In its first integrated law firm partnership of this kind Factor (formerly Axiom Managed Solutions) is working alongside Allen & Overy to provide clients with a comprehensive, tech-led approach to LIBOR repapering.
The new partnership is designed to help the financial services industry manage the complexities of transitioning from LIBOR to new replacement rates, which despite the mass disruption caused by Covid-19 will go ahead at the end of 2021.
Speaking to Legal IT Insider, Factor’s head of strategy, Chris DeConti said: “In the context of Covid-19 with all the distractions and burdens on our clients the LIBOR transition isn’t going away and it’s been confirmed a couple of times that the schedule isn’t changing.”
The partnership with A&O follows years of working together and being aware of each other in the market thanks to a focus on regulatory change. “It’s natural that we can come together like this,” DeConti said. “There’s a perfectly complementary fit in terms of what we each bring to the table. The LIBOR challenge is vast and throws up all sorts of requirements for legal advice both at a strategic level but also for products and jurisdictions around the world and all that will be delivered by A&O. We will then be, with a team of lawyers and contract analysts and a tech enabled process, executing on that advice across tens of thousands and in some cases hundreds of thousands of individual contracts that reference LIBOR and need to be remediated to remain effective after the deadline.”
There is an enormous amount of work to do and big banks are only really just ramping up their LIBOR programmes now. DeConti added: “This is unique in that most other regulatory change projects have focused on a particular area of the bank and a subset product. A few years ago it was derivatives that needed to be remediated but this is across all products and the requirement for a really comprehensive program is what’s different.”
Factor and A&O are deploying tech not only to accelerate the contract review process but also to meet the reporting requirements of the banks. “Our ability to provide that visibility through workflow and reporting and analytics tools is just as important,” DeConti said.
At the heart of the solution is A&O’s Libor Matrix solution IBORMatrix of which DeConti says: “It’s a really clever tool that facilitates the review of documents in a way that is informed by A&O’s know how and data model but also takes what you’ve extracted to populate a remediation document. It’s half about the tech and half about the legal market knowledge.”
Factor uses its own prioprietary tool for client outreach, making contact with thousands of contract counterparties and keeping track of that communication.
It then uses Power BI to underpin a series of client dashboards and DeConti says: “Increasingly our tech stack is configured in a way that uses platforms that will already be onboarded in large banks. Power BI is a Microsoft application and banks will be using it in some part of the business. By relying on the tools that are already onboarded it really helps to speed up the process, which matters particularly when you are under time constraints.”
While Factor does partner with law firms from time to time, this is the most extensive partnership to date and the pair have spent the last six to nine months working out a joint operation model and figuring out their delivery model. DeConti says: “There is a logic to it and real benefit for clients given the complexity of these projects and the really heavy burden for clients to put these together. It’s hard for law firms to handle this work alone. Clients used to have to piece the different offerings together themselves.”
The LIBOR offering could easily be translated into helping clients to work out what their post COVID liabilities, as we’ve seen in the case of Hogan Lovells. DeConti said: “We are working on a couple of COVID matters for our small clients, one in conjunction with the LIBOR work we’re doing.”