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I’m a good example of how you can progress

Explain the culture at HJA. How important is that culture to you?

There’s a very collegiate culture at HJA. We are all working for one common purpose – social justice. It is that commonality which binds people in all our departments together.

There’s also a great deal of shared pride about the results we achieve. People believe that at the end of the working week they’ve really made a difference. The fact that we’ve always managed to navigate whatever has come our way, whether that be cuts to legal aid or fixed costs, and still be successful speaks volumes about our culture.

You became managing partner in 2017, but it was far from a traditional route to the firm’s top spot. Can you explain how you became managing partner?

I completed my training at Mayfair firm Portner & Jaskel, and spent seven years at City firm Prolegal, where I led the personal injury team before I was made redundant.

It was while I was on holiday soon after – and considering a career change – that I got a call from Patrick Allen, founding partner of HJA, which changed everything. He’d heard about my successes at Prolegal with implementing a new CMS system and other technological developments and wanted me to do the same at HJA.

I have always had an interest in technology. My previous firms didn’t have a Magic Circle budget so if you wanted anything changed on the CMS, you had to wait for it to be done by someone else. So, I picked up the manual and taught myself basic coding. I began to learn the value of tech and what you can manipulate it to do.

I joined HJA in 2012 to roll out new software. The CMS software company told me it would take 18 months, but I pushed it through in six. A year later I was promoted to associate and after a further 12 months to partner. In 2015, I was promoted a third time to head the firm’s largest department – personal injury – also joining the firm’s board as an equity partner. In January 2017, I took over as managing partner.

What new policies or initiatives have you initiated since becoming managing partner that have helped staff and clients?

Most recently it is the change of structure from a limited liability partnership (LLP) to an employee ownership trust (EOT), we’re the first major law firm to do this.

Prior to this there have been a range of initiatives including the launch of a training programme for the firm’s partners, aimed at instilling commercial awareness. I’ve done this in recognition of the fact that lawyers are trained to practise the law but rarely the commercial realties of running a firm. For our junior solicitors and trainees, we’ve just run a speed networking event. We’re a firm of over 230 people and it’s important, not only so that everyone knows their colleagues and the depth of expertise across the firm for cross-selling purposes, but so that they can rehearse networking in a supportive environment.

Under our continuous innovation programme, which ensures HJA can continue to deliver on its founding aim of ‘using the law to improve people’s lives’, we have made the firm paper-lite, significantly reducing the cost of printed letterhead, postage, and storage. The second phase of this will see the elimination of paper archives and reduction in on-site storage.

To improve cash flow, I have introduced a process to seek interim payments in high-value cases carrying large amounts of WIP, resulting in an 80% reduction in fees tied up externally. Additionally, we’ve always offered agile working, but in recognition of increased London living costs, have now implemented a nationwide recruitment programme, allowing the firm to access a wider pool of talent. The first recruit, based in Bristol, joined in August.

You mentioned HJA becoming an EOT, what is that and how does it work?

We’ve moved from being a LLP to a limited company and will trade and run in the same way as the LLP, the only difference is that 100% of the shares of the new limited company are employee-owned and held in the trust rather than by the members of the LLP.

The EOT is a similar model to that of department store John Lewis in that it enables all employees to become beneficiaries of the firm. I remain managing partner and along with Patrick Allen, our senior partner, and Kingsley Tedder, an independent trustee, I am a trustee of the trust.

How did the move to become an EOT come about, and what, if any, were the challenges?

The move is part of a succession plan to enable Patrick to take a less active role in the business and was very much driven by the need to ensure that the firm’s founding ethos of helping people would continue and that all of our loyal staff at the firm could benefit.

The biggest challenge was simply that no other major law firm had done this before and so there was no rule book; that meant going on quite a journey with the bank and it took a lot of explaining to stakeholders.

Do you think more law firms should look at this model and if so then why?

As soon as we made the announcement, I had many firms contact me asking for advice, saying that they’d tried to do something similar or were thinking of switching to this model. There is certainly appetite out there for employee ownership and I would recommend it as a perfect way to secure the future of a firm while at the same time allowing staff to benefit from the firm’s success.
We know from independent research commissioned by the Employee Ownership Association that an EOT model delivers great benefits, including high productivity levels, good staff retention, and happier staff.

As mentioned earlier, you originally joined HJA due to the firm’s need for better internal tech. How is technology changing the way your lawyers practise law?

I have a big interest in what technology can bring to a firm. We’re a firm that has always tried to be early adopters of technology if we think it will benefit our clients and the firm. That said, the quality in a business still comes from its people, supported by the technology and I don’t see that changing in our business.

What have you found are the best ways of attracting and retaining talent, both at partner and associate levels? Also, what is HJA doing to attract and retain a diverse group of practitioners?

Culture and ethos play a huge part. One of my most important roles at HJA is to facilitate individuals’ goals and ambitions and I am big believer in that. I’m a good example of how you can progress.

We are also implementing blind recruitment for our trainee intake which will start from the next round of applications. This will ensure that we are looking at all the candidates are on an equal footing and will provide a fairer process as this will also exclude educational institutions.

We are constantly looking at ways in which we can provide more benefits to our staff to help us attract new talent.

What are the biggest market challenges facing HJA and firms of a similar size and specialism?

How fantastically supportive the partners and all of our staff have been. I am very lucky to work with such great people.

Since becoming managing partner what’s surprised you most, either internally or externally?

Funding. We had a period of swingeing legal aid cuts and the drive towards fixed costs with very little time to consider either. Yet, with tight financial controls and continuous innovation we’ve been able to navigate the challenges and come out stronger.

How would you describe your management style? Whom have you taken inspiration from?

Democratic. It’s very important to me to get people’s views and to bring them along with me in any decision making. At the same time, I am the decision maker and I will always hold myself accountable. I think colleagues appreciate that accountability.

How do you find the time to manage a firm and still head a busy practice?

It’s certainly a challenge, but I have been very fortunate in the partners and associates stepping up to take on more responsibility which has removed some of the burden from me. We also meet regularly too; good and regular communication helps a great deal towards running a successful team.

