DAC Beachcroft growth strategy: pump up the volume

DAC Beachcroft goes live with a new management line-up and fresh strategy today (31 October) and the firm has ambitions to deliver services in a new way to drive international expansion.

The impetus behind the Beachcroft-DAC merger is similar to that behind the BLG-Clydes deal. Like BLG, Beachcroft and DAC both have core insurance client bases, both have seen profit margins pushed downwards and both have witnessed demand for a broader range of services offered on an international basis.

Like the soon-to-be enlarged Clydes (the BLG deal goes live tomorrow) DAC Beachcroft is about to embark on a wave of office openings, initially targeting South America before exploring opportunities in the South East Asia ­markets. Unlike Clydes, Beachcroft has spent time investing in a volume claims arm and plans to use this to leverage international growth.

Grow getters

Paul Murray is in his second term as managing partner at Beachcroft and will remain in that position at DAC Beachcroft, with ­senior partner Simon Hodson also retaining his role, while DAC senior partner Danny Gowan will take control of international growth.

Murray says both firms had established that they needed to find a way to grow internationally to continue to secure client wins. There were “synergies” between the firms and relatively few conflicts, so eight months ago the high-level talks began.

“Our competitors were moving ahead. Clydes and Kennedys are pushing for international expansion,” Murray reflects. “The [insurance] market’s ­moving forward all the time and it’s moving quickly. Both firms need to push together and do it quickly.”

Legacy DAC had a ­successful Latin America practice, with bases in Madrid and Mexico and alliances with JBO Advocacia in Brazil and SegurosLex in Chile. DAC Beachcroft aims to expand this rapidly. The firm is looking at growing its presence in Mexico and investing in bases in Brazil, Chile, Panama, Colombia and Peru in the next three to five years.

Domestically, the firms’ offices only overlap in ­London and Manchester. The aim is to consolidate the combined firm’s four ­London bases into two, with the international insurance practice based in Minster Court in the City, while the remainder of the firm will be based at Beachcroft’s ­Fetter Lane premises.

Keep calm and carry on

While those changes are effected the message ­internally from Hodson and Murray has been the same as that delivered by Gowan to his firm: it is very much business as usual.

For management, ­however, the hard work is just beginning.

The aim is to grow top-level services by leveraging ­off DAC’s elite insurance ­reputation, while at the other end of the scale commoditised services will be made available to all clients, not just insurance, both domestically and internationally.

It is a bold ambition, particularly for a firm operating across three sectors known for being volatile as a result of economic fluctuations – insurance, healthcare ­(public and private) and real estate. The partners leading the practices (see box) have been tasked by their clients and now their partners with finding new ways of working and billing.

“The insurance market’s a good place to learn how to run a business,” says ­Murray, placing emphasis on the need for DAC Beachcroft lawyers to be more business savvy both in how they work within the firm and how they connect with clients. “There are a lot of contracts, a high demand for good service and some tough margins. We’ve had to be innovative in how we respond to that. Our background means we’ve had to approach clients buying large-scale legal services as bulk contracts.”

Beachcroft acquired its volume arm from ­Kingslegal back in May 2009 to launch ’B2 from Beachcroft’ as its commoditised branch. According to an insider, while the move was potentially revolutionary there were issues surrounding how to separate the Beachcroft brand from B2.

“Clients couldn’t tell one from the other,” says the insider. “They questioned why there needed to be two brands, so the simple response was to mould them together and roll out the commoditised business as part of the whole firm.”

As this decision was being taken Beachcroft was ­developing the technology it had acquired through the Kingslegal merger. Strategically, partners started soul-searching about what it means to be a partner in a modern firm.

“The value clients ­subscribe to legal services is coming down all the time,” says Murray matter-of-factly. “Firms can pretend there’s still work out there on the same rates, but ­corporate fees are coming down. Fees are down by as much as half in some areas. Now it’s down to seeking out the value in our business.”

Know your clients

It has been drummed into the heads of the newly installed DAC Beachcroft practice group chiefs that they must learn how clients want to use the firm.
“In our business we have a number of lawyers who are also business-minded,” says Murray. “The question is, what do you do with that and where should the mid-tier work sit? To me, that should be moving to the process end of the firm.”

Litigation chief Trevor Chamberlain is working with claims solutions head Duncan Rutter to develop the processed service for domestic clients with a view to taking it international.

“The link comes when you look at it from a client perspective,” Chamberlain explains. “Clients want to know that we can deal with anything from the smallest road traffic accident case to disputes involving power stations in Kazakhstan.”

His fellow practice heads agree. Employment and pensions chief Sue Jenkins is looking at how she can internationalise the practice by leveraging off the ­expertise of legacy DAC employment chief Chris Syder while using the ­commoditised service.

“We need to show clients how we can help with their expansion internationally,” stresses Jenkins. “We can learn from the claims arm. Being able to do volume claims is a differentiator. It’s about knowing what clients want and being able to tweak our systems for them.”

The firm will also test how it can use its systems to promote its health business internationally, finding alignments between its insurance market and the private health market.

This will be extended to the corporate commercial practice, where partner Martin Cannon believes the product can be leveraged for a standardised contract. In real estate the market will be tested to see where it best responds to the model.

The planned rapid expansion of the process end of the business should not distract from DAC Beachcroft’s plan to be known for ­international litigation, ­particularly in insurance.

Extra cover

Global insurance head ­Paulino Fajardo, who ­previously headed DAC’s insurance practice, envisages a string of office openings across South America ­initially, with an eye on Australia and South East Asia in the longer term. It is this that will support the drive for deeper penetration in the London insurance market.

“Clients want us to be everywhere, serving everything,” Fajardo claims. “Internationally we’re a ­sector-orientated firm, not only in insurance but also in health and real estate. In this type of business you need partners to work together.”

If the core firm is ­managed effectively and partners are encouraged to be entrepreneurial in their approach, the newly ­combined DAC Beachcroft will not lose its standing in the new insurance market it finds itself in.

The challenge for the firm now is to build on its reputation in the health market and replicate that success in the construction sector.

DAC Beachcroft practice heads

Dispute resolution, Trevor Chamberlain
Global insurance, Paulino Fajardo
Commercial and corporate, Martin Cannon
Employment and pensions, Sue Jenkins
Real estate, Robert Lee
Claims solutions, Duncan Rutter