Clydes, cases and cat-astrophes

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  • So the inevitable has happened at Clydes and the cat is out of the bag.It would be useful to know if uncontested was by order from Michael or as a result of low levels of interest. From the loan article, low levels of interest are what Clydes really need now to keep their debt servicing costs down while Mr Burns finds the path ahead for the firm at this crossroads in its future development. Hopefully he'll guide the firm to the right path and enable it to shed its current image.

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  • Within 3 years Clydes will have done some or all of the following:
    1. Merged with a US firm
    2. Spun off much of its insurance claims business to preserve brand integrity and increase the profit margin
    3. De-equitised large swathes of the partnership to preserve falling PEP
    4. Gone into 'special measures' with its bankers by reason of debt overstretch
    5. Elected Simon Konsta as Senior Partner.
    Mark my words ...

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  • I see a tough time ahead for Clydes and the key question is whether their stars are aligned with the strategic direction. With rising costs - including interest - and a challenged revenue line, the future may not be as blessed as the past. It requires the skills of a Gemini to marry growth with tight cost control as governments are finding. For those with an astro leaning - its whether Uranus trumps Mars in the end.

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  • The future isn't written yet so Burns has the perfect opportunity to fundamentally change the orbital path of Clydes away from it's current transit towards something more enlightened. File colours is a good example. Something of the rainbow or even over it may work for the old order but possession isn't always nine-tenths of the law. A more collegiate approach to client working could ensure the firm lasts longer than it will if the current strategy and culture is left to run its course.

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  • Nostradamus makes some interesting suggestions. The facts are simple though. In five years' time the disputes bubble will have burst and the M&A guys will be making hay again. At the rate the insurance disputes market is crumbling on rates, it won't be attractive enough for great or even good lawyers - to this end the heads of claims at major insurers have cut off their future talent supply. Clydes will therefore be unattractive (nothing personal) on several levels - its profits will continue to fall unless it restructures; and its levels of debt will become unsustainable or at the very best costly in an economy with rising interest rates. True it will have a big international network but it's no Norton Rose and certainly not magic circle quality. So US merger? Nah - nobody will want the toxicity of culture and debt. Spinning off insurance claims - yes but should have started by now as those who existed Motor did many years ago - Clydes needs to shed the Konsta/Jabbari legacy of Manchester and Oxford. De-equitising and restructuring is a given - particularly to address the issue of a mature chort of senior associates ..and some of that is happening or planned to happen already. Special measures is always a risk - a business strategy based on borrowing to build turnover carries a liquidity risk. Simon Konsta as SP? Nah - Simon had his day in the management sun and it's too soon for most to forget the journey.

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  • Eh? What M&A guys? The good ones have left because it's not a corporate firm or brand. The only M&A Clydes do relates to other law firms. And what disputes bubble? Clydes is a trade/shipping firm and mainly in the mid/lower-mid market, which means a steady flow of disputes and 'volume', with only the occasional 'dripping roast'. That's why they have a 25% margin, as do HFW and Ince - they're all doing the same thing, the same way. Michael bought some parts of BLG's non-marine business because they operated on 30%+, or at least did, and that's now dropping back too as the work moves out of the City. It's big(ish) and semi-international, but so what?

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  • For the avoidance of doubt, I wasn't confusing Clydes with a firm that does M&A work. My point was that as M&A firms get busier, firms like Clydes will be struggling. I don't get the dripping roast analogy - coming from the Netherlands where roasting means something else. Understand that Holmansh and Inch wil have shimilar problemsh.

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  • Mark mine ... By June 2013 ... (December to allow some room for manoeuvre ...)
    1. Manchester and Oxford with be part of BLM or DAC;
    2. Clyde & Co will not be a magic circle firm;
    3. The above is subject to the overdraft not causing Spinningfields Part 2 - The Administrators Strike Back.

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  • I am told golfers have a saying along the lines of 'Drive for show, putt for dough'. This firm seemingly has a booming drive in terms of revenue, but direction is wayward and so we continually chase the wrong revenue. And our short game (people) is just awful. Back to range I'm afraid.

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