Can you describe your best and worst days in law?

The best: Becoming managing partner and knowing that the senior partner, Patrick, and the then equity partners recognised my work and had the confidence in me to take the firm forward.

The worst: Making the decision to stop doing family legal aid work earlier this year. We’d been doing it since we started out 41 years ago, but it was just no longer feasible. That was a tough decision and was taken with a heavy heart.

If you have one prediction for the UK legal market, what is it?

Given the complexity of the legal market it’s quite difficult to answer as what will apply for a firm like ours will be different to a Magic Circle firm, for example.

As an industry I think we have started to look at things differently and consider innovative approaches to our service provision for our clients moving from the more traditional approach.

We are also more aware that people have choices in where they work so we need to also ensure we are taking care of our staff. I’d also like to think we’d see more firms recognising the benefits of employee-owned models and switching to more equitable models to secure their futures.

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When growing, it’s essential your partners are on board

When Richard Crump took up his current role of senior partner role in 2007, Holman Fenwick & Willan, as it then was, had roughly 240 lawyers working across eight offices and revenue of just over £67m.

Today, newly reappointed for a fifth three-year term, the rebranded HFW has more than doubled its office and head counts, with more than 600 lawyers helping to bring in record revenues of £179m for the last financial year. And it has managed to do this without taking on debt or significantly impacting on PEP.

Key to the firm’s growth has been expanding internationally, with overseas offices now generating some 60% of revenues, as well as building out its practice base far beyond its maritime
roots.

In a tactic that differentiates it from its peers, the firm has often chosen to launch new practices overseas, building positions of strength internationally before looking
again at London.

These international expansion efforts are far from complete. Working alongside newly elected managing partner Jeremy Shebson, Crump says further expansion in the US is going to form a key plank of HFW’s strategy. Not content with merging with Houston energy and marine firm Legge, Farrow, Kimmitt, McGrath & Brown in 2017, Crump says Miami, Chicago, and New York are all of interest to the firm.

How HFW achieves this is yet to be decided, but it’s fair to say that merger – potentially with a bigger firm either in the UK or US – is a possibility. Here, Crump sets out how HFW has achieved its transformation from London shipping firm to international player and how bringing the partnership with him has been key to the redefined strategy.

How did HFW go about repositioning its business beyond what it was best known for?

A core part of our strategy has been to grow our aerospace, commodities, construction, energy, insurance, and shipping capability in the key international markets that are important to these clients. This has involved strengthening our existing offices and launching in new markets. We’ve opened in eight new markets in the past three years and added 24 new partners in 2018, including five in
London.

Sixty percent of our revenue is now international and that will increase.

How have you shifted your practice?

We’ve focused on growing the transactional side of our business, as well as boosting our litigation, international arbitration, and regulatory practices – particularly internationally. We’ve made several hires in London recently, but it is a very competitive market and it can be harder to build in certain areas, such as corporate and finance.

Our position is that once we start to acquire a certain size in a region, it gives us a credibility that perhaps we wouldn’t have for that practice in London. For example, when we targeted aviation finance to add to our strong aerospace practice on the contentious and regulatory side, we started that process in Asia Pacific and now we have one of the biggest aviation finance teams in the region. That has given us a strong base on which to develop the practice globally.

How have you managed to achieve this international growth without affecting profitability or taking on debt?

We’ve achieved it by being more efficient – billing more quickly, for example – and by being very selective about our investments. It becomes more of a challenge as we continue to expand and the partners have said they would support borrowing to fund a worthwhile project if we had to.It’s essential to have your partners on board when you’re growing like we are.

What are your plans internationally now?

We now have a large international network across the Americas, Europe, the Middle East, Asia, and Australia.

We would like to have a bigger presence in the US and we’re open minded as to how we achieve that. Miami is interesting as a gateway to Latin America and an important shipping hub; Chicago is interesting because of the commodities market; and of course there’s New York.

It’s more about finding the right opportunity than saying we want to be in a specific city. If a firm is focused on one of our sectors and is in a market that is important to that sector, we’d potentially be interested but we would also be open to something bigger.

What about London?

We’re particularly keen to expand in certain areas in London, such as construction and project finance, but we’ll seek to continue to grow across our sectors and also in corporate, finance, and litigation.

What are your other priorities?

Talent management is a real strategic priority. The career ambitions and expectations of young lawyers have changed beyond all recognition. It’s no longer about staying at the same firm for your entire career and hopefully making partner. When you consider that firms essentially invest in a young lawyer at the start of their careers and only begin to make a profit after
they’ve been qualified for a couple of years, that presents a real challenge. But it’s also an opportunity – the successful firms will be those
that adapt.

We’re also constantly reviewing the services we deliver to clients and the way in which we deliver them. We’re looking at how we
can use technology to be more effective and more efficient, and how we can reduce costs by being more agile and working smarter. We’re also looking at other services that we could offer that would be of value to clients. We recently launched a standalone consulting business, HFW Consulting, which has been very well received by clients.

What advice would you have for other firms looking to expand beyond what they are traditionally known for?

It’s about focus and bringing your partners with you. Be very clear about what your strategy is, stick to your knitting and don’t get distracted. You need to be clear about what you are going to do and what you aren’t. There are opportunities, because sophisticated clients are very discerning about who they use for particular matters.

What impact will Brexit have on you and the UK legal market?

We’d be foolish to say Brexit won’t impact on us, but I do think people will continue to use English law for disputes and contracts – it’s been around for ages, everyone understands it and it’s a great product.

These are challenging times, though. I remain genuinely optimistic but we can’t all keep growing at this rate. There will be some consolidation, in part because of the benefits scale can bring for big investments. If you need to spend £10m on an IT project, for example, the cost per partner in smaller firms is going to be much higher and the investment cost wouldn’t be proportionally that much smaller.

Talking about consolidation, would you consider merging with a firm in the UK or elsewhere?

