Solid foundations but a struggle to build – Can BLP regain the confidence of its 2000s heyday?

Last year did not run smoothly for Berwin Leighton Paisner (BLP). Merger talks with Greenberg Traurig publicly fell apart amid some acrimony, while the City firm’s revenues dipped 2% in the 2015/16 year, making it one of the few Legal Business 100 players to see its top line slide.

Even before that, BLP had been through a factional election in 2015 which elevated employment specialist Lisa Mayhew as its new managing partner, while gripes over a disastrous run of partner hires on guaranteed pay deals several years previously have still not been forgotten.

For one of the most upwardly mobile and inventive law firms of the 2000s, it has been a painful shift to find BLP viewed as a brand with questions regarding its prospects rather than a stock to back. The 200-partner firm also now has to address the impact from the 2016 Brexit vote, with inevitable implications on its top-tier real estate business, while attempting to expand an international practice that lags many peers.

Mayhew is at least clear on BLP’s approach, focusing on its stripped down core industry sectors – real estate and infrastructure; financial institutions; energy and natural resources and private wealth – which clearly re-establishes property as the rock on which BLP builds its church.

The renewed sector focus has also been underpinned by an overdue push to tighten the firm’s operational rigour, improve internal communication and tentatively move towards a more performance-driven culture.

The good news, judged by interviews with more than a dozen current and former partners, is that the firm gets more credit than its somewhat battered image in the wider legal market would suggest… at least among those who can accept the idea of BLP once again being ruled by real estate.

It helps that Mayhew herself is regarded to have settled effectively into the job, having astutely judged the firm’s office politics.

‘Lisa is very clear, she knows what she wants and how to get there. She has been pretty bullish and that’s been very good for morale. Management style has shifted for the better,’ says tax head Elizabeth Bradley, expressing common sentiments. Even those with a downbeat view on BLP’s prospects concede that Mayhew has made a credible start. Says one former partner: ‘It’s been a decent first two years for Lisa. The strategy is clear and centred on the crown jewel: real estate.’

Mayhew’s focus on real estate and push for a more collaborative and less hierarchical partnership have also been well received within the partnership.

But establishing herself was not easy. Her election in February 2015 to replace long-time head Neville Eisenberg came after a bruising campaign against head of corporate David Collins, who was calling for BLP to heavily invest in its transactional business. The election opened divisions in the firm at a time when Eisenberg was viewed to have lost some of the sure handling he had demonstrated during BLP’s 2000s heyday. Real estate swung heavily behind Mayhew, reflecting the tense relationship between Collins and some of its leading property lawyers such as rainmaker Chris de Pury, while its disputes practice effectively aligned with the property team.

Recalls one former partner: ‘David had a lot of experience in management and that played against him as the firm wanted something new. Lisa was meant to be refreshing – she was on the board but not in management.’

‘Part of what defines us is our edginess, preparedness to take risks and do things differently.’
Lisa Mayhew, Berwin Leighton Paisner

On her appointment, Mayhew initially focused heavily on strategy and communication, welcome in a firm that had become driven by a handful of its older guard but also a difficult balance to strike while trying to be tougher on performance.

Six months into her role, Mayhew presented her practice, sector and enterprises strategy at a partners’ conference in Brighton. She describes it as one page outlining key goals for the firm and how these will be achieved.

‘It looks a bit like a dartboard,’ she says, noting how the sectors are at the centre of the strategy, with more layers of objectives as the circle gets bigger. ‘What mattered most to me is to make strategy clear, concrete and understandable to every person in BLP. It’s not something we just presented to a conference and then put in a drawer. It’s a management tool that we use every day. It’s the big objectives, but more sharply articulated than before.’

Mayhew says she wants the firm to become the world number one brand in real estate, while building a more balanced practice and growing the firm’s ‘enterprise businesses’ like Lawyers On Demand (LOD) and AdventBalance.

Asked about her style as a leader, Mayhew responds: ‘Ambitious, determined, open, inclusive and accessible – those are words that people have used about me which I recognise.’ If that assessment sounds self-regarding, it is largely borne out in background discussions with partners.

While the practised communication of an employment lawyer has been well deployed internally, it has been less consistent externally. Mayhew was at times wrong-footed in communication surrounding last year’s merger talks with Greenberg Traurig and is still prone to a defensive robotic approach when under pressure.

What Mayhew is credited with is delivering a distinctive strategy focused around clearly defined industries, an innovative and inventive approach and an emphasis on user-friendly service. Even the firm’s critics concede it is a distinctive game plan and one which BLP does a good job in making a reality.

 

‘A bit too benign’

If much in BLP’s playbook is without controversy, its attempt to drive individual performance gets more mixed feedback. Mayhew reflects: ‘We are seen as getting clearer and tougher in terms of performance. We have sharpened the way we do things and have more clarity around our direction.’

In the last year, according to Companies House records, BLP lost 20 partners across its network, including retirements. One partner suggests of those, just 10% were people they would have liked to have kept.

