Three litigation partners left Addleshaw Goddard last year to set up a conflicts-free, disputes-only boutique. LB finds out how well the model is working.
For many, it’s a depressingly familiar scenario. You’re an experienced litigation partner handling financial services and contentious civil fraud disputes, advising corporates, entrepreneurs and high-net-worth individuals. A senior in-house lawyer from a bank asks you to represent them against another major financial institution after being given your name by a partner from a rival firm. A conflict check then reveals a banking partner at your firm had dinner with the other side and anticipates some corporate work in the pipeline. You have no choice but to decline the instruction.
It was situations like that which faced Pietro Marino, the Addleshaw Goddard partner who co-founded litigation boutique Enyo Law, time and again.
‘The irony is that one of the key conversations that really got me thinking about setting up my own practice was actually with a banking client,’ he recalls. ‘The client said “you and your firm need to really think about filling a gap in the market”, referring to the fact that in the current climate there will be situations where banks need litigators with experience of banking disputes who aren’t conflicted out.’
‘When acting for an individual, sooner or later a bank becomes involved. This was an issue with 75% of my cases.’
Pietro Marino, Enyo Law
Marino says the client in question was refreshingly honest about the role that the banks had played in contributing to its own problems, tying vast numbers of good firms to restrictive panels, leaving few decent independent lawyers available to take on the banks. Marino, along with fellow co-founders Simon Twigden and Michael Green, had grown frustrated with a situation that many litigators face: struggling in the disputes team of a successful full-service firm that is focused on building institutional relationships with large financial services institutions and corporate UK in the post-Lehman landscape. In such a climate, there’s little room for agitators, which ultimately set the three of them on the path to forming the boutique they own now.
Go your own way
Twigden, Marino and Green opened Enyo Law in October 2010, with four other partners and nine fee-earners. For those for whom Classics isn’t a specialist subject, Enyo was the Greek goddess of war. If such classical mythology is good enough for Nike and Apollo, then it’s good enough for a litigation boutique. Twigden, who came up with the moniker, says he loathed the idea of using surnames and wanted something short that said what the firm was all about. Despite the odd raised eyebrow, the name is rather apt: Enyo Law is ready for a scrap. This niche firm wants to be the leading litigation boutique, capable of handling the big cases that larger, full-service firms are conflicted out on. The ethos of the practice is quite clear: to take on the cases that the big boys can’t – or won’t – handle.
‘Enyo is not a criticism of Addleshaw Goddard or any other City litigation practice for that matter.’
Simon Twigden, Enyo Law
‘There is space in the legal market for a firm with the right experience, resources and freedom to act in major business-critical disputes,’ says Green. ‘We want to be the natural choice for clients involved in disputes that would present conflict issues for major City law firms that have substantial transactional practices.’
A brief statement on the firm’s website regarding conflicts simply says: ‘we are able to act against almost all of the major financial institutions’. That means litigating against banks, the perennial taboo for nearly every firm in the City. Enyo is already working on one confidential case against a major global investment bank and another against one of the UK’s largest retail and investment banks.
Twigden, Marino, Green and head of marketing and business development Matthew Denney all sit around a table at the firm’s serviced offices at 25 Southampton Buildings, just across Chancery Lane from Lincoln’s Inn. The choice of location is convenient for the Bar and High Court and has good omens – it was the temporary home of highly successful IP boutique Powell Gilbert when it span off from Bristows in 2007, before it moved to more permanent offices in Fleet Street.
There isn’t a tie to be seen at Enyo Law – the atmosphere in the office is very much one of relaxed industry. Freedom is a recurring theme for the founding partners. They talk of being so busy that they have to turn work away already – but despite this they look relaxed.
‘This was all about me being completely my own boss and doing what I wanted to do,’ says Marino. ‘This was the only real way of doing that. To walk in here every day and do our own thing is incredibly rewarding.’
Twigden is clearly content, a contrast perhaps to his last few months at Addleshaws. He and Marino, both early birds, would often find themselves sharing the frustrations of having to turn down good litigation work because of a real or perceived conflict with a relationship the corporate or banking team may have had.
‘You have to feel for those banking partners,’ says Twigden. ‘A piece of litigation could come which may have involved a bank on the side. It might not even have been a big banking client of the firm but perhaps one that a partner in the finance team had been trying to win for two years. With one flip of a claim form we could scupper the whole thing. We didn’t even want to be putting the firm in that position.’
