Editor: Would each of you gentlemen tell us something about your professional experience?
Baris: I am a partner in the Financial Services Group at Kramer Levin Naftalis & Frankel LLP. For the past 24 years I have represented investment companies and investment advisers.
Spangler: I am a partner in the London office of Berwin Leighton Paisner, and I practice both U.S. and UK law as it relates to investment management generally and investment funds, both regulated and unregulated, in particular. I spent the first half of my career in New York, and I have been in London for the past several years.
Editor: How did each of you come to your respective firms? What were the particular attractions?
Spangler: I joined Berwin Leighton Paisner three and a half years ago, having been in London for several years practicing at American law firms. I joined BLP because they were a market leader in real estate fund structures - something in which I have a great interest - and they had a similar vision to mine, which is to build a comprehensive investment management practice. I came to the firm to take up what I perceived then and now to be a terrific opportunity.
Editor: It is interesting to me that you are an American practicing in an historically English firm.
Spangler: I was the first American national at the firm and also the first person there to practice U.S. law as a large part of my day-to-day undertakings. I took the English examinations for qualification the year after I graduated from law school. At that point my idea was to practice in Asia, where the English legal ties are very strong. As often happens, my career went in a different direction, and I have wound up being based in London. My practice is about 70 percent UK law, 20 percent U.S. law and the balance an interesting mix of EU, Irish and offshore - Cayman Islands, for example - activities. My particular focus has been on a niche area which cuts across a great many jurisdictions.
Baris: I have been in the financial services business since 1982, when I worked in-house for a funds manager. Kramer Levin then retained my current partner, Carl Frischling, for a financial services matter, and I became a client of his. I had wanted to go back to a law firm setting for my career and, ultimately, I joined Carl's practice in 1989. We moved to Kramer Levin in 1992.
Editor: And the Kramer Levin - Berwin Leighton Paisner relationship. How did the two firms come together?
Baris: The two firms have entered into a trans-Atlantic alliance, which permits them to work very closely together while, at the same time, retaining their own institutional personalities. They are very compatible firms, and the arrangement is working extremely well. Neither firm is submerged in the other, and each is able to draw upon the strengths of the other in serving their own clients and, increasingly, a group of common clients.
Spangler: I joined Berwin Leighton Paisner the same week the alliance with Kramer Levin was announced. I think what has made the alliance work so well over the three years of its existence is the common cultural basis of the two firms - they are both entrepreneurial firms with a real sense of emerging practice areas - and an ability to work together in some relatively specialized areas. In quite a number of practice areas specialized teams from each firm have come together seamlessly to complement each other's efforts and to support a common service for the clients of each firm and of the alliance. These specialized teams provide much of the energy that drives the alliance.
Editor: Are there particular strengths that each firm brings to the relationship?
Baris: Berwin Leighton Paisner's strength in the UK and in the EU is one that Kramer Levin does not possess on its own. As corporate and financial services have become globalized, a firm must have a global platform if it is to effectively provide the services that its clients require.
Spangler: That, of course, is a two-way proposition. Kramer Levin's U.S. platform permits Berwin Leighton Paisner to serve its clients in legal markets that would otherwise be beyond our reach. The ability to simply pick up the telephone and have a Kramer Levin lawyer help us address a client's issues is an immense advantage in providing effective services to our clients.
Editor: How does investment management and the regulation of financial institutions differ between the UK and the U.S.?
Baris: Each country has its own regulatory scheme, but the regulators all talk to each other. The result is that the regulatory structures borrow and learn from one another, although the structures are entirely different.
Spangler: The U.S. market and the UK market are extraordinarily successful, but they have followed different paths and, as a consequence, there are differences in regulatory approach. The UK has been the primary international market for centuries, and its cross-border and international perspective informs just about every aspect of the rules, regulations and regulatory framework that govern its activities. In the U.S., by way of contrast, a single continent-wide economy has been the market. Regulation tends to be outward-looking in the UK; in the U.S. there has been, at least until recently, an internal focus.
Baris: U.S. regulation derives from the needs of U.S. markets and the historical structure of the financial system, to be sure. But, U.S. securities regulation has been such an important driver of the world's economy that it gives U.S. regulation an international reach. A prime example is Sarbanes-Oxley. With the increasing integration of the world's economy - with U.S. shareholders invested in corporations all over the world, and foreign shareholders holding interests of every conceivable kind in American enterprises - American corporate governance issues are being addressed in executive offices, board rooms and law offices all around the world.
Editor: Are there pitfalls an American general counsel ought to be aware of when entering the UK or EU financial markets for the first time?
Baris: It is important to be mindful of the laws of other jurisdictions, and, for example, the ways in which distribution is regulated vary significantly from one to another. It is important to seek the advice of a local practitioner in this area early in the process. Otherwise, there is a substantial risk of running afoul of some UK or other EU regulation concerning distribution of securities.
Spangler: I would add to that observation the point that many people take U.S. rules and regulations as a kind of high-water mark, that compliance with the standards imposed by the U.S. is going to meet any and all standards one is likely to meet abroad. That is simply not the case.
Another potential pitfall derives from one of the cultural differences between practicing in the U.S. and New York. An American lawyer tends to look upon himself as a trusted adviser, and to have a kind of open-ended relationship with the client in terms of when and what kind of advice to give. European lawyers tend to become involved at a later point in the execution of a project, and they also tend to respond only to the questions they are asked. In retaining a European lawyer, it is important, as Jay indicates, to bring them into the process at as early a point as possible and to frame the questions presented to them carefully and completely.
Editor: Financial services are becoming globalized. Are the various regimes that govern this activity beginning to converge?
Baris: Each regulatory scheme is likely to learn from and borrow certain aspects of the other schemes, but I do not see a uniform regulatory framework arising from this process for a very long time.
Spangler: IOSCO, the International Organization of Securities Commissions, continues to try to establish global parameters. What is more likely to take place is a gradual, bloc-by-bloc evolution in this area, e.g. the prohibition on non-U.S. funds being marketed in the U.S. being lifted in response to an EU directive permitting U.S. registered funds to be sold across Europe.
The Ontario Legislature has again proposed the idea of a single Canadian securities regulator. If the Canadian provinces cannot agree on such a regulatory regime, it is difficult to imagine different countries coming together on this any time soon. Even within the EU - where the proportion of EU regulation compared to member state regulation is on the increase - considerable differences among the various member states continue to exist.
Editor: Would you give us your thoughts on where we are going to see the greatest levels of financial activity over the next few years?
Baris: Over the past 18 months we have seen a great deal of regulatory activity in the U.S. in the investment management area. That is keeping us very busy for the moment. We also have our attention focused on Europe and Asia.
Spangler: Our focus in London has been on EU expansion of late. By following what is underway in places like Luxembourg and Ireland - countries that are working hard to become jurisdictions of choice - we are able to keep a close eye on the EU's integration of new member states. With respect to the emerging markets area, we pay attention to China, to Southeast Asia and, increasingly, to India. I have a particular interest in the Middle East, and I believe the Islamic investor is going to be a very important figure in my practice over the next few years.
Editor: Please give us your thoughts about the future. Where do you see the Kramer Levin - Berwin Leighton Paisner relationship in, say, five years?
Baris: This is a model that works very well. Over the next few years I believe we will improve the integration of the various practice groups of the two firms that are working together and thereby enhance the services we provide our clients.
Spangler: The alliance permits each firm to leverage off of its strengths by utilizing the strengths of the other. It is clearly a much stronger structure than either of its constituent parts alone. In a few years I trust it will permit us to be acknowledged among the very finest providers of legal services in all of the markets where we have a presence.