The firm also recently scaled back in intellectual property (IP), describing it as ‘not a central issue for clients’ and parted ways with nine of its lawyers in March, including practice head Simon Clark. The move reflects the challenges of building teams without obvious crossover with its much vaunted property team.

Mayhew concludes: ‘We will be constantly looking at performance and inevitably in any year there will be parts and people whose contribution is not up to scratch. A firm that has an aspiration of success has to be tougher and owes it to the others to be tougher on performance.’

Nevertheless, many concede the firm struggles to strike a balance as a practice that maintains considerable autonomy for its partners.

‘We are still too nice,’ says one veteran partner. ‘If you are underperforming here, you get spoken to first, a year later you may get taken down on equity, then a year later get paid out. It’s all a bit too benign, as we are right at that point where we are struggling with how you go to the next stage and keep that collegiate autonomy. It’s something all Silver Circle firms are struggling with.’

The 800-lawyer firm is currently finalising its 2016/17 finances and is hoping for a considerable improvement on last year’s figures amid expectations of 7% revenue growth. In truth, BLP’s hand will be considerably strengthened on a number of fronts if it can sustain a run of improved performance, having lagged many peers in the last five years.

 

‘Not at any cost’

A key aspect of its growth prospects will be expanding its international business, which currently generates 25% of its revenues. One of Mayhew’s first moves was to form an international management group of nine partners, including five regional managing partners, overseen by disputes veteran Graham Shear.

For one of the most upwardly mobile firms of the 2000s, it has been painful to find BLP viewed as a brand with questions regarding its prospects.

The firm can point to credible progress in Germany when it launched in 2011 with a well-regarded team from Linklaters. BLP’s Berlin and Frankfurt offices have gone from four to 35 lawyers since 2011, and the office bucked a soft firm-wide performance in 2015/16 to hike revenues from £5.3m to £9.1m according to its filed accounts.

Another key issue will be progress in Hong Kong, which currently has 40 lawyers. The practice has seen substantial investment in recent years, including absorbing two boutiques, five-lawyer asset finance boutique William KK Ho & Co in 2016 and the bulk of arbitration and construction specialist Haley & Co the previous year. The firm also has small branches in Singapore, China, Indonesia and Myanmar.

Surprisingly, the firm was late to extend its core real estate practice to its key Asia hub, only in May recruiting Mayer Brown’s head of Asia hospitality and leisure Andrew MacGeoch to launch a property practice. The firm says the delay was due to finding a local heavyweight and touts MacGeoch as a playmaker for its Asian business.

Progress in Asia leaves France as the most glaring weakness for the firm, with BLP intending to replicate its German growth with a quality broad service practice. The firm has been scouring the French capital for months, but concedes it is a challenge to find credible Parisian operators ready to make the move.

‘We have to be in Paris, but not at any cost,’ says Mayhew. ‘It’s like football teams, if you get a few quality players, they know other quality people, have quality clients – that first hire is very important.’

Real estate chief de Pury echoes the point: ‘The dilemma is that you want quality but quality in Paris is very expensive and it’s not any easier since Brexit.’

The one area in which BLP can claim to be ahead of peers is Russia, where the firm has since 2009 been heavily represented via its merger with Andrei Goltsblat’s corporate practice. The 117-lawyer practice, which focuses on international firms operating in Russia rather than domestic clients, is regarded as having performed well in a local legal market that has been battered by sanctions imposed on Russia by the US and EU in the wake of its military interventions in Ukraine in 2014. Still, some internally question the strategic value of the practice, arguing that too much profit is retained locally and that it has too little crossover with BLP’s mainstream practice.

The wider issue that was exposed by the Greenberg talks is BLP’s response to the US. Greenberg walked away from the mooted deal with BLP citing concerns over its excessive focus on real estate and lack of equivalent quality in transactional areas. In truth, while the US firm shared a focus on real estate, it was always a stretch to see how the thrusting and hard-driving Greenberg would combine with its laidback City suitor. One Greenberg partner notes: ‘We decided overall that it was too big a bet on real estate and some of the other practice areas weren’t strong enough. The worry we had was about the profitability of the overseas offices and the strength of the other practices.’

 

There is no doubt that real estate has the real clout in the firm, with highly influential partners like Chris de Pury (pictured). Indeed, some grumble that individualistic de Pury has too much sway in general.

 

 

Mayhew says that BLP will not attempt to build US law capacity under its own steam. The official message is that BLP is open to a US union without making it a core element of its strategy. Currently, BLP is, alongside Simmons & Simmons and Bird & Bird, a member of AdvanceLaw, the general counsel-founded network set up in 2010 to help clients find advisers across borders. The network has helped BLP handle new work for several marquee US names, including Nike and Google.

Nevertheless, the firm retains the credible alternative of building its practice in Europe and Asia under its own steam, with the option of securing an opportunistic US deal down the line. In truth, with sterling battered by last year’s Brexit vote, BLP would have considerably stronger odds of a high impact US deal once it has achieved material increases in its profitability.