I think all firms will be looking more openly at merging now. We’re not actively seeking a large merger partner, but we would be open to a combination of significant scale – in the UK or elsewhere – if it aligned with our strategy and if the cultural fit was right. Partners will always prefer to combine with a smaller firm, but good partners will do well in any environment.

How do you go about shifting partner mindsets on matters like this?

Lawyers tend to be cautious and conservative by nature, but they are increasingly focused on the business side of legal practice. Our partners know that the market is changing and that we need to adapt to these changes – preferably ahead of the curve. You just have to make sure you bring the partners with you on the journey.

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Leveraging value from the directories process

Legal directory submissions have been a regular business development fixture across global legal markets for years – starting with the UK market more than 25 years ago.

Participants have undoubtedly become savvier about what it takes to produce compelling submissions. Yet, every year we hear about the significant time and cost involved in completing a set of ‘best foot forward’ submissions and the challenge of sparking enthusiasm from lawyers and barristers to provide the intel required.

However, there are some serious strategic benefits to the work that goes into a submission that are largely overlooked. Done right, they can yield efficiency savings and ‘wins’ for the firm in other business development activities.

Take up recycling!

Bids, tenders, and proposals are the cousins of the directory submission, sharing many attributes. A few examples:

  • The discipline: teams of lawyers, business development, and marketing professionals coordinating their time and effort to produce informed, focused content to meet the submission requirements
    and deadlines.
  • Understanding the process: whether submission or tender you must know your reader and have a very clear grasp of the process and how the information you provide will be evaluated and used.
  • Strategic planning and clearly presented evidence: in both instances, having fully understood the process, the goal is to communicate relevant value and impact. To do this, you must understand your worth within the relevant market or sector and be able to evidence it. Everyone says they are best – but can you prove it?

Submissions and the legal directories themselves are a gold mine for bid teams, providing a wealth of current and informed killer content. And the ‘recycling’ isn’t all one way. Work done for the directories can be repurposed for bids and tenders.

Partners hate being asked to repeat work they’ve already done. Having been a bid manager in a previous life, I know that ‘we provided all of this information for the last The Legal 500 submission’, was often the response to a request for information for a tender. Creating and using submissions to maintain an up to date ‘bid library’ for tenders, CVs, deal summaries, and award submissions works well.

Business planning and client management strategic audit

While firms and barristers will approach their directories submission process differently, like a tender it is important to scope key messages and identify relevant evidence before putting any words on paper. And if in the end you are unhappy with your ranking or writeup, you need to know why. Your dissatisfaction might be clear, but is your strategy and argument?

If a firm has a well thought through strategic plan, writing submissions for key practice areas should be straight forward as the information required (key strengths, key clients, matter highlights) should be clear. If the scoping session is more like pulling teeth or sounds more aspirational than a look back over a busy year, this should be a flag
to business development teams and heads of department.

Why has the team not achieved objectives and goals set out in a business plan (and if there aren’t any, why not)? If matter highlights are difficult to identify, or a team fails to show strength and activity across the ranks, is there an issue with the team structure, experience, or training deficit or is effective delegation an issue? Is the
team unrealistic in terms of its capability in a particular market or sector?

The directories process is a valuable opportunity to carry out an internal audit of strategic business plans and evaluate key client relationships. For example, when pulling together matter highlights are any key clients missing from the list of top matters – and if so, why? If a team can’t put forward new client names, does there need to be a renewed focus on targeted
growth plans and pipeline?

Focused and well-presented content

What makes it in to a directory is incredibly brief. With the discipline of a tender specialist, ask yourself – is the volume and content of information you’ve thrown at the submission appropriate? Is there a chance the things you want to be understood could get lost? Sometimes, getting to the point quickly can be the
best time-saver of all when up against deadlines.

Ultimately, the power of a standout ranking is clear. However, often overlooked, there is significant value to be gained from the submission process and content itself to support wider business development activities.

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The secrets of law firm marketing

In your new book, Best Practices in Law Firm Business Development and Marketing, you write that you’ve seen a number of large-scale changes in the legal ecosystem that law firm leaders and marketers need to address. What are the most pressing changes you’ve seen that will impact legal marketers?

I think the most significant changes start with the buyer of legal services. Now more than ever, the general counsel is in the driver’s seat. In recent past years, GCs were placed under the watch of corporate leadership and instructed to reduce or cap costs – but now something is new in that missive.

Today, GCs have options that allow them to make the goal of cost reduction and efficiencies even more of a reality. They have access to new technologies and the additive abilities brought to them by recruiting a new generation of in-house professionals who have training in legal operations. The levers of who is in control between the client and the law firm lawyer, and who has the power, has shifted.

If you pair this with the fact that there are now other alternatives beyond the traditional law firm, the weight shifts even more on the side of GC. We now have legal service companies – some referred to as legal process outsourcers – and accounting firms, both of which are ready to service corporate legal departments. This, along with artificial intelligence and a host of new technologies allow GCs to have an even greater arsenal. This new tilt in balance, the technologies and the ability to use them, and the ability to curate the full legal operation, is impacting all law firms regardless of their size or prestige.

Marketers need to adjust to these changes and also think of new ways to market their firm’s services. They also need to have a voice in suggesting new paradigms for the firms they call home. Smart leaders will involve their marketers in how they face this new future.

Much of your work involves creating strategic plans and practice plans both for law firms and other professional service firms. What are the key mistakes firms make when they try to create these roadmaps?

There’s a belief that if you write a good marketing plan for a given practice, put it into your top desk drawer, and remove it once a year to read, that you are set up for success. Unfortunately, the writing of the plan, if you get that far, is just the first step. Left unattended in the drawer, these plans are not likely to sprout any growth. For the plan to be successful, several things must happen.

Involvement and communication are crucial. The lawyers who are involved in preparing the plan must get buy-in from four groups: those who will be affected by and participate in the plan; those not immediately impacted by the plan who may be potential advocates; the naysayers of the plan who may have the potential of impeding the plan’s success; and the firm’s leadership. The plan needs to be socialised so that while the lawyers and marketers are working on execution and implementing the nuts and bolts of marketing, others in the firm are supportive of the efforts through cross-selling and keeping an eye out for other business opportunities.

