General Pinochet, Nick Leeson and Ian Maxwell are all former clients.
More recently, Rebekah Brooks and UBS rogue trader Kweku Adoboli have called in Kingsley Napley for help. LB speaks to managing partner Linda Woolley about a firm where the clients make the front pages.
The reception area at Kingsley Napley’s offices in Clerkenwell very much reflects the character of the firm. It’s small, but big enough to serve its purpose. It lacks the ostentation of many City rivals but isn’t too Spartan either. In fact, it’s just about right. Kingsley Napley hasn’t gone for the wow factor, which is probably just as well. Unlike some of its larger City neighbours, many of the firm’s most high-profile clients won’t ever step foot inside its office.
This is a firm that advised the Chief Police Officers’ Staff Association (CPOSA) over the aftermath of the Raoul Moat shooting in Northumberland last year. It has represented property tycoon Vincent Tchenguiz following a raid by the Serious Fraud Office. It also acted for seven families of victims killed in the July 2005 London bombings at the inquest into the atrocities.
‘The Adoboli case is the most obvious example of what we’re all about because it’s linked to our previous history.’ – Linda Woolley
But this summer saw it feature in the mainstream press more than most law firms, first for being instructed to represent former News International chief executive Rebekah Brooks on the House of Commons Select Committee on Culture, Media and Sport and Levenson inquiries into phone-hacking allegations at the News of the World. Then in September it was called in to represent Kweku Adoboli, the 31 year old charged with unauthorised trading, which has cost his employers, Swiss banking group UBS, an estimated $2bn.
But despite the attention that two such high-profile matters have brought to the firm, including one day in July when there were news cameras chasing the Brooks story outside the firm’s office, to managing partner Linda Woolley it’s all water off a duck’s back.
‘It’s really in our normal sphere of activity,’ she says. ‘We’re used to having exciting and high-profile cases.’
‘Low key’ would make an ideal firm motto for Kingsley Napley.
Cutting Edge
Woolley admits the instruction to advise Brooks caused a rare ripple of excitement within the firm.
Brooks was arrested by appointment on Sunday 17 July after hearing that the police wanted to speak to her on the Friday. She was released on bail in the early hours of Monday 18 July, to return to the police station in late October. ‘The Brooks case, in particular, was very high profile and at the centre of the country’s news,’ Woolley recalls. ‘I think it came in on a Friday night and first thing on Monday morning there was a real buzz about the place that we were involved in the case.’
Head of criminal litigation Stephen Parkinson is heading up advice to Brooks on behalf of the firm. Woolley says that fellow criminal law firm Hickman & Rose, which is representing Newscorp, referred the work to Kingsley Napley. Parkinson, in particular, was chosen because of his experience of parliamentary inquiries from his time as deputy head of the Attorney General’s office between 1999 and 2003. The firm has refused to comment on fee arrangements for both Brooks and Adoboli, so it is unclear whether or not Brooks’ former employers are footing the bill.
As for Adoboli, Woolley says this instruction came directly from UBS. ‘What was gratifying for us was that the instruction came to the firm and it wasn’t simply a case of the client wanting Stephen Parkinson or Stephen Pollard [one of the firm’s other star names, who advised Nick Leeson] or any one particular partner. In fact, both Stephens were on sabbatical at the time.’
Criminal litigation partner Louise Hodges picked up the baton and has found it tough to get into Wandsworth Prison to see her client ever since, according to Woolley, who, as a criminal lawyer herself, knows that prison bureaucracy can make client visits very difficult indeed. The Swiss bank instructed the firm in the evening of Wednesday 14 September, and Adoboli was arrested a few hours later. He was charged on 15 September with fraud by abuse of position and two counts of false accounting.
