Legal Business

Case study: Berwin Leighton Paisner

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Financial results 2016 Berwin Leighton Paisner
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Had merger talks earlier this year with Miami-based Global 100 firm, Greenberg Traurig, been successful, Berwin Leighton Paisner (BLP) would now be part of a £1.1bn firm and a £5m fall in revenue would look like a drop in the ocean. As it is, BLP’s strategy is under scrutiny again with its recent revival looking short-lived.

Revenue fell 2% at BLP in 2015/16 to £254m, while profit per equity partner (PEP) was more positive with 4% growth to £687,000. This is in sharp contrast to the rapid growth of the previous financial year, when revenue rose 5% to hit a record £259m and PEP surged 22% to £661,000.

Legal Business

The Brexit effect: BLP becomes the first City firm to freeze pay post EU referendum

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Brexit Berwin Leighton Paisner
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City firm Berwin Leighton Paisner (BLP) has become the first law firm to freeze pay for UK staff following the British referendum that saw the country vote to leave the European Union.

The move will impact all UK-based staff, apart from partners who take a share of the profits, with pay reviews postponed from 1 July 2016 to 1 November 2016 following the Brexit vote. Staff were notified of the decision by email on Tuesday (5 July).

The pay freeze follows a slump in revenue at BLP last year, with income falling 2% to £254m in 2015/16. While some firms were caught off guard by the Brexit vote, with the Magic Circle and a host of US firms ramping up London salaries in the weeks leading up the vote, BLP labelled the pay freeze on associates, paralegals, business development, marketing and other back-office staff as the ‘prudent thing to do’.

It does, however, mean that BLP is now off the pace in the City salary stakes. The move means that associate pay will remain at the same levels that were set in July 2015, with newly-qualified lawyers paid £66,000 a year.

The firm said in a statement: ‘BLP has deferred its salary review process for UK-based staff for a period of four months from 1 July to 1 November 2016. BLP’s normal salary review date is 1 July. However, following market uncertainties arising out of the recent EU Referendum vote, BLP has decided that the responsible and prudent thing to do is to defer making UK salary decisions for a further four months. Employees who have been promoted will still receive related salary raises and bonuses referable to the prior financial year will also be paid.’

‘Successfully meeting and anticipating our clients’ needs at this time remains the critical focus for BLP and the thing that will ensure our successful future.’

tom.moore@legalease.co.uk

Legal Business

In reverse: BLP the latest UK firm to report falling revenue as turnover drops 2% to £254m

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Financial results 2015/16 Berwin Leighton Paisner
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After something of a revival in 2014/15, Berwin Leighton Paisner (BLP) went into reverse last year as revenue dropped 2% to £254m.

Revenue fell by £5.2m in 2015/16 as the chasing pack of City firms behind the Magic Circle suffered a slowdown. However, profit per equity partner (PEP) withheld the fall in revenue to hit £687,000. This is a 4% increase on 2014/15, when PEP stood at £661,000, and equates to a £26,000 increase in take home pay per partner.

BLP managing partner Lisa Mayhew told Legal Business: ‘We’re happy. It’s our second highest PEP achievement ever and to end the second year in a row with cash in the bank was particularly pleasing. We would rather that was different but in the environment we were operating in, and with the investments we’ve made, we were pretty pleased with revenue as well.’

Mayhew (pictured) added that costs associated with the merger between freelance lawyer service LOD, which it majority owns, and Australasian counterpart AdventBalance ‘run into the millions of pounds’ so made the rise in profitability ‘even more pleasing’.

BLP, which came close to merging with Miami legal giant Greenberg Traurig earlier this year in a deal that would have made BLP part of a £1bn firm, was impacted by the slowdown in the corporate and banking work in London at the end of 2015. Mayhew said that these practices ‘not being at their most buoyant had an impact’ and argued that the merger talks had not played a part in the firm’s poor performance. ‘I have thought about that but even though there were a large number of partners that were involved in the latter stage of that discussion, I still don’t think it had an impact on revenue or caused a major distraction as for a long while we were tight on the number of people that were involved in the conversation until the end. And from when we announced it, until we announced it was off [in March], it was only a few short, sharp weeks.’