It’s also imperative that the goals of the plan are concrete and measurable. They need to be actionable. And to accomplish these plans, of course, you need to have the right people in place who can help you implement them, and that usually means a well-staffed professional marketing department and, in certain firms, embedded non-practicing professionals in the practice groups. If a firm doesn’t staff these functions adequately, lawyers end up with plans that can’t be implemented. It’s frustration, all-around.

In writing the book, you spoke with more than 60 managing partners, GCs, CMOs, and other experts. What were some of the most interesting interviews and why?

The leaders of law firms were fascinating, as they all have a passion for their firms and a common mission to see their firms succeed. These are people that I suspect never sleep. Mitch Zuklie (Orrick), Beth Wilkinson and Alexandra Walsh (Wilkinsen Walsh + Eskovitz), Bob Gunderson (Gunderson Dettmer), Henry Nassau (Dechert), and Barry Wolf (Weil Gotshal) were awe-inspiring.

Speaking with the incredible people at Pryor Cashman who run their women’s program and having the chance to sit in on one of their sessions was very special. Dyan Finguerra-DuCharme and her partners are role models for focusing on what matters. Charles Martin at Macfarlanes is one of the smartest most-thoughtful people managing a great law firm today. He was wonderful to interview.

Reaching out to Steven Brill was the only interview for which I was somewhat intimidated, just because I felt it would be impossible to find him and I doubted that even if I did, he would remember meeting me years ago. It was like a hunt for JD Salinger.

Brill represents the battery that started the modern legal profession. He was the founder of The American Lawyer and in my mind, the person who most embodied taking the profession and recognising and reported on it as a business. He had a demanding reputation with reporters and I didn’t know what to expect. Once he agreed to be interviewed, he did not disappoint. He was brilliant and insightful and told me a few great stories, including some about the early days of The American Lawyer. It was great fun to write about it.

You wrote quite a bit about how firms approach innovation. Is technology something in which you have an interest?

I am interested in technology when it comes to how we can make businesses run more smoothly and employ greater efficiencies. I have always been interested in innovation from my days of working with management consultants. There are several firms, such as Orrick and Allen & Overy, with whom I spoke, where they have set aside a significant investment in technology allowing them to find ways to do things better, faster or at a more reasonable cost. The bottom line for them is how to create systems or products that make a difference for their clients. They are not thinking of innovating for innovation’s sake.

There are still so many people who know much more about this than I ever will, so I enjoyed speaking with and getting to know David Perla and Sanjay Kamlani who started one of the first legal processing outsourcers, Pangea3, Dr Mark Greene, who helps firms address their technology needs, and Bill Carter, the CEO of ALM. Michael Mills at Neota Logic was also fantastic. His interview with me was done by email as we conducted it during the horrific California wildfires.

How did you even start to write a book, had you ever done it before?

I’ve always enjoyed writing, whether it was writing short stories on a notepad and sending them to my friends in high school or the recent pieces on marketing that I have been writing for Forbes. I had in the back of my mind, along with everyone else, that I might like to write a book, but it was pure happenstance that Ellen Siegel, a vice president of the Practising Law Institute (PLI), called and asked if I would be interested in writing one for PLI Books, PLI’s book division.

Having loved worked on big complex projects like building websites and conducting rebranding projects, I have always found the planning process to be important. I needed to think of this with the same mindset as one would any large project with components and deadlines that I needed to address in pieces.

What was it like shifting gears from leaving a firm, noted as one of the world’s most prestigious where you have all types of services, an office with river views and a large staff to starting your own practice, all alone, and writing a book?

While I loved my work at Cravath, I worked the very long hours that anyone at a large law firm works; however my hours have not changed very much since leaving. You learn that you have more capability than you ever thought you might. I quickly created my LLC, took a lease on an office, and found great executive administrative support. While there isn’t a messenger service on-call to deliver packages around the city any longer, there is a service called TaskRabbit that will help take care of that.

If a project is not the type of thing where I can add value or I think there is someone who can do it better, I have no hesitation to send it to someone I think is the best person for the job. And when an element of the project is beyond my range, I enjoy picking up the phone and partnering with someone I know is expert in the field.

How difficult was it to build a practice and get clients?

I was fortunate. The day that I announced I was leaving Cravath and started talking about what I had planned, I received a number of calls from law firms in need of help. One of them, an excellent firm where I knew I could make a difference, wanted to come by to meet me. I quickly leased an office (I am in the same building as King and Spalding). In my first year, I’ve had clients in New York, California, and Texas. I’ve also done work in London. As it is just me at this point, I plan to only work with a few clients at a time. My goal is to do outstanding work that will make a difference for my clients.

Are there rainmakers you admire and what about the way they operate do you admire?

Jeff Klein heads the employment litigation practice group at Weil Gotshal. He is a true rainmaker both because his clients love him and because I have seen his approach in developing more junior lawyers. As he says in the book, he thinks about business development as a muscle that needs to be used on a consistent basis. He believes that with practice, lawyers really can get better at it. But at the very core of Jeff’s success is the fact that he is simply an outstanding lawyer.

I also admire Beth Wilkinson and Alexandra Walsh for their approach. They are so incredibly targeted, working solely on high-stakes litigation. They are smart and very focused. I’m sure they say no to a lot of business, but the business they say yes to, they truly excel at handling.

David Bernstein is the chair of Debevoise’s intellectual property litigation group. Not only is he a fantastic lawyer handling clients for well-known brands and companies, he has a great way of connecting with his clients. He is always going the extra mile for his clients, getting to know them as individuals and truly making a difference in their company’s survival.

Evan Chesler, of course, is the gold standard. I’ve never seen anyone prepare for trial in the same hyper-focused way as Evan, and his track record for winning difficult cases is unparalleled. But in addition to his talent, he is very attuned to his clients as people, and cares about their wellbeing as well as their success in business. In his case, it’s a combination of rare talent, intuition and very hard work that add up to lawyer who clients adore.