‘I’m not saying those City firms aren’t doing a good job, it’s just that I think we could do it more economically and more expertly.’ – Linda Woolley
Woolley laughs at the suggestion that Kingsley Napley, which famously represented Nick Leeson in 1995, is now the ‘go-to’ firm for rogue traders. She points out that there wasn’t much domestic work on the Leeson case, that he was arrested in Frankfurt and taken back to Singapore to face charges. ‘We tried unsuccessfully to have him charged here,’ she recalls. ‘The irony is we have had a lot of press coverage for a non-domestic case where our arguments weren’t successful.’
However, when asked which matters really sum up what Kingsley Napley is all about, she says that the Adoboli case stands out. ‘Our work for the families of 7/7 victims is the kind of work that we’re proud to do on a human level,’ she says. ‘The Adoboli case is the most obvious example of what we’re all about because it’s linked to our previous history and we’re on the edge of the City, so we like to think we should get work coming out of the City.’
Leeson was perhaps the highest profile example of the scale of matters that Kingsley Napley has handled but the list is long and at times infamous. Both Parkinson and Pollard, who is generally regarded as one of the best lawyers in the country for advising individuals facing criminal charges from the Financial Services Authority, have illustrious track records in advising on headline cases but so does the rest of the team. Pollard acted for former British Airways commercial director Martin George on the Office of Fair Trading price-fixing case, where charges were eventually withdrawn. Hodges represented Sir Ken Morrison, the founder, chief executive and former chair of Wm Morrison supermarkets, on the investigation and subsequent fine by the FSA for failing to disclose shares worth hundreds of millions of pounds. Closer to home, Stephen Gentle advised former McDermott Will & Emery partner Michael McFall last year in successfully defending eight counts of insider dealing brought by the FSA. This was the first major trial in which defendants facing allegations of insider dealing brought by the FSA were acquitted.
Best Laid Plans
While the firm’s track record in acting for individuals in high-profile white-collar crime matters is unsurpassed, the firm does not compete with larger City firms in acting on criminal and regulatory compliance work for banks and large corporates. Woolley admits that ignorance of the firm’s potential to advise more corporate clients does irritate her at times.
‘We could do an internal investigation or a health check as well as anybody. I’m not saying those City firms aren’t doing a good job, it’s just that I think we could do it more economically and more expertly,’ she argues.
With this in mind, part of the firm’s 2011-14 business plan includes promoting the firm’s civil fraud and Bribery Act capabilities to in-house counsel, as well as targeting US law firms both in London and in the US that do not offer a full service.
‘We are not generally going to be instructed either by professional firms or large corporates to do their compliance work,’ she says. ‘We tend to get involved when there’s trouble, or the suggestion that there might be trouble. But we are well placed to advise when something has happened historically or recently that makes management fear that their infrastructure isn’t as solid as it should be and we can say how they can improve it. So we are looking at getting involved earlier in the life of the client.’
She points out that there’s enough work to go around for the firm to concentrate on representing individuals and smaller entrepreneurial companies, rather than trying to compete with the larger City firms.
Kingsley Napley is a firm that had a traditional reputation for mainstream criminal work but has a much broader practice mix today. The firm is 75 years’ old in 2012, and Woolley wants to cement its position as on the ‘edge of the City’. It is already rubbing shoulders with the legal elite. Now a LB100 firm, it posted revenues of £24.9m for 2010/11, up 14%, with profit per equity partner (PEP) at a healthy £430,000.
‘You have to want to be partner at Kingsley Napley rather than just a partner at any firm in London.’ – Linda Woolley
The firm is also far from being a one-trick pony. While criminal and regulatory combined make up the lion’s share of revenue, accounting for £10.3m between them, the practice areas are diverse and all contribute. The firm has grown steadily over the past five years, not feeling the effects of the recession and has grown considerably during those supposedly lean years. In 2008 the firm had a total staff headcount of 176. In 2011 that was up to 261, marking a 48% rise.
