‘The fantastic, wonderful part about being in-house is working with massively stimulating people. There’s this misconception that you outsource talent. You don’t.’ So says Piers Le Marchant, chief compliance officer for corporate and investment banking at JPMorgan Chase & Co.
Such is the scepticism of in-house lawyers that few could make such a statement without eliciting snorts of derision. Yet a glance at Le Marchant’s experience at some of the world’s leading financial institutions, including Nomura, Lehman Brothers, and now JPMorgan, the largest US bank by assets, gives an authority that comes from a career carved out within one of the most assertive and influential branches of the profession.
One of the most prominent UK-based counsel in finance, Le Marchant joined JPMorgan in 2014 from Nomura, succeeding longstanding legal chief Karen Linney as EMEA general counsel. He joined as the bank faced intense scrutiny from regulators, paying out nearly $20bn in settlements during 2013.
Le Marchant had served as head of legal and compliance for EMEA at Nomura since 2008 after an 18-year career at Lehman Brothers when the Japanese-based investment house acquired much of Lehman’s European investment banking division following its dramatic collapse.
You don’t want to know my agenda. It’s a global one, driven by multiple regulators.
Today, Le Marchant oversees a 90-strong global compliance team and has ‘regular dialogue’ with the current New York-based GC for the bank’s corporate and investment banking division, Cyrus Amir-Mokri. The duo also work closely with EMEA GC John Tribolati and his 200 EMEA-based lawyers, paralegals and legal professionals when required.
Top of Le Marchant’s agenda is unsurprisingly managing relations with US regulators. This year saw JPMorgan come under fire over recruitment practices in China that became the focus of a federal bribery investigation. At press time, the bank was preparing to settle with federal prosecutors and the Securities and Exchange Commission. Its primary regulators, the Federal Reserve and the Office of the Comptroller of the Currency, are also seeking to impose their own penalties, according to recent reports from The New York Times.
In Europe, obvious hurdles in a post-Brexit environment include uncertainty over the impact on the Markets in Financial Instruments Directive passport and the market for financial services in Europe for UK-based financial institutions. Equally pressing are questions over the Senior Managers Regime, which holds executives responsible for failings in financial institutions and could pose a risk of conflict to in-house lawyers, their employers and legal professional privilege.
Remarking on the scope of his role, Le Marchant says: ‘You don’t want to know my agenda. It’s a global one, driven by multiple regulators. My job varies from region to region.’
The House of Nomura
Raised in Somerset, Le Marchant is the son of an art collector father and an artist mother. As a teenager he inherited the creative streak and decided to work in the film-making industry. He worked behind the scenes for Channel 4 on programmes including The Tube and Equinox, and completed a stint at the BBC, winning second place as a teenager in the British International Amateur Film Festival for a short film based on Simon and Garfunkel’s ‘My Little Town’.
Despite those creative ambitions, Le Marchant decided to become a lawyer, a decision dictated by the fact that his family ‘was absolutely nowhere near it’. He says his family agreed that ‘in terms of who I was, law was better for me’.
One of the seven people in the building trying to stop Lehman collapsing, I was working day and night.
Initially intent on becoming a criminal barrister, he worked close to home at All Saints Chambers in Bristol as a pupil under the eye of Charles Auld, now at St John’s Chambers.
Yet by the late 1980s, Le Marchant found himself changing direction again, accepting a place in Nomura’s City-based graduate trainee programme. There he grafted as a trader for a year, learning the basics while rotating around different trading desks, in particular spending a lot of time on the Japanese equity warrant trading desk in 1987.
Le Marchant was given the chance to help create Nomura’s first European legal division – an opportunity that arose out of a bad situation at the time. Wall Street had experienced its biggest decline since 1929, causing a ripple effect across the Pacific and spreading panic among Tokyo’s financial elite. Catastrophe was just about averted through the buying of stocks en masse by Japan’s most powerful securities firms. Such behaviour was scrutinised by American stockbroker Albert Alletzhauser, who penned The House of Nomura, alleging Japan’s legendary financial dynasty had spawned many characters engaged in questionable market behaviour for generations.
Le Marchant recalls that Nomura did not have an in-house department in Europe at the time when the book came out and decided to take legal action. Off the back of that, a legal department was set up and they asked him to form part of it.
‘In-house legal departments were just starting then. It was fun, challenging – you were always working with the best external lawyers. Part of the privilege of working in-house is learning from and working with some of the greatest legal minds around.’
A voice at the table
Le Marchant’s most challenging in-house role came next. He left Nomura in 1990 for a role as European legal director at Lehman Brothers after it broke away from American Express. That year, Lehman had lost a lot of money and was considered high risk. But Le Marchant wanted to work alongside then chief legal officer Peter Sherratt. ‘I joined largely because Peter was there and people told me he was the best. We met for lunch and got on really well. I was hired as a transactions lawyer, but quite quickly my role became broader.’
Le Marchant got to grapple with new products, a process he loves. He is particularly proud of his role in establishing the tri-party repo market where, in a repurchase, an investor can borrow cash for a short period from another party, using securities as collateral for the loan.
This is a fantastic trade to be in. You can reinvent yourself from time to time.
‘My background was new product generation. I chaired the new products committee while at Lehman, I sat on the trading floor and a lot of my work was product development. That’s stimulating. You see something, create it and watch as it becomes standardised over time.’
Away from that crisis management, bigger mandates were there for the taking. The Maxwell crisis was a particular favourite, when Sir Robert Maxwell’s death triggered instability with banks frantically calling in substantial loans.