But while the rationale behind the boutique is fundamentally sound, the more cynical might suggest Twigden’s exit from the national firm was precipitated by losing out in the race to become senior partner to fellow litigator Monica Burch in 2010. Twigden agrees it was a factor behind the timing of the move but is keen to point out that there is no beef with Addleshaws or the senior partner election process.
Twigden helped set up Addleshaw Booth & Co’s City office in 1999 before its merger with Theodore Goddard a few years later and regards the firm as family. He describes leaving as ‘cutting the umbilical cord’. Running for senior partner, he says, was his chance ‘to put up or shut up’. But in campaigning on a platform for change, demanding a more assertive approach and a need to promote more of a litigation focus, Twigden failed to win the hearts and minds of the Addleshaws partnership. With that failure, Twigden knew that the time had come to exit stage left. ‘When you’ve bared your soul and have put out a very clear vision of how the firm should behave and what direction the firm should take and the partners don’t support that, then it becomes a very difficult space to be in,’ he reflects.
Twigden could have taken a US firm’s money or even joined a strong litigation practice at another UK firm but he says he never really contemplated that. He didn’t even get as far as drawing up a list of firms he could approach. He says he just saw an oversaturated mid-market filled with firms ‘with similar philosophies, chasing the same kind of clients’. A US firm would present issues of its own. The conflicts conundrum frustrating so many litigators in the City could be magnified at a US firm, as far as he could see. So his idea was to draw on those frustrations and create an environment where he would be able to choose cases on merit, free from policy concerns and being dictated to by corporate and finance.
Although Twigden had never run his own law firm, he is not unfamiliar with taking risks and going it alone. He trained at Freshfields Bruckhaus Deringer and left in 1989 to build his own UK and US reinsurance companies before joining Addleshaws in 1999 to help it set up in London. Litigators that know him in the City suggest that the larger, full-service law firm environment never really suited him and his personality is better matched with running a more entrepreneurial, focused business. Twigden broadly agrees. ‘I think that’s right, this business model suits my personality better,’ he says. ‘I’m quite assertive in what I do and I’m very clear in my mind about what we’re doing and why we’re doing it. I like the idea that we’re in charge of our own destinies.’
Joining Twigden in leaving the firm was perhaps less of an emotional wrench for Marino and Green, having not been involved in the leadership fight. Marino says it was the logical conclusion to many months of trying to see a way around an inherent problem that had beset his practice after Addleshaws took a more corporate direction post-merger in 2003. His practice had become a standalone, one-off case practice, acting for wealthy individuals and entrepreneurs who weren’t necessarily key clients of the firm. This became, he says, more pronounced after 2005 when the UK practice made a real push to get on the major banking panels, such as Lloyds TSB and Barclays. ‘When acting for one individual against another over money, sooner or later a bank becomes involved,’ he says. ‘This was becoming an issue with 75% of my cases. I could understand the difficulty for the firm and I tried many ways to get around this, including supporting Simon in encouraging the firm to shift its focus but by then I’d pretty much come to the conclusion that I wasn’t going to be able to do that effectively.’
However, any inference that Addleshaws is somehow disputes-shy is fundamentally incorrect. £56.1m of its £126m revenues in 2010/11 came from its contentious and commercial division, way ahead of both corporate and finance. In addition, the firm has just announced plans to open in Singapore and Dubai later this year, with both offices focusing on international arbitration. Addleshaws also succeeded in retaining one significant case, albeit on a surprising conditional fee arrangement, acting for Boris Berezovsky in his high-profile dispute with compatriot Roman Abramovich in the UK courts. This is despite the fact that Twigden has acted for Berezovsky in the past and continues to do so on other cases. He recently handled a separate appeal for the oligarch over the commission due on the sale of his E110m superyacht.
For Twigden, Marino and Green personally, they felt they were losing out on too many good cases because of the greater good of the firm.
‘Enyo is not a criticism of Addleshaw Goddard or any other City litigation practice for that matter,’ says Twigden. ‘It’s apples and pears. We’re very lean, very business focused and savvy about what we do. We are never going to do anything but disputes. Pietro has threatened to use violence against me if this changes but it won’t.’
Born free
With the concept in place, and the break from Addleshaws established, the logistics took priority. Twigden says that the nitty-gritty was fairly straightforward, with him first approaching his personal banker at Coutts & Co to secure the finance to cover Enyo’s start-up costs.
