Credit Suisse is taking a break from its longtime outside counsel at Allen & Overy. Apparently, Credit Suisse General Counsel Romeo Cerutti has “personally” decided to limit the work it gives A&O — the bank will reportedly stop giving the firm new work, though existing engagements will persist. So… what’s up?
According to tipsters and reports, there are a number of factors are in play, with one tipster telling ATL that it involves — at least in part — an A&O attorney “losing a mysterious briefcase with, it is said, highly confidential Credit Suisse documents on a train in Finland.” And while these data breach concerns (though the briefcase is said to have been recovered) played a role in the souring relations, there is more brewing under the surface. That appears to include A&O’s representation of the failed financial firm Greensill Capital.
CS has taken a bath on its involvement with Greensill, and, as reported by Roll on Friday, that had Cerutti taking a hard look at A&O’s representation of both Greensill and Credit Suisse:
Credit Suisse ran a group of investment funds with Greensill worth $10 billion, and since its collapse the bank has been seeking to recover a shortfall of $2.3 billion to repay investors.
Heads have rolled at Credit Suisse over the Greensill fiasco and a $5.5 billion loss incurred when Archegos, a US hedge fund backed by the bank, disintegrated. Swiss regulators have opened a probe into its activities after the two failures.
Cerutti and his team are understood to have been unhappy that A&O worked on both sides of the Greensill matter, and began identifying perceived issues with the firm’s work, including alleged data leaks across the Chinese Wall between A&O’s Credit Suisse and Greensill teams, and the Finnish Train Incident.
Folks have OPINIONS on the move — as reported by Law.com, some have called it “harsh,” “unfair,” and “outstanding” (not in a good way), with at least one general counsel calling out the move as “hypocritical”:
As a result, one GC at an industrials group feels its decision to impose sanctions on A&O is “hypocritical”, in light of the bank’s own reputational hits.
He added: “Credit Suisse has had a shocking few years and it’s helpful if they can point elsewhere. It all feels very hypocritical, and [taking issue] over Greensill seems very much like the pot calling the kettle black.”
While others disagreed:
“There’s nothing hypocritical about it. Just because you have standards to hold your external firms to, it doesn’t mean you’re perfect,” [another GC] said.
That GC welcomed more accountability and similar measures being taken by institutions, adding: “Accountability is refreshing and important. My view is there is not enough of this.”
Not that disengaging from A&O will be easy for the bank.
Credit Suisse may also find it difficult to untangle itself from A&O given it has used the firm for many years. The industrials group GC said it may be easier for Credit Suisse to simply keep A&O as an adviser due to it having an “awful lot of knowhow and knowledge” on the bank. This type of relationship with incumbent law firms is “very, very hard to unwind”, the GC added, as well as expensive.
“If it will cost you much more money to move to another firm, then it becomes hard to do. It can lead to a difficult conversation with your CFO further down the track.”
The London-based senior finance partner echoes this, saying that while Credit Suisse can “manage without A&O”, it’s more a question of “how quickly Credit Suisse can instill the same corporate memory [to another firm]”.
A&O’s work for Credit Suisse is reportedly in the £25 million a year range, so that’s a big chunk of change over a lost briefcase (and conflicts, don’t forget those).
Kathryn Rubino is a Senior Editor at Above the Law, host of The Jabot podcast, and co-host of Thinking Like A Lawyer. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).
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