‘It’s in times of intense activity where you have to keep your head around you, think clearly and work out the best way through. The Russia crisis in 1998 was another favourite. There was a run on Lehman and there was a rumour it was going down. I had moved to protecting the firm over Russia to doing everything we could to protect the balance sheet of Lehman.’
Le Marchant spent 18 years at Lehman, right up until its collapse in 2008. Sitting on the 30th floor at 25 Bank Street – JPMorgan’s London headquarters – Le Marchant recalls scrabbling to limit the damage in the same building eight years ago. ‘One of the seven people in the building trying to stop Lehman collapsing,’ he says, ‘I was working day and night, and over the weekend. I remember it very well.’
Le Marchant is candid about the harsh realities of Lehman and lessons learned from the fallout. ‘When a crisis gets to that level, it’s going to reach politicians very quickly. Particularly when a bank is to be rescued very quickly, managing not just your relationships with the senior regulators, but also those in power, can be critical to how things are going to progress during the course of a weekend. For those in positions of authority in the US, there are banks that will be protected and saved, and clearly Lehman wasn’t going to be one of them. But it was important to have a voice at that table and being able to have an influence was clearly very important.’
Le Marchant adds that the complexity involved in damage limitation gave him a new appreciation of bankruptcy. ‘Companies become bankrupt regularly. They just don’t happen to you very often. I had clients of Lehman going bankrupt from time to time, so I had seen it from the other side. The difference when you’re dealing with your own company is the level of complexity – the different aspects involved are huge. For 80% of the time that weekend, we weren’t preparing for insolvency; we were trying to prepare Lehman for a pre-packaged deal.’
The fall of Lehman saw Le Marchant presented an opportunity by his old shop. In September 2008, Nomura announced it would acquire the Lehman Brothers franchise across the Asia-Pacific region, including Japan, Hong Kong and Australia, as well as its intention to acquire assets in the Middle East and Europe region.
Negotiating with then chief executive, Kenichi Watanabe, a prerequisite for his return was the transfer of his 100-strong legal team. ‘One of the worst things about major bank collapses is you have so many people who are out of a job. My interest was trying to save my own team. When it came to a discussion about whether I went back, the question was: “Will you take my team too?” They agreed, so on that basis I said yes. We moved them into Nomura’s legal unit, which worked incredibly well. There was huge humility on both sides and that “could have been me” feeling. There were no power plays, no jostling for positions. We made the decision who had which roles within three weeks of the merger taking place.’
By the time he was approached by JPMorgan GC Stacey Friedman in 2014, Le Marchant was eager for new opportunity. He had spent five years at Nomura where, in his words, ‘the platform was looking smaller and smaller. I’d taken my entire team, who had gotten into a position where they could take over my role. I was the bottleneck for them. I formed a view it was right for my team and Nomura that I start to look elsewhere’.
Appointed European GC in May 2014, it turned out to be one the shortest-held roles of his career. By November he had been approached to take on the chief compliance officer role. He says he had largely taken on a compliance role as Europe GC anyway, as there was a lot that needed to be done.
‘Compliance is about prevention, setting things in place so nothing goes wrong from a regulatory perspective and putting in place the structures to make sure it’s all very robust. It’s a very different role but works hand in hand with legal.’
Reflecting on how events have changed his expectation of outside counsel, Le Marchant says: ‘From a regulatory point of view, expectation has changed very quickly. We increasingly need lawyers who have close relationships with the regulators, because they are not just there to interpret what is written but rather how the regulator is interpreting them. You need those relationships to benefit from their understanding of what the regulators are trying to achieve.’
For Le Marchant, building a function fit for a global investment bank should not necessarily be about cost management but having the right lawyer with ‘the right mindset and technical knowledge’.
Citing senior names, including Deutsche Bank’s Simon Dodds, Goldman Sachs’ Terry Miller, and former Lloyds Banking Group GC Andrew Whittaker as peers he admires, he continues to place high expectations and demands on himself, and on those that work around him. Referring to his move from legal to compliance, he says: ‘A key shift took place in compliance a number of years ago as compliance moved from being an advisory function into a robust second line of defence that was capable of identifying gaps and areas that required remediation. In addition to working closely with legal, compliance is rightly to be regarded as a key risk control function and therefore needs to align its work programme closely with groups such as risk, oversight and control and audit.
‘I enjoy bringing in new top talent to the team and watching the impact they make. I also enjoy making structural long-term improvements to the way we implement our compliance programme. I am very much driven about what changes the team has instigated that will hopefully stand the tests of time.’
And having foregone a career in a City law firm, eschewing the road to partner in favour of an in-house career in financial services, Le Marchant says: ‘This is a fantastic trade to be in, particularly if you like variety. There’s so much change. You won’t regret it. It will give you more flexibility than you think. You can reinvent yourself from time to time.’
At a glance Piers Le Marchant
- 1986 Pupil barrister, All Saints Chambers
- 1988 Associate, Nomura International
- 1990 European legal director, Lehman Brothers
- 2008 General counsel Europe, Nomura
- 2014 Group general counsel EMEA, JPMorgan Chase & Co
- 2014 Chief compliance officer, corporate and investment, JPMorgan Chase & Co
JPMorgan Chase & Co – key facts
- Size of team Around 900 in compliance globally; 200 lawyers, legal professionals and paralegals in EMEA region
- Annual global legal spend firmwide 2015 £3bn
- London-headquartered advisers include Allen & Overy, Clifford Chance, CMS Cameron McKenna, Eversheds, Freshfields Bruckhaus Deringer, Linklaters, Norton Rose Fulbright, Slaughter and May