You’ve run two successful marketing department at two demanding firms. Are there any secrets to operating a marketing department that has an impact in the marketplace?

I think the most important thing that the CMO needs to do is to identify with the culture of the firm and know what it is that the firm needs to do to succeed. Much of that is in the hands of the CMO, but a greater part of that is in the hands of firm management. If the firm is led by someone with vision who can helps create and communicate a business strategy, the CMO is five steps ahead of the game. If the firm leadership tries to delegate these important steps lower down the totem pole, it will not be as effective.

Once the CMO learns what it is that the firm needs, they can create a blueprint of shared objectives and agreement on the general tactics they will employ to get them there.

It also becomes a matter of hiring the right people. This is tough because although there are now more people with good talent in various marketing disciplines, you need to find people that have the right skill set, are a good match for the firm, but most important, you can trust and who are of the highest ethical standard. I’ve seen departments with the right people do incredible things, but I’ve also seen departments where there’s one or two bad seeds, and that can be ruinous. CMOs need to take their time to hire and train the right people. If done properly, you will end up with people who create good relationships between marketing and the partners and within the marketing department.

You need people who set an example by how they work and garner relationships. The value that good marketers can provide is exponential.

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The millennial bug

A millennial (or generation Y) is typically classed as anyone born between 1980 and 1994. Therefore, in the legal profession this group includes both the junior partners and senior associates who are now close to or about to make the step up to partner, which is easier said than done in the current climate. More alarmingly however is the number of millennials who are increasingly questioning whether it’s worth them going down the partnership track at all.

For most lawyers in practice, making partner was, and for some still is, the ultimate goal, but the path is longer than it used to be, as much as ten or 11-plus years post qualification in some cases, when the norm used to be around five or six years.

From the outside, it might look like some firms will lose this talent to in-house roles and thus create a long-term issue with succession planning and to some extent that’s true, but most associates would still prefer partnership, it’s just a question of at what cost.

Those who cite an interest in being an in-house lawyer are too often focused on what they want to move away from, rather than what they trying to work toward. Too many assumptions are often made about how different life is outside of private practice when sometimes the answer is just that they’re simply working at the wrong law firm.

There are a lot of well-known generalisations made about millennials and for the most part they’re true. The differences are notably centred on culture and environment above all else – around the need for flexible working and a work-life balance; to be treated as an individual yet be part of a collaborative team; to be offered continued learning and career advancement; to be able to make a meaningful difference. Millennials will always prefer to be part of a meritocracy and so their progression should not have anything to do with rank, age, or length of service.

Take flexible working, for example. We’re often approached by associates citing that they don’t live to work and want their weekends and the occasional evening back, and no amount of money will change that.

There’s no doubt the attitude to flexible working has vastly improved and the majority, but not all firms offer it to varying degrees. However, who wants to be the associate who is deemed to not be spending enough time in the office? Some associates are concerned that this will affect their prospects versus someone who is more visible, yet millennials want to be judged on results, not just time spent in the office.

It’s often said millennials are not as loyal as previous generations, but loyalty goes both ways, and when there are environmental or career advancement concerns then it’s understandable that they have no problem jumping from one organisation to another.

Upon making partner, or for those that are already in the partnership, what comes next? That ongoing need to continue to progress doesn’t just go away upon promotion and the biggest proportion of junior partners we represent are often motivated to move because they can’t see the scope for career advancement and, despite desiring equity, are often stuck in the fixed share/salaried partnership ranks.

This motivation for equity isn’t primarily driven by earnings alone, but by the recognition, ownership, and the ability to have a voice and make a difference. However, with PEP being an increased focused for firms that feel pressure to pay their top partners competitively, as well as the rate pressures coming from clients, equity is being protected and the bar for entry is getting higher all the time.

It’s also apparent that many of those who have trained with their firm and remained loyal are finding their progression is slower than lateral hires who were able to negotiate a better deal.

Remuneration should be relative to a partner’s overall contribution to a firm and millennials are on board with that meritocratic concept, but resentment is often created when non-equity partners compare themselves to lateral hires who have not ported across the clients and revenue is expected of them. The same goes for current equity partners who are perceived, rightly or wrongly, as not working as hard or contributing as much. Fundamentally, whenever we’re told by a lawyer that they’re underpaid, what they’re really saying is that they feel undervalued relative to the contribution they’re making, or in comparison to those around them who aren’t pulling their weight.

Despite what we read in the press about headline grabbing partner moves to elite US law firms paying huge sums, most individuals move for modest increases in pay or a comparable salary so long as they are genuinely offered an opportunity to be in a more favourable environment which enables them to progress, develop and reap the rewards in the medium to long term.

Overall most partners, while not actively looking for a move, are open to hearing about the right opportunity, ever mindful of the fact they need to re-evaluate whether they’re at the right firm, and if a move will better help them achieve personal goals.

There is of course no straightforward answer to addressing all the needs of an entire multi-generational workforce, but there’s a clear need for all firms to make a concerted effort to engage at every level (associate, senior associate, and partner) with what matters to individuals, to be transparent, develop effective mentoring/development programmes, and reward the
right behaviours.

Many firms are working to create the right balance but there is no perfect system and suffice to say, less of today’s associates and those to come are as committed to the partnership track. This coupled with the fact that millennial partners are more receptive than ever to move means firms must constantly look after their own if their succession plans are to be realised.

Definitive Consulting is a leading executive search firm focused solely on partner level appointments for law, accountancy, and consulting firms with offices in London, Dubai, Hong Kong, Singapore, Melbourne, and Sydney.

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Lawyers learn new tricks

When The Legal 500 United States 2019 launches in May 2019, it will include, for the first time, a dedicated ranking for fintech practices.

Unless you’ve been living on Mars for the past five years, you’ll be very familiar with the term – as well as some examples such as cryptocurrency and peer-to-peer lending – so it’s fair to wonder what’s taken us so long.

