Pinsents has delivered operational competence at the expense of flair and visibility. Kathryn McCann asks if a more outward-facing leadership team can energise a low-profile thoroughbred.
‘If you were to ask: “What’s Pinsents’ vision and where is it ultimately going?”, I’m not sure you will get a consistent answer. I myself would struggle to answer it.’
Co-publishing feature
What if ‘best practice’ is wrong?
– George Bull, Baker Tilly
This comment, from the UK managing partner of a rival international law firm, suggests a common view: Pinsent Masons has been flying under the radar for far too long. And, as evidenced by its 2014 contested leadership elections – the first at the firm since 1998 – resulting in new managing and senior partners, it would seem that the partnership felt much the same way. After having the same management combination of David Ryan and Chris Mullen for almost a decade, the top 20 outfit is hungry to embrace change.
The firm is certainly historically comfortable with transformation. Today’s Pinsent Masons was formed through a series of mergers over the last two decades, most notably the union of national player Pinsent Curtis and construction and projects specialist Masons in 2004, and its most recent tie-up with top-four Scottish player McGrigors in May 2012.
After experiencing some growing pains, the firm is structured along the lines of its four chosen global sector groups: infrastructure; financial services; energy and natural resources; and advanced manufacturing and technology. With approximately 400 partners and 2,500 staff based in offices throughout Europe, Asia and the Middle East, the firm consistently holds the top spot in the AIM Corporate Adviser rankings, while coming second only to Slaughter and May for its total number of stock market clients (which includes secondary market clients).
Pinsents has also proved successful in procuring sole adviser mandates, signing an exclusive deal with multinational infrastructure group Balfour Beatty in April 2013, followed by energy supplier E.ON later in the year. And this success looks set to continue, with the firm recently winning a new mandate as sole legal adviser to Unite Pension Scheme, an £800m scheme for the largest union in the UK.
While some of this can be chalked up to generic City sniping, a new leadership team of senior partner Richard Foley and incoming managing partner John Cleland have work to do to project brand Pinsents. With a renewed strategy built around the three key pillars of innovation, internationalisation and a defined sector focus, the most significant test Foley and Cleland will face will be how the firm continues to differentiate itself with general counsel. There will also be pressure to improve financial performance, which has been solid but nothing more since 2008.
Renewed vigour
Although still early days, consensus both internally and externally on the impact of the change in management at Pinsents is positive. According to Laura Cameron, head of the firm’s regulatory group and partner of legacy firm McGrigors, Foley has been well received as the new senior partner since beating incumbent Chris Mullen last summer.
The hope is that the more charismatic and upbeat leader can bring an outward focus to a firm that in recent years delivered operational competence in hard times but hardly pushed its plc potential and proud history of Pinsents to its limits.
‘He’s brought a real sense of purpose about the firm,’ she says. ‘That’s not to take away from what David [Ryan] and Chris [Mullen] managed to achieve – they did a fantastic job navigating the firm through some of the toughest economic times this country has ever faced. But it is exciting having Richard at the helm because he is all about innovation; he’s all about people. He really wants to take the firm to new places and you get a sense of that in the business just now. It’s exciting times.’
Foley’s background certainly casts him in the senior partner mould. After joining legacy Masons as a two-year PQE from a small Bristol practice (Richard Welsh & Co) in the late 1990s, he specialised in construction ‘because it was likely to be people facing’, and rose through the ranks before moving to head up the firm’s Asia practice in Hong Kong. Mentored by the likes of John Bishop – current head of the firm’s Beijing branch, experienced construction lawyer Mark Collingwood, and the late Tony Bunch, one of Pinsent Masons’ longest-serving partners, Foley has had strong support and influence on his way up. It was Bunch who first suggested a move to Hong Kong.
Foley, who took over the senior partner role on 1 October 2014, cut his teeth heading up the firm’s trophy projects and construction practices. He also led the launch of the firm’s energy sector group. ‘To be developing and pushing that was something that was new for him and outside of his existing comfort zone,’ recollects board member and head of client strategy, Alastair Morrison.
Foley has already re-defined the somewhat blurred roles of managing partner and senior partner at Pinsents in recent months, which have come under particular criticism in the past.
‘It was an interesting dynamic which I could never really understand at Pinsent Masons,’ says one former partner. ‘At other firms you have a senior partner that is more ambassadorial, more about general strategy, reaching out and being a figurehead of the firm, while the managing partner is responsible for the detailed, day-to-day, strategy implementation. With Chris and David it was effectively like having two managing partners.’
There is now renewed emphasis on the difference between those in the leadership team. Foley’s role is primarily concerned with spending time understanding the needs of clients, with a focus on being the external face of Pinsent Masons and a responsibility for the direction of the business. When Cleland takes up the role of managing partner on 1 May, he will assume responsibility for the operational delivery of the business, its internal nuts and bolts – a dynamic more common at top-25 UK firms. Cleland was elected in December 2014 ahead of property head Adrian Barlow and client operations head Richard Masters, after Ryan announced he would be stepping down from the role after a 16-year tenure.
