The life of Bryan

One year since he became Eversheds’ chief executive, Bryan Hughes is reshaping a business badly bruised by the downturn. Can he be the firm’s new messiah?

For a moment the persona slips. The studied slouch stiffens. The I’m-the-man-for-a-crisis composure loses its gloss a little. ‘We’ve got a fairly emotive brand for some reason; we do attract views,’ he sighs, getting worked up by the web commentariat or ‘the blogs’ as he calls them. ‘I don’t know if it’s a question of whether we’ve been too successful too quickly, or whether people see us as a threat, or whether we’re just big and therefore people want to put the boot in.’

Since Bryan Hughes took over from David Gray as Eversheds’ chief executive in May 2009, he has become accustomed to the pressures of one of UK law’s higher-profile jobs. Although he spent six years in senior management roles prior to taking over, first as chief operating officer and then, from 2006, as UK managing partner, he saw less of the spotlight. A numbers-obsessed, operations-focused manager, Hughes was the internal foil to his outward-facing boss.

Now he’s agitated by comments posted on the web that he’s taking the firm downmarket. Since a story appeared in Legal Week at the start of the year revealing that the firm was actively looking at options to outsource a range of work to its South African arm, Hughes and his colleagues have faced accusations of going after low-value, volume work that doesn’t befit a top-ten UK practice.

He shrugs his shoulders, admitting that any firm’s coverage in the media often goes in cycles. ‘With almost everything you do, whether it’s good or bad, you’re going to get a slating from some people in the sector,’ he says.

‘You have to put yourself in the position at the time. If we could have predicted when things would come back, we may have made the decision to be more generous than we were.’

The trouble is that Hughes is managing a delicate balancing act. The downturn hit the national practice hard. Eversheds laid off more than 700 lawyers and staff in four separate redundancy rounds, more than any of its rivals. It then attracted considerable opprobrium by paying the statutory minimum redundancy package to its leavers.

For a firm that has traditionally tried to portray itself as one of the market’s friendlier, more understanding employers, some of the sheen had come off the Eversheds brand. While trying to restore morale, Hughes is driving the business hard to restore profitability. Then there’s the outsourcing initiative, which, although he claims presents more opportunities than threats to the business, could easily end up taking jobs away from the firm’s UK heartland. Life in the Eversheds glare can be blinding.

Timing is everything

The 48-year-old Hughes is a glass-half-full kind of guy. With his timing, you would need to be. He was elected, unopposed, as chief executive in early September 2008, shortly before the collapse of Lehman Brothers spread panic in the world markets. Then, after he had formally taken over from David Gray the following May, he announced the firm’s bleak financial results. Turnover in 2008/09 had dropped 6% to just under £366m, while PEP had fallen 27% from £552,000 in 2007/08 to £404,000. Not quite as bad as the profit falls of national rivals Addleshaw Goddard and Pinsent Masons, but tough news to break nonetheless.

Where Eversheds did stand apart from many of its closest rivals was the depth of cuts it made to its workforce. In four separate redundancy rounds between August 2008 and September 2009 the firm made 735 lawyers and staff redundant. Although the firm won’t disclose the total number of lawyers that were laid off, it is clear that non-legal staff were the hardest hit. Between May 2009 and May 2010 total lawyer headcount fell by about 140. Painful decisions for any law firm manager to take, but Hughes looks at the downturn now in terms of the opportunities it presented. He had a chance to make the business more efficient – ramping up productivity levels, making better use of the firm’s national and international networks, and the lower cost bases they offer, and improving client service. And, by his own admission, it was an opportunity to lose some fat.

‘We’re leaner, we’re more productive and we have a better client base,’ Hughes says of the firm now. ‘So while it’s been a painful time, it’s given us a platform to reshape the business.’ There’s a distinct undercurrent of machismo with Hughes. His reputation is that of a tough manager; a leader very closely focused on driving the firm’s bottom line.

‘I think tough is overstating it,’ he insists. ‘I did have the historical reputation as a bit of a numbers man, and I think to be quite honest parts of the firm hadn’t been managed with any financial rigour. I brought a bit of that to it and some people might have thought I was tough, but I suspect there are other organisations and industries where I wouldn’t be seen as tough at all.’