‘Enyo is not a criticism of Addleshaw Goddard or any other City litigation practice for that matter.’
Simon Twigden, Enyo Law
‘You don’t really need much to start this kind of operation up, just make sure the rent and salaries are paid and the IT costs are covered,’ he says. ‘We just don’t have the overhead. Coutts firmly believed in what we were doing and if they had any doubts, they kept them to themselves.’
Enyo’s founding partners were helped significantly by Jon Cartwright at the accountants Hazlewoods, who is experienced in taking law firm start-ups from the cradle. He advised the founding partners on the LLP and service company structures early on and helped present the business model to the bank.
The beauty of the structure is its simplicity. Twigden, Marino and Green are the only equity partners and split profits equally three ways, while the remaining five partners are fixed share. There is no lockstep or eat-what-you-kill remuneration system. If there are any concerns over succession, then they are ignored for the time being. Associates are paid generously, according to the founders, and receive two bonuses: one based on a billable hours target of 1,600 hours, the other based on the firm’s overall financial performance.
Less than a year in, the equity partners are already drawing profits from the business. They are coy about exact figures but say that they are now drawing roughly the equivalent of what they were taking home at their former firm (Addleshaws’ PEP last year was £425,000, while partners at the top of equity took home £572,000). However, they expect this to increase exponentially. All are agreed that the litigation boutique model has the potential to match levels akin to the most financially successful boutique in the LB100 – Sacker & Partners, which has a PEP of £858,000 while top of equity partners are drawing over £1m.
‘I don’t see why not,’ says Green. ‘The dynamics are really very simple – what’s your overhead and how much revenue are you generating? We’ll be utilising the opportunities afforded by conditional or, when permitted, damages-based fee arrangements worth potentially very significant amounts on top of lots of hours on commercial top-line cases with appropriate chargeout rates and very little overhead. So I can’t see why this can’t be as profitable.’
Marino’s mantra is quite simple: if you get the work in then profits will come. ‘It’s too easy to get drawn into thinking about tinkering with costs and losing sight of being completely committed to the top line,’ says Marino. ‘Bring in the best clients and the best work and the money will just follow.’
The founding partners are adamant that the quality of cases that the firm takes on will never be compromised. ‘If you handle a case poorly or you lose sight of quality then you’re toast in this business,’ confirms Twigden. He says that even from day one of Enyo, work has been declined as the founders felt it wasn’t of sufficient quality.
A mixture of continuing work from their Addleshaws days plus some high-profile work that has come through the door has kept everyone very busy. In addition to instructions against an investment bank and work for Berezovsky, high-profile matters include representing the claimant in North Shore Ventures v Anstead Holdings, a widely reported case that involves a quantum of $32m in which the defendants have sought permission to appeal to the Supreme Court. In another case, Green will be in the Commercial Court in October, representing the claimant group in Tech Investors v Roper, where 550 investors in 19 tax-advantaged technology schemes have launched a £50m claim that includes allegations of fraud, dishonest assistance and breaches of contract. It is likely to establish new law relating to LLPs, liability and duties and remedies under the Financial Services and Markets Act.
The firm is also representing a large group of independent financial advisers in the much-publicised Keydata case, which arose after the IFAs’ clients lost around £80m following the collapse of life settlement vehicle SLS Capital Management.
But while this work is making headlines, law firms will be crucial clients to Enyo going forward. In a bid to win more of this work, the founders took a novel step in appointing Matthew Denney as a non-fee-earning partner. Denney, who is not a lawyer and spent the best part of ten years in the recruitment market for Glass and later Stanford Resourcing – most of them focused on the litigation market – joined Enyo in February. He is expected to leverage off his extensive contacts in the business and knowledge of the litigation market to sell Enyo to the rest of the legal industry. Given Denney’s background, recruitment will also be a key remit. All of the lawyer partners at Enyo are fee-earners, and this arrangement gives Twigden, Marino and Green comfort that there is someone who is devoted to developing the business all day, every day. Described by one senior litigation partner in the City as an ‘enthusiastic and incredibly well-connected individual’, Denney says he has encountered no hostility from litigation heads around the City in dealing with a non-lawyer marketing a litigation practice.