In terms of green shoots, Mayhew said that real estate ‘had a cracking year’ and experienced strong growth in London and Germany, where the group ‘beat its budget by a material margin’.

tom.moore@legalease.co.uk

Legal Business

Asia wrap: MoFo hires Magic Circle trio and Nabarro takes key Gadens partner, as BLP makes office move to support growth in Hong Kong

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Asia Berwin Leighton PaisnerCMS UKMorrison & Foerster
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This week in Asia, Morrison & Foerster (MoFo) added a trio of partners from three Magic Circle firms, as Nabarro has also strengthened its transactional practice in Singapore with the hire of former Gadens managing partner Marc Rathbone. Meanwhile, Berwin Leighton Paisner (BLP) will move its premises in Hong Kong out of the Central District to Taikoo Place to allow for further growth.

In Hong Kong, Chuan Sun and Vivian Yiu have joined MoFo from Freshfields Bruckhaus Deringer and Allen & Overy respectively, while in Singapore, Yemi Tépé has joined the firm from Clifford Chance.

MoFo managing partner Eric Piesner said the hires illustrate the firm’s continued investment in Asia following the recent arrivals of partners Jason Nelms in Hong Kong and Joshua Isenberg in Tokyo. Sun joins MoFo’s technology transactions group, while Yiu brings significant experience in Hong Kong capital markets and Chinese-focused M&A matters to the firm’s corporate department. Tépé, who advised leading banks and financial institutions, major corporates and private equity sponsors, joins the firm’s financial transactions group.

In addition, Nabarro has also hired in Asia, strengthening its transactional practice in Singapore with the addition of Rathbone who specialises in infrastructure, construction and energy projects. Rathbone joins the firm from Gadens, where he founded the firm’s Singapore office in 2013 and was previously its managing partner.

Finally, BLP will relocate its premises in Hong Kong after signing a six year lease for 15,000 sq ft in Taikoo Place. The firm currently leases 9,500 sq ft in Central District, housing 40 staff, and said the new office can accommodate approximately 100 people and will enable further growth of the firm’s team.

BLP head of Asia Bob Charlton said: ‘Our move into the built environment centre of Hong Kong is an exciting development in the legal services market. A move to modern open plan working, already enjoyed by many of our colleagues in our London office, and by our investment in IT improvements, and smarter co-location of our teams, will also result in better communication and collaboration for our multidisciplinary teams on more complex matters for our high quality clients.’

kathryn.mccann@legalease.co.uk

Legal Business

Comment: The tiger that came to eat BLP’s culture for breakfast and other sorry tales

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Comment Berwin Leighton PaisnerGreenberg Traurig
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These are tough times for another house that Stanley Berwin built, with exhibit B being the acrimonious end of merger talks between Berwin Leighton Paisner (BLP) and Greenberg Traurig. While the practice fit between the two looked both convincing and distinctive, these were two firms with plenty of strong characters.

Summing up the prospect of the proposed deal recently, Legal Business noted that proceeding with a union would be holding ‘the proverbial tiger by the tail’. So it quickly proved, as on 16 March the pair officially called time on the discussions amid some discontent from the US firm, which was unhappy at the messages being put out by BLP at the end of the talks.

It was the US firm that walked away, in part because it saw the merger as too heavily weighted towards real estate, but there was a more personal breakdown in chemistry as well. This dynamic was amplified in a 538-word statement issued by Greenberg’s executive chair Richard Rosenbaum, which aside from noting that ‘culture eats strategy for breakfast’ drowned its former suitor in faint praise beyond some warm words for BLP’s real estate team.

The US firm subsequently indicated it was generally unimpressed with BLP’s management and handling of the talks. It was a substantial break from the well-established protocols for bland post-talks flannel law firms usually adhere to. But given the iconoclastic, thrusting style for which Greenberg is well known, such an outcome was hardly a shock.

The bigger issue for BLP is where to go from here. Not because merger talks with one suitor went nowhere – that’s just business – but because the firm has committed itself to a real estate-heavy strategy that looks very hard to execute without a US merger and because BLP is still an institution uncomfortable in its skin.

What was once one of the most assured mid-tier players in the City – indeed, through the 2000s BLP was one of the most influential law firms outside the Magic Circle – has been beset by conflicting views and factions since its troubled 2012/13 year. The use of guaranteed pay deals for lateral hires has now taken on a symbolic weight beyond all proportion to its historic use at the firm for those who see the tactic as evidence of an ‘us and them’ culture.

While financial performance has more than stabilised in the last two years, it’s not apparent that has been enough to heal its divisions or how credible it is to regroup around real estate once again after more than a decade of talking up its transactional business.

BLP has a lot going for it still but so do many other major UK law firms that have spent the last ten years drifting unhappily. BLP made its reputation by standing out during the 2000s against a backdrop of underwhelming City peers.

