatest chance of success.”

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Two-thirds of finance professionals are now more efficient due to the Covid-19 crisis

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Two-thirds of finance professionals are now more efficient due to the Covid-19 crisis 2

The Covid-19 crisis is making a big impact on the efficiency of the UK’s finance departments, with 66% of financial professionals reporting that they are working more efficiently since the onset of the pandemic in March of this year. The results from a recent survey into the impact of the pandemic on the sector by fintech company Onguard revealed that this increased efficiency is primarily due to the obligation to work from home and rapid digitisation during this period.

Changing attitudes to digital transformation

71% of financial professionals agree that their department was able to rapidly adjust to home working within just a few days, with 21% reporting that their organisation has invested in specialist software in order to do so. This has resulted in just under three quarters of those surveyed believing that they are able to perform their work well from home, with only 35% still in need of specialist software to collaborative effectively.

Alongside the implementation of new technology, changing attitudes to digital transformation have played a role in the successful move to remote working. Research conducted earlier this year prior to the Covid-19 outbreak in the UK highlighted employees’ resistance to digital transformation as a major challenge, however now only 11% of organisations view employee attitudes as a barrier to change.

Working from home is the new norm

Looking ahead, 61% of financial professionals would like the flexibility to keep working from home permanently, thanks to the benefits provided by new technology.

Marieke Saeij, CEO of Onguard: “It is certainly admirable how English businesses have adapted during the Covid-19 pandemic. Pre-pandemic, digital transformation initiatives within many organisations was a multi-year plan, but the events of this year meant that businesses could not wait to implement further strategies. Almost exclusively, colleagues now update each other digitally. Because of this, its crucial that organisations have the right software in place to keep everything running effectively.

Due to the challenge of finance professionals communicating via digital tools, it is important that data is kept up-to-date and contains real-time insights so professionals can make the correct remote decisions in an efficient and collaborative way. With the help of the right software, the finance professional can be sure they always have the correct data to do their job and assist both the organisation and customer moving forward.”

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Two thirds of people believe their work travel patterns have changed permanently

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Two thirds of people believe their work travel patterns have changed permanently 3

Alphabet research shows accelerating demand for mobility and EVs after lockdown

  • Only 35% of people expect to return to normal travel habits
  • A quarter of consumers said their next vehicle would be electric
  • 55% of consumers think all delivery vans should be electric, and one in three would pay extra to guarantee it

Farnborough, UK – 29 September 2020: Alphabet (GB) today published a new report examining how the pandemic has accelerated changes to travel and transport, altering consumer and business travel habits in UK cities.

Changing travel patterns

With mass migration to working from home, in March, road traffic travel dropped to levels not seen since 1955[1] and journeys on the London Underground fell by 95%[2]. Today, only 6% of those travelling to work by train feel comfortable, dropping to just 4% for tube users.

Use of more active modes of transport like cycling and walking have more than doubled to 20% and 10% respectively. A quarter of 18-44-year olds expect to retain the new modes of travel they used during lockdown, and only one in three expects a return to normal travel patterns.

Private vehicle preference

As such, the company car may also see a surge in popularity. Alphabet’s research showed 37% of consumers would now consider using a company car following the pandemic, to enable them to travel safely, whereas prior to lockdown many employees favoured a cash benefit. These changes are likely to remain for some time due to ongoing safety concerns and fleet managers will need to have a flexible fleet offering to handle these changing preferences when building their future mobility plans.

Electric Drive

The improvements in city air quality during lockdown appear to have had an impact on public perception and sales of electric vehicles (EV). Adoption of EVs continued to accelerate during the pandemic, taking a record market share of new vehicle registrations in August. Nearly a quarter (24%) of consumers said an EV or plug-in hybrid vehicle (PHEV) would be their next choice and 40% would strongly consider one. This is a substantial increase from the 19% of people considering EVs at the end of 2019[3].

People also want to see businesses supporting the shift to EVs and are prepared to pay for it. Over half (55%) of respondents felt delivery vans should be electric, while one in three said they would be happy to pay extra for an electric delivery vehicle. Fleets that make the shift early have the opportunity to benefit significantly in terms of brand perception and preference.

Simon Swan, Director Future Mobility, Arcadis said: “Due to the impact of COVID-19, all sales of vehicles took a major hit; however, electric vehicles were affected less than other vehicle types. As the UK emerges from lockdown, electric vehicle registrations continue to rise in absolute numbers with August new car registrations figures showing a record market share for pure electric cars. Analysts were expecting EV sales to hit 10% of new car registrations in 2022, not 2020. Hitting 9.7% in August is a big deal for the UK market.”

Alan McCleave, UK General Manager, NewMotion said: “As adoption spreads and we embrace electric vehicles – especially in the commercial sector – we need a much more robust smart charging infrastructure. Fleet managers need to feel confident that powering their plug-in vehicles will be as simple and reliable as it is for traditional vehicles. Introducing interoperability, so a single payment solution works across all charging networks, is a large and necessary change. With a focus on electrification, and the infrastructure to support it, fleets will be a central part of the national recovery from COVID-19 and our path to a greener economy.”

Nick Brownrigg, Chief Executive Officer, Alphabet (GB) said: “The pandemic has had a huge impact on people and businesses, fundamentally changing how we move around and use our cities. While we can’t be sure of the long-term impact, it’s clear a lot of these changes are here to stay, and for fleet managers flexibility becomes ever more important. At Alphabet, we are working closely with all our customers to help them navigate the new world. People are adopting new habits and behaviours so it’s key that digitalisation and sustainability are central to any fleet strategy. Now is the time for all of us to invest and meet the changing needs of employees and customers, so we can ensure everyone feels safe and confident when travelling to work.”

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