Focus: Clyde & Co, Clydes’ strides
7 September | By Katy Dowell
Libya, Iraq, St Petersburg… Why Clyde & Co is not afraid of risk. For a firm with such a staid reputation, it is remarkable how much Clyde & Co has embraced risk.
On the face of it, this might sound odd. The firm’s financials over the past few years can only be described as steady.
Average profit per equity partner (PEP) at the firm has remained static at £550,000 for the past two years, before which it was stuck at £500,000 for three years. But the revenue per partner (RPP) figure has crept up by 36 per cent over the past five years, from £264,000 at the 2004-05 year-end to £359,000 at the close of the last financial year. Over the same five-year period turnover has shot up by 51 per cent to £185m from £104m.
One good Turner…
What these figures fail to reflect, however, is that Clydes’ partners are long-term visionaries. Like their many insurer clients, they are unafraid to take a calculated risk on advising on investments going in and out of economies that are out of favour with the international political elite.
Key to this is one partner, Paul Turner. Back in 2003 Clydes sent Turner to Iraq to assess legal opportunities in the country. Turner, who had spent years in Iraq during Saddam Hussein’s regime, came back having signed an alliance with Baghdad firm Numan Shakir Numan.
When local hostilities flared up later that year, Clydes was forced to retreat and hold meetings in neutral territories such as Jordan and Dubai.
However, it still maintains an exclusive arrangement with Numan Shakir Numan, despite the fact that violence there has prevented Clydes from operating on the ground.
Turner, though, is optimistic on behalf of both the Iraqis and Clydes.
“Once the violence simmers down things will get better,” he stresses. “The third-largest oil field in the world is in Iraq; 70 per cent of it is in Basra and that’s its only seaport. The city was starved of development under Saddam. We’ll move forward after the elections - a number of investors are just waiting to go in and many enquiries now are about the opportunities there.”
Once the country stabilises it will be the oil companies that provide Turner with much of his work. Meanwhile, he is busy advising clients that are exploring opportunities in Libya, where Turner has a very high-profile connection.
Last week Muammar Gaddafi celebrated 40 years as Libya’s head of state. The anniversary celebrations coincided with the controversial release of Lockerbie bomber Abdul Baset Ali al-Meghari. This has sparked outrage in the UK and the US, with many demanding that Prime Minister Gordon Brown explain just how much he knew about the release.
While this occupies the Western press, there are other issues that concern the Clydes partner. For Turner advises the Libyan government on claims brought against the state in London, as well as advising Gaddafi and his family on defamation issues.
Turner shrugs off the connection, explaining that the instruction came through a personal contact.
“I’ve always got work to do for them,” he says before changing the subject. “I also advise UK companies on investments in Libya - especially when things go wrong.”
This includes representing shipowners when vessels are arrested by the Libyan state for breaking laws.
“Going forward,” he adds, “the oil countries are going to be extremely important. Iraq, Iran and Libya have all had their political problems, but if it goes well with the Iraqi elections that will change. In Libya people are thinking about post-Gaddafi - we can’t all go on forever.”
While he recognises that the firm is unique in having deep-rooted connections in Iraq, Libya and Iran, Turner also points out that Clydes has worked hard to establish presences in the more popular Brazil, Russia, India and China (Bric) economies.
In the past year Clydes has formed an alliance with Indian firm ALMT Legal (The Lawyer, 4 June), which has offices in both Bangalore and Mumbai, and with Saudi Arabia-based Islamic finance specialist Abdulaziz Al Bosaily Law Office (The Lawyer, 6 April). This comes two years after Clydes opened in Shanghai (The Lawyer, 16 January) and more than 20 years since it launched in South America.
America the grave?
What is more, Clydes is one of only a few practices that has made inroads into the US, that traditional graveyard for UK firms. It has offices in both Manhattan and San Francisco, where it opened in July 2006 (The Lawyer, 27 June 2006).
It was helped by a typically bold move, raiding US firm Condon & Forsyth for four insurance partners, including Kevin Sutherland, a top-ranking aviation partner.
“They took a lot of work with them,” says a US market observer. “The only reason Clydes had such a good year is because of those partners.”
Clydes chief executive Peter Hasson acknowledges that the US was yet another calculated risk. But he acknowledges that the partners took that risk with some trepidation.
“When we were looking at it, it was hard to see anyone who’d made the US a successful venture,” he admits. “What worked well for us was hiring people who were used to working with UK lawyers.”
Since then Clydes has taken decisive action in closing Los Angeles and moving to San Francisco to accommodate four new insurance partners from Duane Morris (The Lawyer, 28 April 2008). This included US managing partner Bill Casey, a big hitter in professional liability circles.
At the 2008-09 year-end the US practice turned over around $20m (£11.77m).
“There’s a lot of glue in our US operations,” says Hasson. “Our plan is to start with a core base and bring in teams to support them.”
Get knit quick
Taking risks has paid off so far, but Clydes’ biggest challenge now is how to knit together those disparate international ventures.
“We’re trying to make sure people have got the confidence and we’re trying to provide the internal glue,” Hasson explains. “The business needs to be managed in a different way.
“People shouldn’t think about their practice in a silo, there’s a lot of crossover. We want to be trade specialists.”
It is up to management to then expand outwards and find partners who can feed work into the core areas.
During a recent partnership conference, to which all partners, including lawyers from ALMT, were invited, Hasson tried to impress upon the firm just how important the international element has become.
“It was an opportunity for everyone to see our organisation as a global practice,” he recalls. “To organise our practice areas globally and look at how we make the connections between people. We want people to take responsibility for their own offices, but we also want them to work together.”
On a management level a global board has been selected charged with developing an international strategy. High on the agenda is the desire to transform Clydes into a firm with international practices.
“It’s also about giving support to our network of offices in weird places, such as St Petersburg,” Hasson explains. “You have to be pragmatic and understand the business you operate in.”
For all the management challenges Clydes faces, economic risk is not one of them, says Hasson.
“Our business model has proved its robustness,” he proclaims, clearly proud of the state the firm is in. “The market we operate in is the most difficult I’ve ever known, with clients under much pressure, as are we. I don’t think it’s a great market for UK insurers, and transactional business is down.”
Yet he also recognises that there are opportunities to be had.
“The quality of people available to us is better than in years, and these are people who question some of the traditions entrenched in the profession,” he muses. “A huge opportunity, yes. But we need to be careful.”