The simple reason is that, in the legal realm, the practice is still in its nascent stages. While there are now many organisations – from startups to emerging companies to established financial institutions – that are either firmly ensconced in the field, or else pure-play fintech businesses, the number of attorneys who can legitimately call themselves ‘fintech specialists’ is still relatively small.

‘Lots of lawyers have pieces of it,’ says New York-based Sullivan & Worcester partner Joel Telpner, ‘but to live it day in, day out, it’s still a relatively small pool. We’re probably still at the point where, if you ask different lawyers at different firms, you probably won’t get consistent answers about what it involves – people think differently – but there’s nothing wrong with that; it’s typical with new areas.’

In the case of fintech, one of the big reasons for divergent views is related to the fact that the practice sits at the intersection of financial services and technology – ‘those
are two industries with radically different cultures,’ says David Luce, a partner at DLA Piper in New York.

Luce jokes that, like Tom Hanks in Bridge of Spies, ‘he’s really just an insurance lawyer’, so for him – who says his journey into fintech has been less about foresight and more about moving with his clients – ‘it’s been like a middle-aged dog learning new tricks. It’s been a really interesting journey.’

Fellow DLA Piper partner Margo Tank has a longer history in the field – in fact, it’s a journey that can be traced back nearly 25 years. Tank, who’s based in DC, moved into private practice with Goodwin Procter in 1996 – having previously been counsel to the House Banking Committee; at the time, the internet was really taking off.

‘Because we were positioned in financial services,’ says Tank, ‘we had a lot of our large banks saying, “hey, can we use the internet as a platform to go direct to consumers”. And then we had technology companies – Intuit and Microsoft, for example – saying, “hey, we have these great technology platforms, can we act as finders or facilitate the offering of financial services”. So, we brought some of these companies together.’

Tank’s practice has continued along these lines ever since, through the transition to paperless transactions around 1998 (the ‘first wave of fintech’), the first iteration of payment technology in the early 2000s, the arrival of Bitcoin in 2011, and up to the present day.

‘We’ve been watching this evolution over time where you have the traditional banks and the technology companies competing or at odds with each other, but also needing each other to be able to fully utilise the medium,’ says Tank.

Bringing these opposing forces together has been a challenge, says Tank: ‘Years were spent lost in translation, where you’d have conversations with the financial institutions and technology providers and people would just talk past each other. We, as lawyers, had to bridge that gap.’

‘It takes creative lawyering,’ Luce adds. For lawyers from a financial services background, it also takes getting to grips with the technology, which isn’t for everyone.

As New York-based Joel Telpner puts it, ‘I find it exciting – it doesn’t make me feel queasy like it does for some lawyers.’ By his own admission, Telpner, an expert in blockchain, is among the older guard in the fintech space. ‘Most lawyers in this space,’ he says, ‘are at the younger end of the spectrum’ – and it’s constantly attracting more. ‘It’s so cool to see all of these young associates literally lining up outside of the door wanting to get involved’; aside from the technology itself, it’s one of the reasons that the practice is so dynamic.

So how did Telpner get involved? Much like Luce, ‘it wasn’t a radical transition – but there was a catalyst’. Back in 2014, Telpner assisted Overstock as the first company to list securities on the blockchain. ‘It took two years,’ explains Telpner, ‘as we had to educate the SEC on what the blockchain is and the regulatory consequences, so by the end of it I was very involved in the blockchain space.’

This gets at the heart of the fintech practice, and the reason it’s such an interesting and challenging space to operate. On the one hand there are new, powerful, disruptive technologies, while, on the other, strict regulatory and compliance infrastructure.

‘To give an example,’ says Tank, ‘the tech companies want to know, “why can’t we have the customer click once instead of many times – it’s easier that way”, but the financial institutions say, “no, we are in a very regulated environment and we need to make sure that the customer sees, reviews, and clicks ten times – or whatever the requirements are.’

The challenging thing is that the regulators haven’t said much in the last 20 years; as Tank puts it, ‘they’ve decided to let a thousand blossoms bloom and then eventually they will probably step in.’ The regulators are holding hearings, doing studies, and generally trying educate themselves, but in the meantime lawyers are having to navigate their clients through the established infrastructure.

Howard Altarescu is a partner in Orrick’s New York office. From his perspective, as someone from a financial services background, ‘certain areas are nascent, but in other areas we’re talking about longstanding issues. For instance, what is or isn’t a security? These are things we have looked at for a long, long time.’

Altarescu began moving into the fintech space around six or seven years ago, when he started seeing deals among market-based lenders (Oportun was an early client – and still is). Not long after, in 2014, the firm welcomed Christopher Austin, whose background is as a tech company lawyer, meaning he comes from the other end of the spectrum from Altarescu – as well as the other attorneys interviewed.

‘I’ve been a tech company lawyer for the majority of my career,’ says Austin, who splits his time between New York and Silicon Valley, ‘and within the tech field I’ve always worked in a range of different areas. What’s really interesting about fintech is the regulatory element. I’ve worked with a number of clients trying to disrupt the payments world – once I’d done one of those it became much more natural to continue.’

Having a mix of perspectives is key, and successful fintech practices will invariably lean on specialists not just in the regulatory and technology aspects, but also in the intellectual property and tax implications.

‘It’s cross-disciplinary – truly – and it’s very exciting’, says Telpner. An interesting insight – perhaps something that’s not obvious – is that there’s a certain amount of risk involved. ‘When you have a new practice like this,’ says Telpner, ‘you have a lot of uncertainty – there are unknown pitfalls – so some firms don’t want to get involved. It’s an interesting dynamic as some of the biggest firms are sitting on the sidelines.’

This creates an opportunity for those who are ready to get involved and move with the latest developments. So what are the anticipated developments? Where are things likely to go?
‘It’s hard to know,’ says Austin, ‘the development of new platforms and ways of transacting is increasing but, at the same time, the big banks are not going away quietly. The march of change is going to continue to accelerate. I’m not sure that all existing financial institutions are going to survive – some will be disrupted – but many will.’