‘I’ve been involved in the litigation market for five or six years and pretty much every time I’ve spoken to a partner the conflicts issue raises its ugly head,’ says Denney. ‘I’ve seen the opportunity for firms like Enyo in the market for years and it’s always been a model that I’ve wanted to get involved with. When this came up it was a complete no-brainer for me.’
‘I wanted someone to get the name Enyo and the brand recognition out there,’ says Twigden. ‘Matt’s background means he knows all the heads of litigation at the major UK and US firms and he knew a lot of people in his former life that use litigation lawyers. As we build into the future, he will help us with the recruitment side. It’s a different way of running the business to traditional law firm practice. He’s pushing the brand and bringing in work – it’s win-win.’
The mighty Quinn
But before Enyo takes too many plaudits for finding a gap in the market, it is worth noting that one high-profile practice has already been taking on substantial cases from conflicted larger litigation teams in the City. US firm Quinn Emanuel Urquhart & Sullivan, launched its litigation-only practice in the City in 2008. And, having handled high-stakes litigation such as UBS v HSH Nordbank, it could be argued that this boutique has not only stolen a march on Enyo but also provided some inspiration.
‘There is space in the legal market for a firm with the freedom to act in major business-critical disputes.’
Michael Green, Enyo Law
Twigden says he recalls partners from Quinn visiting Addleshaws with a clear message that they would do the UK firm’s conflict work. ‘We’ve watched with interest what they’ve done and they’ve been very impressive,’ he says. ‘We saw that they didn’t have to deal with the same sort of issues that we had and seemed to be enjoying themselves.’
Richard East, who was ironically placed by Matthew Denney when he left Kirkland & Ellis to launch Quinn’s London practice, says that he regards Enyo as ‘the first pure competitor in the sense that it is a litigation-only firm with partners coming out of a fairly major UK practice’. However, he suggests that for the moment Quinn has ‘bags more market recognition’ and that the transatlantic nature of the business means that his firm is uniquely equipped to handle major financial disputes that often involve UK and US law.
East also notes that his team is vastly experienced in hedge fund and insolvency-related disputes to the extent that it already has a very firm grip on that type of work. Twigden suggests that while Enyo will clearly target hedge fund clients and many of their cases have an insolvency element, and therefore overlap with Quinn’s expertise, the focus is on broader financial disputes.
One advantage that East says Enyo may have over Quinn is the ability to compete on price. Quinn is unapologetically expensive, charging rates comparable to the Magic Circle. But Twigden also says that Enyo will not be cheap. ‘If our rates aren’t Magic Circle, then they are as near as damn it,’ he says. ‘The quality of the work that we are targeting and the types of client we are receiving instructions from means that price is less of a factor if you’re providing the quality of advice that is business-critical.’
‘Quinn has the advantage of the US mothership which is an important source of work. They’ve also been at it longer than us,’ says Marino. ‘The advantage we have is that I think we’re even more nimble than they are and we’re not a potential turn-off to US firms that are looking to give conflict work to a safe pair of hands and will not tread on their toes – we’ve had that said to us by a number of US lawyers. It cuts both ways but frankly there’s enough work for everyone if you work hard enough.’
For East, the important thing is articulating well what it is you do. ‘This business is all about specialisation. It’s all about delivering a very simple message about what you’re good at and not confusing that message with anything that’s irrelevant. Our key point of differentiation for us from anyone else is our restructuring work and a real focus on finance litigation.’
‘In the litigation market, pretty much every time I’ve spoken to a partner the conflicts issue raises its ugly head.’
Matthew Denney, Enyo Law
Both firms are diplomatically phlegmatic about the presence of the other in the market, saying there is plenty of work to share around. But competition in the market is intensifying. Stewarts Law has established itself as a credible litigation outfit and receives conflict work even from Quinn. Barlow Lyde & Gilbert has also been noted as a strong player unfettered by banking relationships and a merger with Clyde & Co will enhance its litigation credentials. Twigden, Marino, Green and Denney are under no illusions that more groups of disenfranchised disputes partners will become keen to break free from the shackles of conflicts and set up their own boutiques. For Enyo Law, the goal is to quickly become the leading alternative for disputes work and the way to do that, Twigden says, is by taking on the leading cases and growing the practice to a critical mass of around 15 partners.
‘The feeling I get when coming into work is that if I work bloody hard I’m going to get work and that’s not a feeling that you necessarily have at a big firm,’ says Marino.
It’s a feeling that more frustrated partners might want a taste of. LB
mark.mcateer@legalease.co.uk