Law firm of the year: Stephenson Harwood

Operational Risk Awards 2017: High-quality advocacy for individuals and firms accused of market wrongdoing impressed judges

Tony Woodcock, Stephenson Harwood

The string of financial scandals that has tarnished the banking industry in recent years calls to mind the Evelyn Waugh quote: “a blow, expected, repeated, falling on a bruise, with no smart or shock of surprise”. From the mis-selling of payment protection insurance to the rigging of Libor and foreign exchange benchmarks, this has been a boom era for market manipulation, and has brought trust in financial markets to an all-time low.  

The 10 biggest scandals since 2000 have cost UK banks $53 billion, according to a report by think-tank New City Agenda. But while elements of popular opinion might characterise bankers as greedy, manipulative and lacking a moral compass, the individual cases are rarely that simple.

Law firm Stephenson Harwood has worked with a large number of the accused individuals and institutions in recent years, fighting for outcomes that reflect the true nature of the wrongdoing that has been committed. In many cases, the firm has argued that peer pressure, internal culture and scapegoating should be taken into account when passing judgement.

“We are a serious player in the eyes of regulators,” says Tony Woodcock, partner and head of the regulatory litigation practice at Stephenson Harwood. “We have experience in acting for certain types of institutions in certain cases.”

With a 900-strong staff and nine offices around the world, the firm is a significant player across the whole field of operational risk in financial services, but it has developed considerable expertise in relation to both the Libor and forex scandals. Among others, the firm has represented Chris Ashton, formerly global head of spot forex at Barclays and one of the participants in the notorious chat-room known as ‘The Cartel’; Peter Johnson, a Libor submitter from Barclays; and Arif Hussein, a former UBS rates trader involved in the Libor scandal.

With regard to Libor, Stephenson Harwood has often argued that its clients had been singled out as scapegoats while, in fact, a systemic culture of rate rigging had been responsible for the fraudulent submissions – a tack taken by its partner Sara George in former UBS trader Arif Hussein’s case against his ban by the UK Financial Conduct Authority (FCA) in October 2016.  

“We frequently act for senior figures in the corporate world against whom allegations are made of systemic corporate failures, usually in the risk sector. In the banking industry we have encountered outright fraud, such as the derivative traders in Libor, motivated by greed and the way they were paid,” says Woodcock.

In addition to its work in the Libor and forex cases, Stephenson Harwood has represented Robert Tchenguiz, who took legal action against the UK’s Serious Fraud Office together with his brother Vincent after the agency raided their premises in 2011 as part of its investigation into the collapse of the Icelandic banking system. The lawsuit was successful, though the brothers secured damages of only £4.5 million ($5.7 million), which was some way short of the £300 million they initially claimed.

The Tchenguiz brothers have now turned their attention to accounting firm Grant Thornton and failed Icelandic bank Kaupthing, which they hold responsible for the SFO’s botched enquiry. Robert Tchenguiz is suing for more than £2.2 billion and the case is due to be heard at trial in the autumn of 2018.

Beyond such high-profile cases, it is the representation of senior bankers at war with their regulators that has given Stephenson Harwood its main stable of work in this space. In the past year, for example, the firm has advised UK supermarket giant Tesco in the SFO’s false accounting investigation, represented a senior executive at a major energy firm in an FCA probe into accounting irregularities and advised a senior banking official in an FCA enquiry into alleged inadequate audit disclosures.

“We have been lucky enough over the years to attract high-profile clients in high-profile cases. If one does a job well, word gets around. In our type of business, that is the best type of business development. Most clients never want it publicised that they have ever been in any sort of regulatory trouble. I fear we can’t stand on the steps of a court house bragging about a win; clients just don’t want it,” says Woodcock.