‘John’s role will be much more focused around the efficient and profitable management of the operations of our law firm,’ says Foley. ‘That’s where people will see something different to what we had before. And to be honest, a large part of that is because we are now in a different market.’
AUSTRALIAN AMBITIONS: PINSENTS’ SLOW MOVE EAST
With a refreshed strategy citing ‘internationalisation’ as one of its three pillars, as well as the appointment of David Rennick, previously a chief executive of Australian firm Maddocks, as a strategic consultant in Australia, expansion into new markets is clearly an ambition for Pinsent Masons. However the firm, which has had a presence in Asia for more than 30 years, has been criticised for playing it safe with recent office openings in Munich, Paris and Istanbul, and some believe the firm has left it too late as far as Australia is concerned.
‘My view on Australia is that it has rather missed that boat,’ says one managing partner. ‘The people that were going to move into that space have done it and the larger local firms that are left want to be independent. It is a very competitive, over-lawyered market.’
Others argue that the firm’s interest in Australia, as opposed to new markets in Europe or a move into the US, is further proof of an over-reliance on construction and projects. ‘Pinsents is very construction focused, so will be looking at Singapore, the Middle East, Australia – the hot places for construction work,’ says one ex-partner. ‘They don’t have that significant presence in Europe and they don’t have that desire to go into the US and that is where the corporate work lies. If you look at DLA Piper and Eversheds for example, it’s all about Europe and the US.’
Insiders insist, however, that the firm’s international strategy is not about sticking flags on maps, but is built around sectors and core service lines instead of being geographically structured. ‘The market is not purchasing legal services on geographical lines,’ insists head of client strategy, Alastair Morrison. ‘If you get the talent right and you get the best quality lawyers who are prepared to go wherever the project is, then it will work. We have David Rennick in Australia who the board have asked to analyse the Australian market. In the first quarter of this year he is coming back in to report on those conclusions and at that point we will then look at whether to take propositions to the partners.’
‘I am not at all concerned that we have missed the boat,’ asserts senior partner Richard Foley. ‘If you were looking to go into the Australian market as part of a general proposition to pick up domestic work, then yes I would be concerned. But that’s not what we would we doing. If we do decide to do something. It will be very focused and relevant to our strategy.’
No pedestrians
There is an acceptance within the firm that it has been internally focused over the last decade but that Mullen and Ryan did well to steer the firm through the financial crisis with relatively few redundancies compared with its competitors.
Says Foley: ‘Looking back over the last half a dozen years we, like many of our competitors, were dealing with a global financial crisis. We were looking very hard under the bonnet of the business and looking at the most efficient ways to manage it. That was a type of approach that suited David and Chris really well. We didn’t have to do rafts of redundancies – unfortunately we let some people go – but it wasn’t a major part of our response. And actually we managed through that process to do some good things: the merger with McGrigors [although redundancies inevitably followed the 2012 takeover], opening new offices in Paris, Munich and Istanbul, the growth in Asia and growth in the Gulf. That doesn’t strike me as pedestrian to be honest. We should be very proud of that.’
Critics contend that its merger with McGrigors illustrated a lack of ambition at the firm and a desire to be seen to be doing something rather than nothing at all.
That assessment of the McGrigors deal would probably be seen as harsh by most neutral observers. Undoubtedly opportunistic, it still ushered in one of Scotland’s top two firms into the Pinsents fold on good terms. By all accounts the deal has been effectively integrated and bolstered the firm’s resources to the tune of £70m, useful given its need to invest internationally.
From the firm’s perspective, the merger was a complimentary one for both businesses – the two shared panel appointments and had worked closely together beforehand.
‘It probably just came about after a couple of cups of coffee and saying “how are you guys getting on and what is your thinking?”,’ recalls Morrison, one of the architects of the tie-up. ‘It wasn’t brokered in any sense, just something that kind of emerged through the discussion. Our thinking at the time was about getting a bigger platform in the UK and moving into a different weight class that frankly would give us credibility internationally.’
Yet internationally, progress has been slow. Since 2012, the firm has opened offices in Munich (July 2012) and Paris (December 2012) and most recently in Istanbul through a joint venture (May 2013). Although fast growing – the Munich office in particular has tripled its headcount size since its inception in 2012 – the offices are limited service-wise, according to another ex-partner: ‘Pinsent Masons would hold itself up to be a rival of Eversheds and DLA Piper, superior to Addleshaw Goddard, two steps above Wragge Lawrence Graham & Co and certainly superior to Osborne Clarke. But the international reach of Eversheds and DLA just far exceeds it. And while the Paris and German offices were opened quite recently, they are still in their infancy and far from full service.’
