‘This is not ad hoc’: WFW leadership duo aims to drive City specialist ahead of the pack

Victoria Young talks to Chris Lowe and Lothar Wegener about their ambitions for the firm

‘It’s not about: “Here’s an opportunistic piece – let’s grab that.” It’s about a continuous cycle of investment, not something which just happens.’
Chris Lowe, Watson Farley & Williams

 

If there is one firm in the top 50 of the Legal Business 100 (LB100) that makes a virtue of being low key, it is Watson Farley & Williams (WFW). Ask City partners their views on WFW and there will be some varied responses.

‘It’s a bit of an enigma really,’ says one. ‘So under the radar,’ offers another. But for the most part, the typical comment on the firm’s brand was along the lines of: ‘It’s a shipping firm, isn’t it?’

Not quite. While the roots of the firm, which opened in 1982, lie in maritime finance, WFW has notable strengths in sectors such as energy and transport. It is a firm that has quietly gone about its business in an impressive manner: with five-year revenue growth of 56% and among the 40 most profitable firms in the LB100, the firm was shortlisted for Law Firm of the Year at the 2015 Legal Business Awards on the back of a strong run.

The recent recognition follows management changes at WFW two years ago. Co-managing partners Chris Lowe and Lothar Wegener took over from longstanding leader Michael Greville in January 2014, and have set about pushing a successful firm into the spotlight a little more.

‘Running faster in the same direction’ is how Wegener describes WFW’s current approach.

‘The strategy of the firm is a sector-focused international firm with a clear commitment to legal excellence. That was already set and it is all about making more of that. We are happy how it has turned out in two years. We are emphasising something small to create even more of the good,’ he adds.

The management team’s approach is working – in its latest half-year results the firm posted a 5% increase in revenues to £59.5m.

While Lowe had been based in Singapore and Wegener in Germany, the pair combined to share the managing partner role when they took over from Greville. While each will take the lead on separate initiatives as well as make joint decisions – what they describe as ‘a matrix of responsibilities’ – they say having two heads is good for management.

‘Having two managing partners allows us to be in two places at the same time,’ says Wegener.

Since the pair took over the firm’s leadership, revenue has grown faster than average, rising by 15% for the 2013/14 financial year and then up another 7% for the financial year 2014/15.

On these latest results Wegener said a string of laterals – it had hired 24 in the prior 18 months – was key to improving financial performance. The firm also announced last month that Andrews Kurth partner John Conlin was to join along with an associate. Conlin is well regarded for his expertise in oil and gas and ‘joins a lot of threads’ for the firm, according to Lowe.

And Wegener and Lowe have ambitions to raise the number of fee-earners, currently at 438, by 250 over the next three to five years, which is a tall order for a mature firm not looking for a merger.

Lowe says: ‘We are not looking for the big leap – we are looking for an evolutionary progress with a structured focus. Going along at a nice clip is exactly what we want to do. It’s not about ad hoc investment, it’s not about: “Here’s an opportunistic piece – let’s grab that, and let’s bolt it on and look for other opportunities.” It’s about a continuous cycle of investment, not something which just happens.

‘You have to be careful about growing in a way which is uncontrolled and you have to make sure you don’t lose culture or strategy on the way,’ he adds.

And on the subject of opportunistic moves, it was reported in October that WFW was approached by shipping firm Ince & Co with a view to a merger, something that both Lowe and Wegener claim was blown out of proportion. According to their version of events, while an informal discussion took place with Ince & Co senior partner Jan Heuvels, that was the extent of ‘negotiations’.

‘Once he explained the nature of their business and we ours, it was not going to go beyond that,’ says Lowe.

Super sectors

Ultimately, a tie-up with a shipping rival makes little sense for a firm that has broadened its focus from its maritime roots. Management prefers to talk of the firm having a ‘super sector focus’, with Lowe noting: ‘Ideally, we’d like to be seen as a firm in a number of sectors, and we are promoting ourselves as natural resources and transport-orientated – much more than the maritime finance boutique it was 20 years ago.’

The firm has five sectors and generates about 38% of its revenues from maritime, 21% from energy, 4% from aviation/rail, 11% out of real estate and 7% is generated from natural resources clients. Work outside the five sectors accounts for 19% of revenues.

But while Lowe concedes perceptions take a long time to change, he is adamant change is coming.

‘If you are a managing partner or senior lawyer in London who has been around, I would understand why your perception [of WFW] might not have changed, but I’m sure if you asked at the more junior end, associates would tell a different story.

‘There are managing partners at other firms that say they are sector focused, but their sector focus is very much along the lines of seeing what sector they want to sell from any given morning. We have five sectors – it used to be seven – and if we’re really honest, it’s two: transport and energy.’

‘We are looking for US lawyers interested in the managed lockstep. It’s more sustainable.’
Lothar Wegener, Watson Farley & Williams

 

The firm’s focus attracted former Fried, Frank, Harris, Shriver & Jacobson partner Rob McBride, who was hired along with partner Siân Withey in June last year and tasked with re-establishing the firm’s securitisation team.

McBride is blunt about his view of the firm before he was introduced by personal contacts to join: ‘I thought it was always shipping and didn’t realise it had such a good aviation practice.

‘Oil and energy is where growth is going to come. I’m not saying shipping is not going to grow, but the real growth is in energy.’

He describes the leadership duo as ambitious, adding: ‘They are young guns trying to change the direction of the firm; they will lead us through the next stage of development.’

But while the firm moves beyond its shipping practice, Holman Fenwick Willan partner John Forrester says WFW’s shipping practice is the ‘best in the world’ alongside Norton Rose Fulbright’s.

However, Forrester adds: ‘They seem to be grabbing a lot of work. They appear to be lowballing on fees to maintain market share, more than others.’

Lowe says while the firm would not describe itself as a lowballer, it has been able to provide efficiencies for clients in its sectors, especially when competing with the Magic Circle and the chasing pack on cross-jurisdictional matters.

‘We want to be giving our clients good value and the sector expertise has allowed us to be more efficient,’ he says.

WFW and the world

With 14 offices in 11 jurisdictions, about 45% of WFW’s turnover comes from London and a significant part of that is cross-border. Nonetheless, the management duo is adamant there will be no Dentons-style tie-ups for WFW, although the firm is looking at opening in Beijing.

Lowe elaborates: ‘In terms of North Asia – the Beijing, Shanghai, Tokyo conundrum, as it is for everyone – China is about getting the right people and we are in discussions with a lateral at the moment, which may be the piece we need to get into Beijing. We are not looking to acquire or go into a Swiss verein with a large Chinese firm. This just doesn’t work for us and it would dilute our strategy: we’d lose our sector focus, we’d lose our culture.’

But the most interesting play will come in the US, where the firm has had a thriving office in Manhattan since 1990. This month, the firm will move into a new office space in New York with room for 75 lawyers – its current office has 35.

Lowe and Wegener say their plan is to fill the extra space within two to three years, using its sector focus to build a practice. While the firm concedes it cannot compete with the Wall Street elite, it will be taking lawyers and hopefully work from prominent US players.

‘What we are seeing is the opportunity to use our sector focus, which can take us into the New York market, and we believe we can build out our services in a sector which will fit into our remuneration structure.’

‘We are looking for those people who are interested in the managed lockstep, which is interesting for the American lawyer – it’s more sustainable and long-term thinking. If there are 100,000 lawyers in America, if 30 are thinking in our direction, we are happy to accommodate them,’ says Wegener.

If WFW can sustain its recent form for a few more years, the low profile won’t be an option much longer.

victoria.young@legalease.co.uk