Thomas Alan finds mixed omens in the wake of BCLP’s high-stakes union. A solid start cannot obscure that 2019 will be a crucial period for the Anglo-American challenger
When indications of a merger between legacy firms Berwin Leighton Paisner (BLP) and Bryan Cave first emerged in late 2017, there were mixed reactions about the potential union. As Legal Business noted last summer: ‘Confirmation earlier this year that BLP was uniting with a solid US operator, but one whose brand had limited potency in Europe, did not quicken the pulse.’
Our forecast was unflinching: ‘Success will hinge on whether BCLP [Bryan Cave Leighton Paisner] proves to be something like a genuine merger, rather than the graceless, grudge-strewn takeovers that have so far defined legal tie-ups across the Atlantic. And that will take a lot more than some warm fuzzies from the troops and some fluent communication from the top at the first partners’ conference in Florida.’
If anything about the merger suggests it is working, it is the lack of noise around a tie-up that could easily have gone awry. The history of such mergers is hardly a story of unmitigated success. As time passes without signs of clear discontent, attitudes towards the union continue to warm. ‘The distraction factor of the merger is now gone,’ says BCLP partner Neville Eisenberg. ‘We can now begin to focus on the benefits of the union and push on this year.’
Pushing on undoubtedly involves finalising integration between the two firms, with certain legacy elements, such as timekeeping systems, still in place. Also, the firm will need to set about creating a clear identity that clients will recognise, a task that will likely be at least two years in the making.
‘The distraction factor of the merger is gone. We can now focus on the benefits of the union and push on this year.’ Neville Eisenberg (pictured), BCLP
Lisa Mayhew, global co-chair of BCLP, insists that in terms of financial yardsticks, the firm is well ahead of where it expected to be: ‘What is fantastic is cash accounting gives you a quicker indication of how it’s gone and we’ve comfortably exceeded the budgets set by both sides.’
Not that Mayhew would divulge how high those expectations were, but the leadership is confident the financials for 2019 are going to be strong. They need to be: Bryan Cave posted a 3% dip in revenue for 2017 – its last full year as a separate entity – while BLP decided to try to write off an entire financial year by not disclosing its financial performance for 2017/18, using the merger as cause. However, the firm’s LLP accounts for the year to 30 April 2018 show revenue fell 3% from £271m to £263m. Operating profit suffered a heavier set back, dipping 21% from £72.4m to £56.9m. It is an ominous lack of pace to take into a high-stakes union. At the end of January, BCLP announced its first financial results as a merged entity, reporting a modest 1% increase on hypothetical 2017 combined revenues to $905m, while profit per equity partner rose 5%. However, mandates such as advising FTSE 250 company Greencore on the $1bn sale of its UK business will bolster this year’s numbers, with the firm using its new US capacity to act on US aspects of the deal.
Elsewhere, Eisenberg’s appeal for focus has certainly been reflected in the firm’s approach to innovation, with BCLP seemingly capable of continuing legacy BLP’s reputation for being early adopters of new technology. In May 2018 the firm announced a new home-grown legal tech start-up, Swiftagree, an online contracting tool that produces non-disclosure agreements for £5.
This was followed by the launch of a new disputes evaluation service Clear/Cut, before the firm announced new in-house consultancy arm, Cantilever, in November 2018. The initiative saw BCLP combine its transatlantic innovation teams, with data analytics tool CrossLite being one of the firm’s American imports and one of Cantilever’s most significant offerings. ‘Cantilever is a tangible and direct result of the merger,’ Eisenberg points out. ‘Though firms are providing similar services, this is the first cohesive and branded product of its type, and it’s exceeded expectations in terms of the quality of client it’s attracted.’
However, while the divergence between Lawyers On Demand (LOD) and the firm in May seemed like a natural parting of ways, BCLP will be disappointed at failing to persuade LOD to allow it to keep a small token stake in the New Law provider, with Bowmark Capital instead acquiring all BCLP’s 62% stake in the business. The cynical have noticed the sale of LOD came precisely when legacy BLP was due to be hit with a considerable tax bill as a consequence of full financial integration with Bryan Cave. But such sales take time to negotiate and LOD was always due to outgrow BLP’s nest.
However, such announcements are a distraction and the slick new managed services and tech offerings cannot answer all the short-term challenges the firm faces. Even the most detached legal observer will have noticed the slew of departures from the firm since the merger’s completion.
2019 began with London investment management partner Nicola Hopkins leaving the firm for Ashurst, while contentious construction and engineering partners David Robertson and Catherine Gelder decamped to White & Case and CMS Cameron McKenna Nabarro Olswang respectively. Perhaps the most notable exit, however, was BCLP’s respected former head of private client litigation Rupert Ticehurst, who left for boutique Maurice Turnor Gardner – supposedly disgruntled at being unable to create a meaningful contentious business while pigeon-holed within the firm’s private client department.
But aside from a few notable exceptions, there are questions over the impact of some that have left. ‘The people leaving the US side are people I’ve not really heard of, which suggests to me they weren’t big-hitters in the firm,’ says one BCLP partner. ‘Meanwhile, the people leaving the BLP side are mostly from peripheral parts of the business. We’ve not had a heavyweight real estate departure, for example.’
Any complicated transatlantic union will involve collateral exits. However, with changes to the firm’s remuneration structure now having been in place for a full financial year, the biggest departures could yet come. One BCLP partner highlighted the anxiety among some in the partnership: ‘I climbed my way to the top of the old BLP lockstep, and now I’ll be getting a blank envelope and I don’t know what I’ll be paid.’
‘Morale, I would say, is really high – people are enjoying working on matters together.’
Lisa Mayhew, BCLP
Regardless, the firm has so far avoided an exodus of high-billers integral to the core of the firm’s business, with those that matter most, for now at least, persuaded by BCLP’s pitch. Meanwhile, in the first nine months of the merger going live, BCLP managed to attract nine lateral hires – five of which were in the UK, including Irwin Mitchell’s head of family law Elizabeth Hicks and Mukul Chawla QC who joined from Foundry Chambers to lead its corporate crime team in London. BCLP could prove to have more pulling power than either of its legacy firms.
There is also little evidence so far of a transatlantic culture clash, or as one partner puts it: ‘We had our first partner retreat last year and I only met two people who [I did not like], and that’s from 600-odd partners. Honestly, the culture thing hasn’t been that prominent and, truthfully, both firms needed a kick up the rear.’
Mayhew, meanwhile, assesses the situation in understandably more diplomatic tones: ‘Morale, I would say, is really high – people are enjoying working on matters together. We are reassured by the speed at which we’ve managed to come together.’
It would not be glib to suggest a lack of conspicuous crisis so far at BCLP is an achievement in itself. For now, avoiding crisis has seen the firm do better than the critics predicted, but neither has the firm yet demonstrated a post-merger momentum. For BCLP, 2019 is looking something close to its moment of truth.