There has been much talk of further expansion in Asia, according to the firm’s Asia head, Ian Laing, ‘the last few years have seen particularly significant change in the Asia business. It has doubled its revenue over the past three years’, and the firm is specifically looking at Australia (see ‘Australian ambitions’ box). But it is a market that DLA entered before anyone else, while Eversheds has turned its attentions towards the US – a market not even on Pinsents’ radar at the moment. Foley talks about western Europe, the Middle East, Africa and Asia as strategically critical to clients, with no mention of the largest legal market in the world.
PINSENT MASONS TEN-YEAR FINANCIALS |
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| Year | Turnover | Revenue per lawyer | Profits per equity partner |
| 2014 | £323.2m | £216,000 | £403,000 |
| 2013 | £309.2m | £211,000 | £387,000 |
| 2012 | £220.5m | £221,000 | £401,000 |
| 2011 | £212.5m | £208,000 | £404,000 |
| 2010 | £206m | £194,000 | £404,000 |
| 2009 | £215m | £202,000 | £310,000 |
| 2008 | £213m | £217,000 | £500,000 |
| 2007 | £192.4m | £217,000 | £510,000 |
| 2006 | £172m | £198,000 | £400,000 |
| 2005 | £150.6m | £169,000 | £234,000 |
Client facing
Strategic criticisms aside, Pinsents has pulled in some more than respectable client wins in recent years. It beat 40 other firms to secure E.ON’s day-to-day legal work in October 2013. In addition, the firm has recently been appointed as sole adviser to oil services giant KCA Deutag on its property and employment matters across the UK, Germany, Asia-Pacific and the Gulf.
According to Cleland, the firm’s list of major clients – which also includes The Royal Bank of Scotland, HSBC, BP and Fujitsu – has been strengthened by the McGrigors merger. ‘The greater scale we’ve got has allowed us to move up the food chain in terms of quality of work and instructions. For example, the recent appointment to the Clydesdale Bank panel was led by Glasgow restructuring partner Claire Massie – I’m not convinced that either the Pinsent Masons or McGrigors businesses would have got that national panel appointment. Also, we’ve got Aviva – an important client for us. We moved from regional panel there to a national panel place. Other new clients like Diageo and the newly created Green Investment Bank are evidence of the greater scale, size and reach of the business and I see that as strong evidence of the success of the merger.’
Client response to the firm is positive, with one major client praising a ‘very good job’ overall. ‘It has got a lot of strength and depth and some very high-quality people. What it can do is offer a very good, solid, across-the-board practice at very competitive rates and if it is smart it should be able to find a really good niche in the market as well as having some very strong individual practices.’
The firm cites, among other things, its sector focus and drive on innovation as the secrets to its success with clients. However, there remains criticism from rivals over the firm’s pricing strategy, with some claims of buying in work.
There are also suggestions of an internal tension between partners who want to see the firm move into a more transactional space, reflecting the plc traditions of the pre-Masons Pinsent Curtis, and those that want it to focus on what it is increasingly known for: construction, energy and projects. ‘You could draw a line down the firm and divide it into the corporate side and the construction side,’ says one former corporate partner. ‘The reason I left Pinsents was because it was becoming very much a construction-focused firm, which was the strength of the Masons brand. It is big on sector specialisms, but it did make it difficult to do the corporate work because if you run everything along sector lines and it doesn’t fit, it makes it a bit difficult. And with construction being so strong, that gets budget approval where other parts of work wouldn’t. It has been happening for a number of years.’
Cleland, a banking lawyer, responds to the claim: ‘I don’t agree with that. Infrastructure only accounts for about 20% of our revenue and six out of the firm’s top ten clients are financial institutions. This sits very awkwardly with the notion that all we can do very well is construction. It’s an easy comment to make, given that we have a significant brand reputation in internationalising the construction business and way back in the old days, it was what Masons was known for. I would maybe suggest it is a bit lazy in that it doesn’t really understand the make-up of our business going into 2015.’
The most recent breakdown of the firm’s revenues supports this. The infrastructure sector at the half-year 2014/15 accounts for 21% of the firm’s total revenues, whereas advanced manufacturing and technology amounts to 22%, and financial services sits at 20%. Energy is the lowest at 12%, while non-core sector clients such as real estate, healthcare, sport and public sector make up the remainder.
In reality, a sense that Pinsents hasn’t been clearly upwardly mobile or sustaining strong organic growth in recent years has probably been a bigger issue than practice mix.
As the leadership team settles into their new roles, no doubt they will continue to contend with concerns internally and externally over the firm’s strategy, present standing and brand in the market. But ultimately the question for any leader is which criticisms are worth taking on board.
‘For me, [what] this is really about is worrying about Pinsent Masons rather than worrying about the others,’ concludes Foley. ‘What we’ve seen within conversations with our clients is that it’s really important to them that you can deliver absolute quality. We don’t try and project a general City brand, we try and engage with our clients around the core elements of what we believe our law firm is. An international market leader across our four sectors. That is the vision.’
kathryn.mccann@legalease.co.uk