Telpner is expecting smart contracts to really take off. For those who are unfamiliar with the concept, a smart contract uses the blockchain and an if/then code to automatically execute a contractual obligation.

‘There’s a lot of debate now about how smart contracts can be used,’ says Telpner, ‘and there are interesting questions about whether lawyers need to be writing the contracts and thus do they need to know how to code.’

And on the cryptocurrency side, says Telpner, there’s ‘a fascinating debate about regulation that’s very similar to the early days of the internet – people saying it’s beyond regulation – and others saying you can regulate it but you need to think differently.’
‘In 2018,’ says Tank, ‘it was blockchain and AI. I think the focus in 2019 is going to be data security and privacy. It’s always been there, of course, but it will likely have a very big impact on fintech’.

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Life sciences and tech lead the way in UK M&A

Please give us an overview of the current legal market in the UK and how any recent developments have impacted your practice?

Our London M&A practice is a combination of UK and cross-border transactions, so our deal flow remains robust both in the corporate and private equity sectors. Brexit has had some impact on transaction flow given the uncertainty that remains around what sort of deal the UK will negotiate with the EU.

What significant trends exist in the US markets presently? Are you seeing these just domestically or internationally as well?

We are seeing an increase in life sciences and the tech sector activity, as well as an in-crease in activity by private equity debt funds providing financing for
M&A transactions. We have also seen an uptick in distressed M&A transactions. These trends are prevalent both domestically and internationally.
In addition, and notwithstanding the uncertainty surrounding Brexit, English law remains the favoured governing law for cross-border deals and we see no reason why this should be impacted by Brexit.

What are the three biggest challenges to practicing in M&A at the UK at the moment?

Financing of transactions: the availability of traditional lending by banking institutions and the ability of those institutions to write the big cheque, although the replacement of conventional financing by debt private equity funds has alleviated this to a certain extent.

Brexit: uncertainty in terms of what deal the UK will achieve and the possible implications of both the exit itself and the deal create pressure in the market.

Fee structures: more and more transactions are being structured as capped, fixed or alter-native fee deals, and with the inherent fluidity of an M&A deal this is a challenge which will only continue for law firms and will likely lead to a project fee approach as opposed to the traditional hourly billing arrangements.

How does M&A fit into the firm as a whole? Is it easy to collaborate with other teams?

M&A, both corporate and private equity, is a key driver of the firm and provides work to a number of other departments, whether that is tax, antitrust or employment. M&A is the primary ‘exporter’ of work within the firm and the network. Collaboration is easy: the firm is managed on business lines enabling a more uniform approach between international offices on cross-border transactions.

What advice would you give to the next generation of M&A lawyers?

Gain an understanding of your clients’ business and always look to improve your depth of knowledge in that area as it will drive your ability to provide flexible, commercial solutions to your clients’ issues on a transaction. If you understand the commerciality of the client’s operations and their objectives on a particular M&A deal, you will be better placed to spot the key issues as, and before, they arise.

What are your predictions for M&A in the UK over the next five years?

Tech will continue to increase in activity as companies of all sizes get to grips with its im-pact on business. We expect life sciences to be a key area and there will be a greater focus on energy, both in the more traditional oil and gas sector and an increase in the sustainable energy sector. We also expect that Brexit and its impact will lead to an initial dip in activity but that that dip will be followed by an increase once the landscape post-Brexit becomes less uncertain.

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Sweden’s M&A boom

Swedish cityscape image

Please give us an overview of the current legal market in Sweden and how any recent developments have impacted your practice?

The Swedish M&A market (both private and public) is booming and we have noticed a dramatic increase in our M&A practice. The use of M&A/W&I insurance continue to increase in the Swedish market, which also impacts the way the majority of competitive M&A transactions are run.

 

What significant trends exist in the M&A market presently? Are you seeing these just domestically or internationally as well?

The increase in Swedish M&A is both domestic and international. We have seen an increase of international buyers looking at Sweden for acquisitions (industrial as well as financial sponsors, many of which are looking to invest in small- and medium-sized niche technology driven companies) as well as an increase of Swedish-based buyers making significant acquisitions outside Sweden (industrial and financial sponsors).

What are the three biggest challenges to practising M&A in Ireland at the moment?

It is difficult to identify three challenges. We would however say that the biggest challenge facing the Swedish legal M&A market is to hire and keep young, talented lawyers to meet the higher demand of our services.
How does M&A fit into the firm as a whole? Is it easy to collaborate with
other teams?

In our firm we have a seamless collaboration between departments and we have a very good working relationship with other M& A firms both in Sweden and internationally. We have seen an increase of M&A transactions generated to the firm by our specialist teams within other practice areas such as banking and finance (including financial compliance) and insurance.

What advice would you give to the next generation of M&A lawyers?

Be your best. M&A will always be an interesting and rewarding area to practice. A good modern M&A lawyer cannot only be a ‘legal advisor’ bust must also understand and contribute to the client’s financial and business rationales.

 

What are your predictions for M&A in Sweden over the next five years?

Unless there is an unexpected macro change, M&A will probably continue to grow the next two to three years. A turn in the market is probably four to five years away.

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The US drive to consolidation

Please give us an overview of the current legal market in the United States and how any recent developments have impacted your practice?

The M&A legal market in the United States remains generally quite strong. Although transaction volumes are down slightly from a peak in 2015, the level of activity is still quite robust. Overall M&A activity in the US is driven primarily by strategic acquirers and cross-border transactions, which plays into Cravath’s historic strengths, with its corporate and international client base.

What significant trends exist in the US markets presently? Are you seeing these just domestically or internationally as well?

The most significant trend in US M&A activity over the last several years has been the pursuit of size as a strategic imperative. Across many significant US industries (healthcare, technology, media, retail, etc.), the largest participants are substantially bigger than they were ten or 15 years ago. This concentration is driving consolidation in related industries, all up and down the supply chain. We see this trend not just domestically but also across most of the developed international economies.

What are the three biggest challenges to practicing in M&A at the US at the moment?