The firm has not been afraid to dip into the lateral hire market to add to existing resources. The most recent examples of that being international family law partner William Healing, who joined from Woodford Stauffer in August and family law partner Michael Rowlands who arrived from Cripps Harries Hall at the end of 2010. Other significant arrivals include Adam Chapman, formerly of the Treasury Solicitor’s Department and the Attorney General’s Office, who joined in 2010 to add weight to the firm’s public law and judicial review capabilities. On the private client side, Matthew Duncan joined the firm in March 2010 from Dawsons to head up the practice.
It’s pretty much a one-way street as well: there are no big-name partner departures to other firms in recent memory. ‘We haven’t had anyone leave us to join a rival,’ says Woolley. The average partner retention rate since 2008 is 82%.
Profit problems
However, the picture isn’t entirely rosy. The firm’s profit margin is just 17%; its profit per lawyer is a meagre £29,000 and ten of its 46 partners hold the equity – one of the most miserly equity shares in the LB100. Increasing profitability is one of the clearest challenges for the firm. Woolley says the financial targets for the firm going forward include reaching a turnover of £31.5m by 2014, hopefully propelling the firm into the top 70 firms in the country by turnover. This will be achieved in two ways: reducing the number of debtor days to 45, and improving recovery rates from 80% to 85%, which will add an extra £1.5m to the top line alone.
But the biggest challenge will be improving profitability while widening the equity. Woolley says the firm’s target for 2014 is a margin of 23.5%, which compares favourably with other firms in the London Midsizers peer group of the LB100. She also says she wants to keep PEP levels at around £400k to £425k, while at the same time opening up the equity to more partners. ‘We’ve already added three new equity partners this year and have told the partnership that we intend to add more during the period of our current business plan [up to 2014],’ she says.
While she is clear on what needs to be done, Woolley is less explicit about how profitability will improve, saying that there is potential for growth and increased efficiency within the current model, ‘so not by doing anything terribly radical’. She points out that a number of lateral hires made in the last few years are yet to reach full capacity but once they do, profitability will increase. She also adds that the firm’s finance director, Darren Jesse, joined the firm only relatively recently (June 2009) and has been working hard to push the firm’s margin up by the 6.5 percentage points it needs to reach target.
‘We tend to get involved when there’s trouble, or the suggestion that there might be trouble.’ – Linda Woolley
One other structural change that Woolley hopes will deliver better partner performance and improve profitability is an overhaul of the remuneration structure last year. Up until then, the firm operated a modified lockstep of 50 to 100 points, with a discretionary £100,000 performance-based bonus. Now, a four-person remuneration team (Woolley, senior partner Christopher Murray and two other partners chosen by the partnership) distributes one-third of profit on a meritocratic basis.
‘Partners have an appraisal with myself and Christopher Murray, then the appraisal outcomes document is shared with the members of the remuneration committee,’ she says. ‘That committee then has the power to recommend changes in lockstep points and merit-based pay. We circulate a note to all partners summarising the outcome of the appraisal and the reasons for our recommendations on profit allocation. It’s quite transparent.’
Reluctant Leader
While expecting all her partners to put in a high level of performance, Woolley also likes to lead by example. ‘I don’t particularly respect or admire people who have the opposite approach,’ she says. A criminal lawyer herself, she remains on the firm’s out-of-hours rota and has a target of spending one-fifth of her time on client work. She went over that target last year and billed around £200,000.
She refreshingly doesn’t profess herself to be one of those managing partners that was ‘born’ into the role. In fact she responds with a flat ‘no’ when asked if she’d always wanted to run the firm. She came into the law late, in her thirties, with an initial background in sales. As such, early in her career at Kingsley Napley, her maturity and experience meant her opinion was sought on a range of issues. She was even asked to help out with the business plan for the corporate department early on, which meant although she had not begun her career wanting to run the firm, she was unconsciously being groomed for the role.
