Addleshaws to kick off management elections after Devitt stands down early
17 March 2014 | By Hannah Gannagé-Stewart
16 April 2014
24 March 2014
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17 February 2014
Addleshaw Goddard’s Paul Devitt is to stand down as the firm’s managing partner a year before his tenure was due to end on 30 April 2015, sparking an early election.
The election process was originally due to kick off in September but will now begin imminently, with the aim of having a new leader in place by 1 May 2014.
Internal communication of the altered election schedule and Devitt’s decision not to stand for re-election was circulated late on Friday (14 March) and partners will be asked to nominate candidates in time for a vote next month.
The firm was unwilling to name any potential candidates prior to the invitations to nominate being sent out to partners.
However, last month The Lawyer reported that Addleshaws partners were bracing themselves for a contested election, with former head of real estate Adrian Collins and the firm’s head of business support and restructuring John Joyce surfacing as potential challengers to incumbent Devitt (17 February 2014).
Devitt was first appointed as managing partner in 2009 and began his second term in January 2012 after an uncontested election (12 January 2012).
A statement from the firm said: “We understand and respect Paul’s decision not to stand for re-election and look forward to the continued and valuable contribution he will make to our business as a partner in the corporate division”.
According to the firm, bringing the election forward will coincide with the end of its current five-year strategy, which is to April 2014 and “provides certainty over our managing partner for the next three years”.
The news comes alongside confirmation of a series of internal reporting miscalculations, which led to misleading profit projections being circulated to partners at the half-year.
The first has led to a full review of the administration of Addleshaws’ partner remuneration system following an error in calculating the number of points which are used to distribute profit to partners. The mix-up will result in a lower than forecast pounds-per-point value at the end of 2013/14.
It is thought that the firm had calculated the value on the basis that there were 9,300 points in circulation, when the correct figure was 9,832.
Senior partner Monica Burch said: “Points in issue are a moving feast and ours hadn’t been extrapolated properly. It is embarrassing and has annoyed some partners. It didn’t affect the amounts of drawings, but the forecast for end-of-year pounds per point value was wrong.
“We had a review, took steps to ensure that it couldn’t happen again and made sure reporting and KPIs were accurate. Some partners were pretty annoyed, others were more sanguine,” she continued.
A second error involved the establishment of the firm’s Hong Kong office, led by international managing partner Andrew Carpenter and international arbitration partner Jonathan Tattersall (8 August 2013).
Burch said: “We drew up the budget before deciding to open our Hong Kong office – there was a reporting error of just over £1m of costs that wasn’t carried over in the internal reporting to the board of the cost base forecast until the half-year.”
The error was picked up at the half-year point but not before it had been circulated, meaning that the projected profit pool did not take account of that figure.
Finally, the firm has confirmed that it has decided to internally write off a relatively large success fee on the basis that it would be extremely difficult to collect.
Market sources said the written-off success fee was a proportion of the uplift due from Russian oligarch Boris Berezovsky who died in March 2013, making the debt difficult to recover.
Addleshaws secured Berezovsky as a client in 2010, when the firm agreed to bankroll the mammoth litigation on a conditional-fee structured deal (8 November 2010).
Addleshaws declined to comment on the client involved but said: “Any provision of fees this year for fees billed last year - whether success fees or otherwise - affects the income of the firm for 2013/14.”
Devitt is the second senior management figure to leave his post in recent months. The firm’s longstanding financial director Martin Gaskin left in December.
Gaskin’s successor, Eversheds’ former head of finance operations and treasury Colin Brown, instigated a work-in-progress amnesty in January and is pushing for a soft year-end this month to prevent a rush to complete billing in the last few days of the financial year.