The ascent of Norton Rose up the global league has been swift in recent years, with the City-based law firm currently in 14th place in the Global 100, with turnover marginally up to $1.33bn. Profits per equity partner (PEP) were $887,000.
This growth came due to the dramatic expansion of the Norton Rose Group with the addition of Australian mid-tier Deacons in 2010 and subsequent takeovers in Canada (Ogilvy Renault and Macleod Dixon) and South Africa (Deneys Reitz).
The Australian and South African practices have been strong performers over 2012, with Norton Rose’s ground-breaking deal with Deacons increasingly credited with sparking a wave of international law firms to move into the G20 country. In contrast, Norton Rose’s Canadian practice has had to contend with integration issues between its two legacy firms during 2012.
It could be argued that the reinvention of Norton Rose has created a new strategy for global law. Norton Rose deploys a ‘hub and spokes’ model in which a core firm, brand and management team can rapidly bolt on smaller law firms that still operate financially separate partnerships.
While some rivals still question the long-term viability of the model, it is generally agreed that this pioneering approach has been instrumental in recasting a once-ailing City player as one of the most upwardly-mobile international advisers of recent years.
This strategy moved to its logical conclusion when it emerged in November 2012 that Norton Rose had secured a deal with the Houston-based Fulbright & Jaworski, which itself last year placed 55th in Legal Business’s Global 100 table with a turnover of $597.4m and PEP of $765,000.
Research from The Legal 500 underlines the expansion of the firm’s practice. In 2009 Norton Rose and Fulbright were ranked in 190 areas globally combined – a figure that rises to 253 in 2012 data.
The union makes Norton Rose one of a handful of practices to have secured a sizeable practice in the US. Fulbright is well regarded in the US – particularly for contentious energy work – though it has suffered financially in recent years and is widely perceived to have lost ground against larger Texan rivals. It is notable that Fulbright receives only one top-tier ranking in the US edition of The Legal 500, for energy litigation.
The newly merged firm, which, as with Norton Rose’s earlier mergers, has come together by means of a Swiss verein umbrella structure, went live on 3 June 2013, creating a practice of over 3,500 lawyers, including more than 1,200 partners.
Fulbright’s turnover has continued to slide by 2% to $585.5m, which would give the two firms a combined revenue of just under $2bn. In revenue terms this will next year put Norton Rose Fulbright comfortably in the top ten and well ahead of Hogan Lovells or Allen & Overy.
In comparison, Norton Rose ranked just 56th globally in revenue terms back in 2008 with income of $596.3m – at the time ten places behind Fulbright, which then generated income of $649.5m.
Peter Martyr, the firm’s global chief executive, has described Norton Rose’s profitability over the past year as ‘satisfactory’. The Swiss verein structure means revenue will be pooled and profits remain separate but it is expected that the combined firm will attempt to improve profitability, which lags behind most Global 100 peers.
Although the deal had had minimal fallout as Legal Business went to press, it emerged that at least part of an eight-partner Dubai branch of Fulbright was in talks to move to another firm rather than integrate with Norton Rose’s local office.
The unified firm will be strong in energy and litigation and has built a substantial industry focus in areas like insurance and financial services. Martyr comments: ‘One thing we’re really going to major on is regulatory. If you have a global business, as we have, you are in pole position to develop a multi-jurisdiction regulatory practice.’
With the full management line-up announced in June – the executive committee will include London partner Martin Scott as global head of corporate, Manhattan partner Linda Addison as head of dispute resolution and head of banking Jeremy Edwards continuing in that role – the firm can now focus on the hard task of bedding down the merger.
Martyr argues that the key challenge will be to forge common standards and culture across the firm, rather than focus on financial integration, commenting: ‘Nobody questions the big four accountancy firms and you wouldn’t say they had different businesses or don’t operate on the same standards.’
This latest stage will also usher in a new style of management. Since Martyr was given a mandate to bolt on new businesses three years ago, he has been accused of being autocratic.
Reports that some partners found out about mergers almost on the day they were happening are exaggerated, but nonetheless Martyr concedes that the firm is now entering a more consensual chapter.
But further bolt-ons are not entirely off the agenda. Jurisdictions to watch include Latin America, where the firm has offices in Venezuela and Colombia courtesy of its merger with Macleod Dixon. The firm is also looking to launch in South Korea, but Martyr says there is ‘nothing major’ to add to its network.
Commenting on the difficulties of integrating the rapidly assembled global giant, Martyr concludes: ‘The main thing is the challenge of running a multi-speed business in which some parts of it have been doing this longer and are moving at a different speed.’