‘It’s hard enough building up an ethos and a culture with people you’re bringing through and the odd lateral hire,’ – Linda Woolley
The opportunity came in 2004 when she became joint managing partner with Jane Keir (now head of the family team) and former head of property at the firm Keith Laws. She says it was necessary to have three people sharing the role at that time as ‘the firm hadn’t needed to be proactively managed up until then and it needed a concerted effort. None of us were very experienced.’
By the end of the three years, Woolley says that the firm wanted her to manage the business alone and the three co-managing partners had agreed that the process had become too cumbersome. She wrote down specifically what she would be able to do and how much money she would be able to spend without the approval of the partners. She is the only partner on the firm’s day-to-day management team that includes the various heads of finance, business development, IT, HR and the partnership secretary and general counsel David Smythe.
‘The reason that I’m the only partner on the management team is to make us more efficient,’ she says. ‘I have a strong mandate to run the firm.’
Going Solo
However, that mandate doesn’t include running around the City, touting the firm to would-be suitors. Woolley is also particularly refreshing on the most popular subject on law firm managers’ lips of late: consolidation and mergers. When asked if the firm would be interested in growing the top line via a merger, the answer is an unequivocal ‘no’, rather than the meaningless tripe trotted out by nearly every management figure that runs along the lines of ‘never say never’ and ‘we’re keeping our door open’.
‘I find it challenging enough to manage this firm with people I know,’ she says honestly, pointing out that Kingsley Napley would never be swallowed up by a larger firm and taking on a smaller firm would never be on the cards unless there was a very obvious reason for doing so. ‘If we brought anyone in it would be a small team, a small bolt on.’
She admits that the firm came as close to a merger as it was ever going to around two years ago. Kingsley Napley had merger discussions with a culturally well-matched firm with a similar practice mix, but she says they agreed not to name each other and so the identity of the suitor must remain a secret.
‘It’s hard enough building up an ethos and a culture with people you’re bringing through and the odd lateral hire,’ she says. ‘If you think culture is important, which I do, it’s very easy to lose.’
However, while she does concede that now is a good time for firms to have small corporate and property teams, Kingsley Napley’s property team needs to build on its existing work to get more mandates from entrepreneurial, owner-managed business and small property developers. With this in mind, a West End firm with a strong client base like that could be attractive.
‘The reason that I’m the only partner on the management team is to make us more efficient.’ – Linda Woolley
The other obvious missing component is a strong private client practice. This team only accounts for 3% of revenues and while the hire of Duncan last year was a move in the right direction, a sizeable team would seem a natural fit for the firm’s client base, which is mostly individuals and owner-managed businesses.
But Woolley says that adding firms, teams or individual partners is not straightforward. She is quite clear that anyone who joins the firm needs to fit in, and that means leaving self-importance at the door. While some form of hierarchy is necessary in every organisation, a partner talking down to other members of staff is not tolerated. Anyone used to treating their secretary like a serf will have to mend their ways.
‘You have to want to be partner at Kingsley Napley rather than just a partner at any firm in London,’ she says. ‘In so far as there’s a gap between those two, you will have to change. If it’s not working out then I will remind a partner of that.’
Woolley is clearly unafraid of having difficult conversations with other members of the firm.
‘I think the hardest thing about management is having difficult conversations. Sometimes people will leave as a result and hopefully people will change as a result but I hope my management style is fair.’
The firm is not desperate for big-name laterals or picking up disgruntled teams. It seems that Kingsley Napley is doing just fine on its own under Woolley. It is not following other firms of its size in putting out desperate signals for would-be big City sugar daddies. The main challenge for the next three years will be nudging up that profitability to meet its target. The firm is focused on the expansion of some practice areas, such as employment, private client and immigration. It also plans to leverage its criminal reputation in the City, taking advantage of opportunities under the Bribery Act, and promoting its civil fraud practice to existing and new clients. This is a firm on an upward trajectory, so expect to hear more from Kingsley Napley and not just because one its clients has made the front pages. LB
mark.mcateer@legalease.co.uk