It is now competing against a range of mid-pack players that are some of the strongest performers in the UK. It will need to find a message to galvanise the whole firm.

alex.novarese@legalease.co.uk

Legal Business

The tiger that came to eat BLP’s culture for breakfast and other sorry tales

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Comment Berwin Leighton Paisner
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These are tough times for another house that Stanley Berwin built, with exhibit B being the acrimonious end of merger talks between Berwin Leighton Paisner (BLP) and Greenberg Traurig. While the practice fit between the two looked both convincing and distinctive, these were two firms with plenty of strong characters. Summing up the prospect of the proposed deal recently, Legal Business noted that proceeding with a union would be holding ‘the proverbial tiger by the tail’. So it quickly proved, as on 16 March the pair officially called time on the discussions amid some discontent from the US firm, which was unhappy at the messages being put out by BLP at the end of the talks.

Legal Business

Leadership, strategy and culture: behind the failed merger discussions between BLP and Greenberg

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Leadership Berwin Leighton Paisner
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Following the fallout of failed merger talks between Berwin Leighton Paisner (BLP) and Greenberg Traurig, it has emerged the UK firm’s leadership was an issue for the Miami giant.

The merger had promised to create a property and disputes giant across the Atlantic and one of the most distinctive law firms in the global market but was called off in March.

Legal Business

‘Not enough common ground’ – BLP and Greenberg call off transatlantic merger bid

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Legal mergers Berwin Leighton PaisnerGreenberg Traurig
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It promised to create a property and disputes giant across the Atlantic and one of the most distinctive law firms in the global market but in the end the mooted union between Berwin Leighton Paisner (BLP) and Greenberg Traurig has been called off.

The talks, which the pair confirmed in February, had enjoyed substantial support in BLP’s muscular real estate practice and had been cited as a means of the City firm achieving its strategy of being the world’s leading property and infrastructure adviser.

BLP managing partner Lisa Mayhew confirmed to Legal Business on Wednesday (16 March) that the merger discussions had ended. Mayhew (pictured) commented: ‘There was no one single thing. There was enough there to warrant proper consideration but in the final analysis there just wasn’t enough common ground to progress the conversation further.’

A deal would have created a firm with 2,700 lawyers and revenues of over a £1bn. Both firms had already made it clear that a deal would have involved full financial integration, which would have led to challenges over unifying their accounting and compensation systems.

There is a gap in profitability between the two firms. PEP at Greenberg stood at $1.424m in 2014, against £661,000 ($1.090m) for the UK firm’s 2014-15 year.

However, Mayhew said that the challenge of putting together Greenberg’s more individualistic partner pay model with BLP’s modified lockstep was not the deal-breaker, adding: ‘There wasn’t one single killer issue.’

However, Greenberg has said that it ultimately walked away from a merger because of its belief that ‘culture eats strategy for lunch’ and its ‘conservative approach to financial risk’.

In a statement, executive chairman Richard Rosenbaum said: ‘Greenberg Traurig is a substantially larger and more diversified firm than BLP. We therefore maintain much broader practice priorities. The core real estate practice which first attracted us is indeed impressive, as are other BLP practices, and we have a great deal of respect for the firm as a whole. Real estate is, of course, a core practice and one of our strongest brands, along with litigation and corporate (M&A, private equity, capital markets, finance), which are our largest areas… For Greenberg Traurig, it was quite exciting to enhance our practices, but not at the risk of materially diluting our cultural, financial and other priorities. This is what our diligence has been all about.’

‘After spending a substantial amount of personal time on this opportunity, visiting nearly every location and meeting so many fine BLP partners, I must admit to some regret in this decision.  But in the final analysis, we are a business. However exciting, we do not grow for growth’s sake and we do not ‘fall in love’ with a story or act on emotion; we run a disciplined operation, and will continue to run it and achieve our stated goals for the benefit of the many families who are dependent on us every day.  We have added many shareholders, practices and offices in the last months and years and must intensely focus on integration and execution, including our continued build-out of a first class London office of an appropriate size in today’s world and the number one global real estate practice.’

The end of the talks leave the thorny strategic issue for BLP of whether to pursue another substantive tie-up in the US as some partners believe the UK law firm should do. Mayhew said BLP retains an open mind on the point but was committed to its ambitious strategy.

alex.novarese@legalease.co.uk

For further comment on the pitfalls hampering merger discussions between BLP and Greenberg Traurig, see Merging BLP and Greenberg Traurig – unique, compelling, bloody difficult

Legal Business

Magic Circle trainee retention: Clifford Chance, Allen & Overy and Linklaters post lower rates

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Trainee retention Allen & OveryBerwin Leighton PaisnerClifford ChanceLinklaters
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Clifford Chance has retained 80% of its March trainees, with 43 out of a cohort of 54 accepting positions at the Magic Circle firm. The rate comes as rivals Allen & Overy and Linklaters also posted lower retention rates than the year prior.

