And tomorrow the world...
28 June 1999
18 March 2014
18 August 2014
24 March 2014
8 July 2014
24 March 2014
Paul Downing is a journalist's nightmare. Not because he is rude or reticent. On the contrary, he is one of the most relaxed and open City lawyers one could hope to meet, peppering the conversation with anecdotes and pieces of juicy gossip.
The problem is that these nuggets are all off the record. "We did some naughty things there, but of course you can't say that" and "Better cross that out - they wouldn't like that."
These comments are tantalising, but I have come to meet Downing to talk about his unique job in the legal profession rather than gossip. Downing is global head of corporate development in the tax and legal department of PricewaterhouseCoopers (PwC), the Big Five accountants with legal ambitions on a global scale.
Downing does not actually practise law at all. He spends his time sizing up and negotiating with law firms around the world to help realise PwC's ambition. PwC signalled this ambition in January, when it announced it was acquiring Spanish law firms Estudio Legal and Mullerat & Roca, predicting it would be one of the five biggest law firms worldwide within five years, with revenues of more than $1bn (u650m).
Downing's position gives him a bird's-eye view of the legal profession across the globe. "I have no operational role, so my whole life is spent talking to lawyers in countries around the world, and we freely share our views with them and them with us," he says.
PwC's global pretensions have been met with some scepticism by top UK law firms, which say that major clients will not be swayed by the promise of one-stop shopping with the accountants. Downing concedes that they may be right, but he obviously thinks he knows something that others do not yet appreciate. "The fools laugh at my plan now, but nothing can stop me - nothing!" he proclaims.
Downing does not usually use such megalomaniacal language, instead talking in careful, measured tones about the progress of PwC's plan for world domination. "In the last two months we have been approached by lawyers or teams in Australia, Germany, the Baltic states, Mozambique, central and eastern Europe and the Indian subcontinent, in a total of 14 countries," he says.
"My job is to do the negotiations with them so that ultimately they will join us as associated law firms. I will look at the business proposition and give help and guidance." He insists he has no power of veto and that his role is simply to help make things happen, although one suspects he may play a more active part than he lets on.
His global remit leads to an often punishing schedule of travel that has taken him to France, the US, Germany, South Africa and Hungary in the past month alone. This week, he is spending Monday and Tuesday in The Netherlands before making one of many recent trips to Australia, which will force him to miss his day at Wimbledon, where he lives. "That," he says, pointing to his laptop computer, "is my office."
Downing, who is 52, certainly looks well-travelled, his tanned face clashing with the bright pink shirt he is wearing. He is, perhaps, better prepared for this itinerant lifestyle than other lawyers his age. After joining Clifford Turner - one of the firms which merged to form Clifford Chance - as an assistant in the commercial department in 1973, he spent the late 1970s helping to build the firm's intellectual property practice from scratch.
"IP was more international than other areas of work because, for instance, you didn't have international banking work then," he says. "I'd spend a huge amount of my time going up and down the Silicon Valley. This was when the guys from Apple were doing their work in the garage."
The late 1980s saw him spend four years in the Gulf, first in Dubai and then in Riyadh. In 1991 Downing was headhunted to become London managing partner of Pinsent & Co, where he was part of the executive that drove through the firm's merger with Simpson Curtis. He then joined Price Waterhouse in 1996 as head of legal for Europe as the firm began to co-ordinate and build its legal network.
Following Price Waterhouse's merger with Coopers & Lybrand last year, Downing now works closely with Coopers' former global head of legal, Gerard Nicolay, in building PwC's legal network. He says this task has been greatly aided by the American Bar Association (ABA) Commission's recent recommendation to permit multidisciplinary partnerships (MDPs), allowing lawyers to share their profits with other professionals.
Downing says: "Originally I thought the US was going to be the toughest nut to crack, so I was staggered when the US association of corporate counsel wrote to the ABA saying it was in favour of MDPs. In just these two short weeks [since the ABA's decision] we have had so many people wanting to talk to us."
The knock-on effect of the ABA's decision and the apparent willingness of the Law Society of England and Wales to relent on MDPs later this year has been staggering, says Downing.
"So much of the top-tier work is done by Anglo-Saxon law firms, so for the last year or so the senior members of the profession have been looking to what the Law Society has been doing. Now that you have what appears to be a move in favour in the UK and the US, everyone else is now happy to position themselves," he says.
According to Downing, there are three dynamics destabilising the legal profession around the world. First, the major international firms are increasingly being used for the top corporate and finance work, "so the power and authority of those top firms is out of all proportion to the number of lawyers they have in many countries and this is hitting the established law firms in those countries, who find that their best partners are joining the international law firms".
Second, the euro is creating pressure for pan-European legal advice, which is prompting firms to merge. "And if that wasn't enough, you also have the US firms following the US investment banks and multinational corporations," he says.
Downing believes these trends will eventually bring work to the Big Five accountants that are building their legal networks, because few law firms are truly equipped to operate globally. Many of the top US firms are driven by profit rather than a clear strategy, "and they will not survive in that way", he says.
Downing says that outside the "four or five" firms he considers to be in the UK's magic circle, "there is a problem, because the major international law firms are seeking to establish these networks without understanding the huge costs which will be incurred when they go truly global. And, most importantly, they do not understand what the impact will be on their partners' earnings."
The choice for law firms is, then, either to scale down their global ambitions or "re-engineer their businesses in such a way that they can keep their partner profits up".
Downing points out that PwC's reported overall revenues at the time of its merger last year were $15bn (u9.4bn), making its annual increase in revenues many times the total income of the world's largest law firms. With approval for MDPs likely on both sides of the Atlantic, it is only a matter of time before major firms see that the best way to re-engineer their business would be to merge with a firm as powerful as PwC.
Perhaps strangely for a man plotting capitalist world domination, Downing says he is a socialist. His radicalism was formed while reading government at Essex University in the late 1960s.
"We spent a lot of time thinking we could right the world, but we didn't have the faintest idea," he says. He concedes that he has moved towards the centre, "in the same way as Tony Blair... but if I wasn't being honest with myself I'd still like to think I'd be more evangelical about my approach. This is when I'm listening to my heart and not my head."
At this point I brace myself for the familiar instruction not to quote him on this, but it never came.
Global head of corporate development