 

‘We’re growing’

If the tightening grip of real estate on the firm is generally accepted, the other major success story is in disputes, which has expanded steadily over the last decade and, beside its unsurprising line in real estate and high-net disputes, has built a robust position in regulatory work and white-collar crime.

The practice underwent a strategic review by Sherwood Consulting and has appointed a chief operating officer, project management specialist David Keers, to oversee the group (echoing a similar move in property in 2014).

The firm now generates over a quarter of its revenues from litigation, a substantial increase over the last decade.

Head of disputes Nathan Willmott comments: ‘We are growing in a number of areas, including corporate crime. We want to grow the contentious practice internationally. We are currently strong in arbitration and infrastructure disputes, and the aim is to build those practices into broader commercial and financial disputes.

‘Litigation is very important within the firm and over the last ten years we have developed massively. The sort of work we’re doing is very high quality and we are routinely one of the most profitable.’

In transactional areas, progress is more mixed. During the 2000s the firm made much of its ambitions in this area, though its corporate practices remains small at 17% of revenue.

While influential co-head of corporate finance Benjamin Lee is cited as a standout partner, by consensus BLP’s deal practice is light of M&A heavyweights, particularly since the retirement this year of Keith Stella. Gareth Jones is, however, cited as a promising young partner.

Finance, which generates roughly 15% of revenue, has in recent years been a mixed bag for the firm, reflecting the challenge to develop financial institutions clients (though the firm does have solid connections with major clearing banks, particularly for real estate and construction-related work, see box). BLP has struggled to establish some mainstream disciplines, and in recent years has suffered major losses like restructuring veteran Ben Larkin to Jones Day in 2014 and in 2015 structured finance partners Paul Severs and Lucy Oddy, respectively to Paul Hastings and Latham & Watkins.

‘We are still too nice. If you are underperforming, you get spoken to first, a year later you may get taken down on equity, then a year later get paid out. It’s all a bit too benign.’

Conversely, the firm is far more bullish in areas that crossover with its property and industry strengths with substantial growth in asset and infrastructure finance.

Finance head Adam Dann notes: ‘Our asset finance business has been a massive success. In infrastructure we need more people to deliver the ambitions we have.’

BLP also has a distinctive tax business and a respectable private client practice, while the firm is about to branch out into handling high-end residential work targeted at £20m-plus properties, an unusual move for a City firm.

But there is no doubt that real estate as its largest and most profitable team has the real clout in the firm, with highly influential partners like de Pury, James Knox and Robert MacGregor. Indeed, some grumble that individualistic de Pury has too much sway in general.

Real estate continues to account for nearly a third of BLP’s revenues, and with marquee clients like Tesco, The Crown Estate, Land Securities and British Land the practice is ranked tier 1 on all commercial property categories in The Legal 500.

De Pury says that he is focused on three core aims for the practice: building up projects and infrastructure coverage; expanding its international business; and making more use of BLP’s New Law assets like LOD and its Manchester arm, which is used as a nearshoring support operation.

The latter point highlights an acknowledged strength for the firm. Earlier this year, a major research project from Legal Business‘ sister brand The Client Intelligence Unit based on 9,000 buyers of legal services found BLP among the four standout City players for adopting innovative working methods. In addition, LOD has grown to a £35m business with over 600 lawyers in eight offices and has just made a major move into Asia with the acquisition of Australia-based AdventBalance.

Manchester, meanwhile, which has reached 80 staff in over two years, is now the firm’s third largest office by headcount and will soon include two partners. Set up in part to service core UK client Tesco, the office is positioned as a hub for new ways of working, including more use of technology and non-lawyers.

Its managed legal service mandate with Thames Water is generally regarded as less successful, with the client this year putting the work up to tender. Still, it is understandable that Mayhew wants to make the most of the firm’s reputation for fresh thinking in its strategy, highlighting the aim to position BLP as a ‘game-changer’.

She adds: ‘Part of what defines us is our edginess, preparedness to take risks and do things differently, we’ve elevated that in the way we define ourselves and promote that spirit.’

The strong story on innovation is underpinned by very respectable feedback from clients for service and quality in general in the latest Client Intelligence Report, with BLP scoring above average rankings against the UK top 50 on all but two criteria. BLP’s strongest rankings came for innovation and value-added services (see box) while the firm averaged 8/10 from clients across all categories, against 7.64/10 for the UK top 50 as a whole.

The firm can certainly boast a distinctive brand, positioning and a clear and credible strategy and there is some indication that the partnership is galvanising after a turbulent few years.

Those are considerable assets but in the end it always comes back to the numbers. If BLP can regain the consistency in financial performance it demonstrated so impressively during the 2000s, it looks very strongly positioned. If it cannot, all the talk of vision and spirit will amount to naught.

georgiana.tudor@legalease.co.uk

alex.novarese@legalease.co.uk