On the subject of how the firm handled its redundancies, he is unyielding, refusing to admit to any regrets. ‘You have to put yourself in the position at the time,’ he asserts. ‘If we could have predicted when things would come back, we may have made the decision to be more generous than we were, but at the time I was faced with a set of trends that were declining and declining with no real sense of when they would come back.’

With the practice group and sector heads giving little indication of when their areas might recover and the firm facing a daunting fall in profitability, radical action was required. ‘We had to make sure we protected the business first and foremost, and while it was a difficult decision, we felt at the time it was the right one and we made it.’

The contrition he leaves to managing partner Lee Ranson, who admits to two regrets: first over the redundancy package the firm offered, ‘I wish we had been more generous,’ he says; and secondly over the four separate rounds of cuts. ‘Each time we did it we thought that’s the end of it,’ he says. ‘We looked at the business and asked what was going to be sustainable.’

However, like Hughes, Ranson likes to look for a silver lining. There’s a bigger picture to understand, he argues. ‘Our view is that the recession was one factor in a picture of change for the legal sector,’ he says, pointing to growing competition in the industry, the Legal Services Act opening the market to outside investment and outsourcing as obvious forces in the changing market.

The gospel according to Bryan

When it comes to outsourcing, Hughes was an early believer. In 2007, he oversaw the outsourcing of Eversheds’ IT function to Computacenter, in a deal worth £27m over five years. In September last year the firm took a further step in streamlining its back office functions, announcing that it was outsourcing basic document production work to South African company Exigent. It also sends some commodity work from its legal systems group to outsourcer Williams Lea in India.

Then, at the start of this year, it emerged that Eversheds was looking at options to outsource more low-level legal work to its South African arm – the former local practice Routledge Modise. Hughes says the firm is still assessing what kind of work and how much it can push out to its lower cost base offices. Parts of the firm’s volume work in its legal systems group is ripe, and he points to the examples of Rio Tinto and Microsoft in outsourcing some commercial contract work.

Given that he made his name in Eversheds heading a volume-driven practice in Cardiff, it’s not surprising that Hughes is acutely aware of the benefits of outsourcing. He clearly harbours considerable ambition for it. ‘We’re still at the concept stage on this, but, if we were able to, we could create an Eversheds-branded outsourcing operation that might be attractive to many people who actually wouldn’t use a less well-known brand,’ Hughes says. But an aggressive move into outsourcing brings them straight into competition with the emerging giants of the sector like CPA Global.

‘We could create an Eversheds-branded outsourcing operation that might be attractive to people who wouldn’t use a less well-known brand.’

Hughes insists though that in the current market firms have to push work out to lower costs bases to free the rest of their lawyers to focus on higher-value instructions. ‘Law firms need to understand how they can deliver legal services better and actually take out those parts of the process that can be done at a lower cost base,’ he comments. And, he points out, volume relationships with clients can lead to higher-value mandates. GMAC, for instance, began as a mortgage repossession client for Eversheds, while Abbey National (now Santander) and Legal & General were both clients of the recoveries business before using the firm for more profitable work.

‘We’re working with clients at the moment to help them determine what is strategic, what is core, what is business as usual and what is commodity,’ Hughes outlines.

Winning high-profile mandates from the likes of Tyco International and Boeing and making full use of its global account management system (GAMS), a tech platform that gives companies regular feedback on live matters, mean that Eversheds doesn’t struggle when it comes to proving its client service credentials. But for the highest-volume, most complex work, typically sourced in the City, Eversheds has a London office that has never quite punched its weight. With a turnover of £90m in the City in 2008/09, Eversheds is just inside the top 25 of largest practices in London according to the City 50 in last year’s LB100. Unspectacular returns for an office that numbers around 100 partners.

‘If you look back, we would have preferred to accelerate more [in London],’ Hughes says. ‘We had the strategic objectives, but we didn’t have the accountability to make sure we delivered on those objectives.’ As part of the firm’s current strategic plan, Ranson, alongside London senior partner Anthony Arter, has been charged with improving the performance of the office.

‘Law firms need to understand how they can deliver legal services better and at a lower cost.’

Reluctant to comment fully on which areas require strengthening, Hughes does point to project finance as one area that needs additional resource. Eversheds doesn’t have a track record of high-profile City laterals though. The firm’s prevailing trend for its high performers is to make it in the regions and then move to London, often in a management position – Hughes, Ranson, chairman John Heaps and head of international Stephen Hopkins all earned their stripes away from the firm’s City office.

