‘We’ll see who wants to step up’ – Burch on growth, ambition and managing partners

Francesca Fanshawe talks to Addleshaw Goddard’s senior partner ahead of big strategic decisions

There is a lot riding on the strategy Addleshaw Goddard will finalise this year, with the national thoroughbred still struggling to regain its form five years after the banking crisis severely hit its practice.

The 174-partner law firm returned to the headlines somewhat unhappily in March when it emerged that managing partner Paul Devitt is to step down early. At the same time, Addleshaws confirmed that it had miscalculated partner profit points and overestimated its profitability on one measure at the halfway point of its 2013/14 year, and had written off a significant uncollected success fee. The write-off, which had long been rumoured, is understood to relate to the big-ticket litigation Addleshaws conducted for late Russian oligarch Boris Berezovsky.

Devitt stands down more than a year before his term is due to end on 30 April 2015, with a successor to play a major role in determining the future direction of Addleshaws.

The firm had refused to comment on claims by former lawyers that real estate head Adrian Collins and business support and restructuring head John Joyce have put themselves forward for the role.

With 2012/13 revenues at £164.4m, still around £30m below its 2008 high, and renewed but familiar claims of unhappiness within the partnership, any dividend from its new five-year strategy cannot come soon enough. Critics of the firm have often contended that Addleshaws has struck an uncertain tone in recent years, citing a lack of clarity about its ambitious and slow decision-making.

Speaking to Legal Business after Devitt’s move from management was confirmed, senior partner Monica Burch comments: ‘We will be speaking to our partners to see who they would like to see step up, then there will be a formal period for nominations, which will close around Easter time and we’ll proceed to a formal vote, which we hope to conclude in mid-May.’

Burch adds: ‘We have had a strategy that we’ve focused on until 2014 and now it’s time to look at the macro as well as the micro environment to see what will be the kick-start for the strategy for the next five years. With the managing partner election coming up, it’s a great time to do that.’

Addleshaws said that it has reviewed its procedures after the firm underestimated the number of allocated equity points and stressed that it would not impact on underlying profitability.

Burch comments: ‘It’s the pizza and slices analogy: the profitability isn’t affected, the size of the pizza isn’t affected, but the size of the slices were thought to be bigger. The points are slightly less valuable than they thought they were.

‘Now it’s time to see what will be the kick-start for the strategy for the next five years.’
Monica Burch, Addleshaw Goddard

‘It’s an issue that we picked up after the half year and corrected very swiftly. We’ve also put in place measures to make sure that the extrapolation of errors haven’t happened again. It is embarrassing, but it isn’t something that affects the size of the profit or the financial decisions of the firm.’

Burch says the firm has made efforts to implement a ‘matrix reporting system’ as part of its current five-year strategy to support sector-driven growth.

‘We have tried to make it as nimble and as non-bureaucratic as possible. Like a lot of law firms, we are quite bureaucratic. In the past it has taken us quite a long time to make decisions about things and it gets a little bogged down. We’ve tried to make sure that we have the overlay and make sure that we have support and systems in place.’

The other major focus under Burch’s leadership has been making good on Addleshaws’ belated international launch, opening the first of its five international offices in May 2012. Addleshaws now has foreign outposts in Doha, Dubai, Hong Kong, Muscat and Singapore.

Burch argues that international growth has been a bright spot. ‘We’ve had to put a lot more thinking into how we do it [expand internationally] and what it looks like, but now we have a fantastic cohort of partners in those offices and they are starting to flourish and to generate work. There have always been partners and practices that have had an international focus, litigation for example, but opening international bases has been a visible manifestation of that.’

With 19 new partner hires in the last calendar year, the firm has been moving to reinforce not only its international network but also in its London base, financial regulation, corporate and its well-regarded litigation team, particularly investigations and white-collar crime.

Burch, however, concedes that financial performance has disappointed of late: ‘If one takes a view in terms of what we would have thought our projected size would have been from where we were [five years ago] to where we are now, one would have had a £250m aspiration.

‘We do need to think about our investment base and turnover and if one looks at how you achieve that, it’s one or more of organic growth, acquisition and merger. We’ve always said that we’d look at each, including merger, as an option to accelerate our progress and that’s no different now in looking at the next iteration.’