From a strategic perspective, the major challenge is understanding the specific industry dynamics that are pushing the need for M&A and consolidation generally. This is related to the quest for size.

The second major challenge is regulatory uncertainty. The changing nature of M&A is creating new challenges in antitrust, national security regulation and other industry regulation, as regulators come to grips with the implications of scale.

The third major challenge is political uncertainty. Recent nationalist and protectionist trends, which ultimately can be traced back to the global financial crisis of 2008, continue to create significant challenges for domestic and international M&A.

How does M&A fit into the firm as a whole? Is it easy to collaborate with other teams?

M&A remains an important part of Cravath’s corporate practice and represents a core part of the firm. As a result of our culture, including
that most of our lawyers are located in a single office, the M&A teams at
Cravath collaborate closely with other experts at the firm, including our antitrust, intellectual property and litigation groups.

What advice would you give to the next generation of M&A lawyers?

‘The more things change, the more they stay the same.’ Twenty years from now, M&A work in the US will simultaneously be very different from but also similar to the way it is currently practised. The challenge will be to recognise what is changing and what is not, and to learn to adapt your skillset, methods and behaviours to meet the changing needs and demands of the market and clients.

What are your predictions for M&A in the US over the next five years?

US M&A activity will be driven primarily by the state of the real economy. The US real economy has been, for a number of years, on a solid footing and, if that continues, then so will flow robust M&A activity.

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Malaysia’s spiritual – and possibly legal – rejuvenation

Since May 2018 much of Malaysia has been undergoing a spiritual rejuvenation brought about by its first genuine change of government in 60 years. From the Vertigo rooftop bar to the esteemed Malaysian Bar, via bus conductors and Grab drivers and bartenders, everyone you speak to lights up when asked about this year’s election.

‘It was incredible, absolutely incredible,’ one lawyer told me unblinkingly. ‘People were running and driving around collecting postal votes from total strangers, doing everything they could to ferry those slips of paper cross-country to the ballot boxes, leaving nothing to chance. Eligible expats each giving their vote to a guy who’d fly all the way to Malaysia, pockets stuffed with paper, just to make sure every vote would be delivered.’

Many in the West are marking the 50th anniversary of the ‘1968 moment’ – a time when it seemed like young people could stand up and be counted, make a real political difference and change the world for the better. For the Malaysian people, political promise is currently unfolding before their eyes – though the embodiment of said promise is the seemingly ageless 93-year-old Mahathir Mohamad, whose stint as prime minster from 1981-2003 made him the longest-serving leader in the country’s history even before his re-election a few months ago. Perhaps a surprising choice, then, for a deliverer of radical change.

This yearning for prelapsarian politics is less surprising when you consider how badly the country has been affected by the 1MDB scandal. The legacy of former prime minister Najib Razak encompasses not only alleged corruption but unpopular impositions, such as the Goods & Services Tax. (The latter has now been replaced by the Sales & Services Tax, which brings in less revenue for the government but targets a narrower tax base. Lawyers have been busy advising corporate clients both on the new tax regime and on obtaining tax refunds following unfair applications of Goods & Services Tax.)

‘Deferment of the Kuala Lumpur-Singapore high-speed rail project has sent shivers up the spines of law firms’

Dynamism on the tax front, however, is not finding echoes in other spheres.
Multibillion-dollar public projects have been put on hold, awaiting cancellation, readjustment or an eventual green light; the most high-profile has been the Kuala Lumpur-Singapore high-speed rail project, which has been deferred and will not be ready until at least 2031. Such news has sent shivers up the spines of those law firms that upscaled their projects teams and re-allocated resources in anticipation of handling long-term infrastructure projects.

Domestic bank liquidity remains fairly healthy, with around half of all major financings being done through Islamic structures, but international investors are watching developments cautiously. As a result, major M&A, IPOs and real estate deals have been quiet since the election was announced and have not picked up despite the jubilant response to the Pakatan Harapan (PH) coalition’s electoral victory. Talk to lawyers and businesspeople, and the phrase you will hear most often is ‘wait and see’ – though quite a few Malaysian companies have decided to list in Hong Kong and Singapore, rather than on the Bursa Malaysia.

Culturally, not much has changed: Mahathir secured a royal pardon for former PH leader Anwar Ibrahim, who had been jailed on homosexuality charges for a second time, but more recently two young women were publicly caned for engaging in lesbian activity. PH’s member parties are not organised along lines as categorically racial as those of the deposed coalition, Barisan Nasional (BH), but ethnic divisions within the country at large remain difficult to deracinate, especially in rural areas, where BH remained popular until recently.

Nonetheless, the current government is certainly making the right noises about anti-corruption and anti-money-laundering measures, and lawyers have been kept accordingly busy on the advisory and compliance side. There have been several politicised de-selections. For example, in July, Ahmad Nizam Salleh replaced Sidek Hassan as chairman of Petronas (the country’s largest company), and the entire board of sovereign wealth fund Khazanah tendered its resignation. One gets the sense that as Malaysia takes stock of its trillion-ringgit government debt, it is – at the higher levels of public business, at least – running to stand still.

These aren’t the only reasons for lawyers to be cheerful. Certain sectors are burgeoning: aviation finance, healthcare and technology, especially fintech, continue to grow, and oil prices have remained relatively stable. There have been some headline mergers: Asia Finance Bank was bought by Malaysian Building Society to form MBSB Bank, which has assets totalling nearly RM50bn (around £10bn). Relations with the Inland Revenue have improved considerably – sure, many firms are currently suing it, but the acrimony is really directed at the former tax administration rather than the current one. Excitingly, the current attorney general – Tommy Thomas, who has for years graced the pages of The Legal 500 – is the country’s first to come from private practice.

General market quietude will probably continue for the next few months, but it’s a fairly sure bet that 2019 will be busier all around, as the government clarifies its position on various fronts – especially in the projects space – and international investment begins to flow in in higher volumes. The legal market in two or three years may look rather different; it remains to be seen how firms close to Razak’s government will fare in the new political climate. But until then, watch this space.