The figures for Clifford Chance are worse than the firm’s spring 2015 retention rate of 91% when 41 offers made to a 45-strong cohort were accepted. The rate is also the worst of the Magic Circle this spring so far, after all bar Freshfields Bruckhaus Deringer have released their rates.

At Allen & Overy, 39 of the firm’s 43 trainee intake have accepted roles – a retention rate of 91%. All offers that were made to trainees by the firm were accepted. This is also lower than the spring before when 43 of 46 or 93% were kept on.

With 45 of 49 offers accepted, Linklaters secured an 83% retention rate of its March trainees, after keeping on 91% of a larger 54-strong cohort in February last year.

Meanwhile back in January this year, Slaughter and May posted a retention rate of 95%, when 38 of the firm’s 40 qualifying trainees accepted newly-qualified positions. The intake was an improvement on Slaughter and May’s autumn 2015 figure of 33 of 37 trainees, and ahead of its 2015 spring intake when 88% of a 42 strong cohort accepted offers.

Elsewhere, Berwin Leighton Paisner has posted a 70% retention rate for March. With a markedly smaller trainee cohort of 20, 14 of the 16 positions that the firm offered were accepted. The new trainee intake will be spread across the firm’s finance, real estate, corporate, litigation and corporate risk practices.

Our sister website The Lex 100 has created a retention rate table which will be updated as more figures are announced.

madeleline.farman@legalease.co.uk 

Legal Business

BLP promotes 82% of its global round in London in property-focused promotions round

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Partnership promotions Berwin Leighton Paisner
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Berwin Leighton Paisner (BLP) has made 17 partner promotions worldwide, in a bumper round more than three times last year’s round of five. Of these 17, 82% were promoted in London and six in the firm’s real estate practice.

BLP, which is currently in merger talks with Greenberg Taurig, promoted 14 of 17 in London, while outside the City two partners were made up in Moscow and one in Singapore.

The firm’s real estate practice saw the most promotions, with six promotions all in the City; Adriano Amorese, Sarah Fitzpatrick, Liana Hewson, Ruth Miller, Matthew Peel and Laura Wild. Real estate is a big driver of the firm’s potential merger as property practices are core to both firms, with real estate contributing around 30% of BLP’s revenue, and Greenberg employing more than 300 property lawyers globally.

In the City office, from the corporate practice Gareth Jones and Kieran Saunders were made up, while one finance lawyer Peter Knust was made partner. Others promoted in the London office include litigators James Clarke, Polly James and Andrew Tuson and tax practitioners Matthew Poole and Paul Shaw.

BLP managing partner Lisa Mayhew (pictured) said: ‘It is a credit to BLP’s quality and culture that we are in a position where we can promote a large successful group of fine lawyers and people. Our new partners have demonstrated exemplary client development skills and the ability to grow their practices and we hope that they will now take an increasingly active role in the development of our firm and become our future leaders.’

Other firms to release their partner promotions this week include Freshfields Bruckhaus Deringer which has announced 16 lawyers will make the cut to partnership this year, one less than last year when 17 were promoted. Meanwhile, Squire Patton Boggs promoted seven in the City in its latest global partnership round of 30, where it has made up the same number of partners across the world as it did last year.

victoria.young@legalease.co.uk 

Read more about the merger in the comment piece: ‘BLP and Greenberg Traurig – unique, compelling, bloody difficult.’

The full list of partner promotions is as follows: 

Gareth Jones, London, corporate

Anton Panchenkov, Moscow, corporate

Kieran Saunders, London, corporate

Peter Knust, London, finance

Simons Spells, Singapore, finance

James Clarke, London, litigation and corporate risk

Polly James, London, litigation and corporate risk

Andrew Tuson, London, litigation and corporate risk

Ivan Veselov, Moscow, litigation and corporate risk

Adriano Amorese, London, real estate

Sarah Fitzpatrick, London, real estate

Liana Hewson, London, real estate

Ruth Miller, London, real estate

Matthew Peel, London, real estate

Laura Wild, London, real estate

Matthew Poole, London, tax

Paul Shaw, London, tax