The firm’s pay scale now gives Eversheds the scope to entice high performers, but it’s telling that on the 12-band scale the top three bands have still not been used.

‘Star partners won’t come for a pay cut, and therefore we have to make sure our packages for the senior players are competitive,’ Hughes says. ‘If you’re not competitive, people will go; it’s a very mobile sector.’ Clients like Boeing, DuPont, Smiths Group and Tyco International might have bought the Eversheds mantra, but in terms of London’s rainmakers, it’s fallen on deaf ears.

For someone who built their reputation on turning around and developing businesses, overseeing real progress in the City might prove to be Hughes’s toughest task yet. His roots were certainly far from London.

The road from recovery

After studying law at the University of Wales in Cardiff, Hughes qualified in 1986 at Phillips & Buck, the practice that would become Eversheds’ Cardiff office. Specialising in commercial litigation, he worked closely with partner John Moseley, targeting a mixture of personal injury, some professional negligence and a bit of insurance fraud work from a client base predominantly comprising insurance companies.

Making partner in 1992, Hughes transferred within the Cardiff office to head up the small, loss-making commercial recoveries business, a practice with a staff of around 15 and a turnover of a few hundred thousand pounds. The target client base was once again volume providers of work, but by now he had swapped the insurers for the banks.

Although he claims that he likes the law – ‘I like the rules and answering problems,’ he says – he soon learnt the lesson of the modern-day partner. Simply, that there are more profitable uses of your time than sitting at a desk drafting. ‘I worked out quite quickly that I could make a lot more money for the firm by not sitting there and doing it myself, but by bringing the work in and getting people to do it in the right way, at the right cost, structured correctly,’ he comments.

The small recoveries business now forms one of the bases for Eversheds’ legal systems group, the firm’s practice that is focused on high-volume, low-value work. While most partners at a large commercial firm would look down their nose at what is essentially highly commoditised advice, Hughes talks with obvious pride about the growth of the practice.

It was during this time, first as head of the recoveries group and then, from 2000, as managing partner of the Cardiff office, that he earned his reputation for a being a tough manager. His elevation to head of the office also brought him into contact with Gray, who, as head of the Leeds and Manchester offices, was also a member of the firm’s senior management team.

Hughes remembers seeing Gray in a meeting, ‘getting on his soapbox about some issue,’ and then describing him to colleagues in Cardiff as one of the most impressive people he’d seen in Eversheds. Gray’s election to chief executive, narrowly beating London head Michael Brown in late 2002, catapulted Hughes onto a much a bigger stage. During the election process he emerged as Gray’s running mate, bringing votes outside of Gray’s northern heartland, and after the vote was confirmed as chief operating officer.

‘I wear my heart on my sleeve, whereas Bryan is much more measured. You’re never quite sure where you are with him until you know him well,’ Gray comments. ‘The more I got to know him, the more impressed I was.’

‘I wear my heart on my sleeve, whereas Bryan is much more measured. You’re never quite sure where you are with him until you know him well.’
David Gray, Eversheds

Even before Hughes’s role changed to UK managing partner in 2006, it was obvious he was Gray’s chosen heir. After his own closely fought contest to become chief executive, Gray clearly wanted a smooth transition for his successor. ‘David saw a big part of his role in building a succession, and I picked up more and more of his role in the later years,’ Hughes confirms. When Gray announced that he would stand down at the end of his second three-year term, no one came forward to challenge Hughes for the job.

‘Over time, it became clear that he was a class act and it was going to be very hard for someone to stand against him,’ Gray remarks. Clearly mindful of his own closely fought election, Gray rebuffs the suggestion that the firm would have benefited from a contested vote to decide his successor. ‘I’m not sure that an election is the best way to pick someone to run a business,’ he says.

Hughes’s grip on the firm is such that it’s hard to see anyone challenging him when, in all likelihood, he stands for a second term in 2013. Gray, the respected dealmaker, took a firm still licking its wounds after a particularly divisive election and accelerated its development as a credible international practice. Hughes’s mandate from the partners is far clearer, but he still has to prove he has the deft leadership skills of his predecessor to restore morale and then articulate to the market exactly what Eversheds wants to be. Perhaps it’s time for him to enter the blogosphere. LB