Founded in 2008, Zeidler Group is a technology driven law firm that claims to be revolutionising legal and regulatory compliance services for the asset management industry. As the company looks towards the future, what sets the company apart and what is next for Zeidler Group?
According to Valentin Chantereau, director and head of legal services for Zeidler Group, the general observation of Arne Zeidler – the company’s CEO and founder – at the time of the firm’s founding was that the legal industry was very traditional and at times based on inefficient ways of working.
“He (Arne) thought that a lot could be done in terms of simplifying legal services to clients and streamlining the way legal advice is provided to asset managers in particular”, said Chantereau. He gave an example surrounding fees, where instead of simply billing hourly and sending a long narrative at the end of the month, the company provides fixed fees.
Another key area for Arne was resourcing. “He saw at the time that the same highly qualified lawyers were working on all different tasks regardless of their complexity or difficulty. No offence to certain tasks but those which are a little simpler can be performed by non-qualified lawyers or trainees, for example. So, we’ve adapted the resourcing to the actual tasks that need to be performed.”
The third pillar for the Zeidler Group founder was the firm’s so-called “geo-neutral” approach. This, Chantereau highlights, includes truly working in an international manner. He explains,” I do believe that there are still many law firms that even though have global offices and claim to collaborate on a cross-border basis, would be anchored locally and would care primarily about the profit locally.
“We on the other hand truly work on an international basis, and most people we recruit have worked that way. They know this business inside out not just from their local perspective. These people often speak more than three languages and it’s been crucial to helping our clients, as asset management in particular has become extremely cross border – so it’s crucial you get the right people to do that”.
The aim of Zeidler Group, Chantereau explains, is to be the one-stop-shop for asset managers. The company is an asset management-focused law firm, and concentrates on solving all legal, compliance and regulatory topics that asset management firm would be facing in their day-to-day dealings.
He continued, “One of the observations that was made at the foundation of the firm is that while clients go to law firms for advice, they have to use other companies to get regulatory documents or registration services, which is not efficient at all. We have lots of clients that use pretty much all the service lines that we offer. That is really what we aim to be – a one-stop-shop for asset managers.
Solving problems
When it comes to the chief problems that Zeidler Group looks to solve, the first one that comes to mind for Chantereau is geographical barriers. “As much as we might be in a globalised world, you still have clients that are facing difficulties in relation to their markets – for example, European clients operating in the US or vice versa. So, one of the main points we look to deal with is how can we help clients break down those geographical barriers.”
The Zeidler Group legal services head said this is an area where the company is proud of the work it does, stating, “When we advise US asset managers in Europe, we can’t just say that we can help them in one country but not in another. So, we try to be as exhaustive as we can.”
Another key area Zeidler Group looks to offer support in is against charging excessive fees. The company charges fixed fees, with the founders noticing that when the firm was founded that other competitors in the industry would charge hefty fees for things that shouldn’t have been so expensive.
“In this area we want to completely disrupt the market and say, well, on this particular test we know it very well and we’ve done it 500 times, and we know exactly what we need to learn to both be profitable and make sure we can control your cost, which our clients across Europe absolutely love,” Chantereau explained. He added that this is key for many of Zeidler Group’s small and medium-sized asset managers, as controlling costs for them is extremely important.”
Zeidler Group’s USP
When it comes to establishing your company in any industry, is always vitally important to be able to outline what differentiates you from competitors.
In the opinion of Chantereau, a key USP for Zeidler Group in its space is that it has a very ‘hands-on’ knowledge of the industry. This is chiefly, he claims, due to the fact that many of Zeidler Group’s team travel globally to work with clients or on secondment for specific projects for a period of time.
Chantereau continued, “Often lawyers are very good at law, and they know regulations and other regulatory issues, but they often lack practical knowledge about what is done in practice at asset managers on a day-to-day basis. This is not an issue for us as we have both the legal knowledge and the practical experience”.
A second key differentiator for Zeidler Group is that the business tries to hire people who’ve not only been in private practice but also at asset managers. “We have several lawyers – including myself – who spent a substantial period of time in-house and not just in private practice, so we think that is a strong plus, because we have gained very substantial knowledge working together with people involved in the business very closely.
Tech disruptors
With technology continuously disrupting every industry it touches, the legal space will, and is proving to be no different – a point broadly echoed by Chantereau.
“First and foremost, technology is changing pretty much everything, so why wouldn’t it impact the legal space? Why wouldn’t the legal industry be able to rely on technology to improve the services to clients?
He continued, “For a long period of time, there were a lot of traditional law firms that ignored this particular aspect and utilised some technology but not really any beyond the ordinary day-to-day things.
“We want to go beyond that. We believe that there is a lot of tasks where technology can substantially improve the legal delivery. The aim is not just to be fancy, but to understand how technology is improving the client experience and how is it improving the service that they’re receiving.”
Chantereau gave an example of the company’s KID generator, where Zeidler Group was able to produce high volumes of key information documents and do it in a qualitative manner. This included not just the legal structure – so the drafting and structuring of the document – but also all sorts of mathematical aspects such as transaction cost calculations, risk levels and costs analysis. He explained, “We’re able to do that in multiple languages, multiple share classes, and multiple currencies. That requires an advanced tool which has been developed in-house.”
The company has also used tech to develop a due diligence tool, which is based on advanced IT tools to analyse hundreds of due diligence questions.
On this point, Chantereau exclaimed, “Most of our clients appoint intermediaries to distribute their funds, and some of them have almost 500 intermediaries all having their own due diligence requirements. That is a massive task, and a lot of knowledge is required to perform. This is where technology comes in very handy.”
ELTIF 2.0
As for key hot topics in the asset management space, there is maybe none more so pressing right now than the ELTIF 2.0.
Established in 2015, the European Long-Term Investment Fund (ELTIF) was created to provide investors with an opportunity to invest in long-term projects that support growth and job creation.
However, despite its upsides, the uptake of ELTIF has been slow. To deal with this, the EU created ELTIF 2.0. This amended regulation aims to be a new and improved version of this fund type that aims to address these issues and unlock the full potential of long-term investments.
Chantereau highlighted some of the key changes from the first ELTIF, which include enhancing the redemption rights or amending the list of eligible assets.
“The whole aim with ELTIF was to attract retail investors towards private markets The rationale (for ELTIF) was really good, it’s just that the legal translation of that was actually not so great at the time, which has now been addressed with the 2.0, which I think is going to be a success”.
He explained the reason for this is that the EU has addressed all the issues highlighted that were stopping the product from being properly structured and distributed.
Chantereau went on, “I wouldn’t be surprised if we see a spike in the structuring of these products maybe in the next two or three years. Because it really is one of the main challenges of this industry in Europe for the next 10 to 20 years – how do you attract retail investors more to private markets? How do you make sure that the real economy sees the benefit from the investment? So, it will be very interesting for the next couple of years.”
Future plans
As the company looks towards the future, there is a lot for Zeidler Group to be excited about. The firm intends to expand its presence in the United States, having already hired colleagues in Arizona as well as having a presence in New York.
Alongside the US drive is a continued push to expand its presence in Europe, with Chantereau stating that the company is constantly recruiting to make sure it reinforces its teams.
“We have a very strong skill set of legal professionals and we want to make sure that we service our clients in the best way we can, which is extremely important to us. Also, we’re looking to grow again, not just by getting new clients but making sure that the clients already engaged with us benefit from the other service lines that we offer, as we think it’s extremely beneficial to them to have a one-stop-shop, an interlocutor so to speak, to sort out all the different legal and regulatory services,” concluded Chantereau.
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