Dibbs gears up to storm top ten
24 May 1999
There was a "honeymoon period" after Dibb Lupton Broomhead merged with Alsop Wilkinson in 1996 when "DLA" (as the firm is now known) outperformed the combined budgets for the component firms. But after that, the current managing partner admits the firm faced "a hard year".
"We had to get everything properly integrated and establish a third culture, which sounds rather like Tony Blair's Third Way, but we did it first. It was all internally focused that year and it was hard," says DLA's managing partner Nigel Knowles (pictured).
Having defined the Third Way, DLA has now turned to that other politician's favourite - The Vision Thing.
This month, the firm announced record revenues of £126.1m and set out its stall in a three-year plan: "To be top 10 in the City and dominant in the regions with a credible European capability all leading to the creation of an integrated European law firm."
DLA has already signed deals with Brussels and Barcelona firms, though it cannot announce their names until bar association clearance is received from Belgium and Spain. It also hopes to sign deals in Milan, Paris and Madrid within six months, followed by Frankfurt.
"What a lot of firms have done is produce a budget and then a plan; what we've done is put together a plan and then we have budgeted the plan. That's how corporates do it. You can't do them both in tandem, because you don't know which is driving the other."
Knowles stresses that DLA is firstly a business, driven by profit rather than turnover. It has moved away from areas that are not profitable enough, such as low-level insolvency.
This, he says, means that while turnover has risen by 12.8 per cent, profits are up 2 per cent over that figure. Profits per partner have grown by about £45,000 in the last year.
"Everyone at DLA will understand the plan," says Knowles. To make sure of this he is going to every regional office, as well as Brussels and Hong Kong, to spell out the plan to everyone in the firm.
This inclusive approach seems a good idea for a firm that has lost between 18 and 23 partners in the last year. Knowles concedes that "a good number" have left but says he would have wished for only "a tiny minority" of these to stay.
A recently departed partner says the firm is still not a happy ship and partners remain disenchanted with management. "More people will leave," he says. Another says: "It depends how they treat people, and they're not very good at that."
But Knowles says the firm's culture is "increasingly co-operative" and that partners are united behind the firm's new strategy.
Knowles stresses that the vision is the result of a year's careful consideration, identifying objectives, strategy, and the firms that will be part of the European alliance. "We have not just sat down over a few beers and decided we want to be top 10 in the City."
A former partner says Knowles accepted DLA was not going to achieve top-five status in three years. Instead he named Herbert Smith, Cameron McKenna, Norton Rose, Simmons & Simmons and Lovell White Durrant as the firms DLA must compete with to realise its vision.
One of these firms' managing partners questions DLA's ability to attract top quality partners and clients. "How many people are going to leave a top-10 firm to join Dibb Lupton? They are not practice area leaders and they haven't got the quality of people, so in a nutshell I don't think they've got much hope."
But Knowles is used to this kind of criticism, and meets it head on. "A lot of people are desperate for us to trip up. In 1991 we didn't have an office in the City. Now we are turning over £50m, so we must have taken work from a lot of people.
"They don't know what we are going to do next, and we must have made life uncomfortable for a lot of them. Unfortunately for them, they'll not prevail."
John Heller, senior partner of arch-rival Hammond Suddards, is complimentary about DLA's ambitions. Its European plans are, he says: "eminently sensible and practicable. If they get the right partners and the right work it can be achieved".
Of DLA's aspirations to be known as a top-10 firm, Heller says: "That comes with time, but it's a realistic ambition. They've expanded immensely over the last decade." He believes that Herbert Smith and Lovells are in a league of their own below the magic circle firms, "but everything else is up for grabs".
Knowles believes one of the main areas that needs to be worked on is bringing in more work from clients in the top quartile of the FTSE 100. But former partners and rival firms believe it will be hard for DLA to turn the kind of work it does in the UK into top quality business. "They say they have FTSE 100 clients, but a lot are people like the Halifax, who they do mortgage repossession work for in Bradford. That's not the same as doing mortgage securities or Eurobond issues. It's pie in the sky and they've got aspirations beyond their capabilities," says a former partner.
Rivals too are sceptical of the European alliance strategy. "That's what you do when you can't afford to open your own offices isn't it?" remarks one.
Another, more kindly commentator, expresses concern that relationships with continental firms take a long time to develop before each side feels comfortable with the other. But Knowles says DLA's advantages are that it is not arrogant and is seeking genuine partnership with its allies. He also believes the firms will be comfortable with DLA's experience of running a multi-site operation and will not feel swallowed up, as they might if they merged with a firm that billed £100m-plus solely from London.
Yet it was only three years ago that DLA was looking west, as ex-managing partner Paul Rhodes sought merger with a US firm. Since then, the firm closed its New York office in February. Knowles says it still wants to "develop relationships with similarly minded law firms" in the US, but clients want the firm in Europe.
Philip Brown, of legal consultants Hildebrandt International, is sceptical about DLA's plans. "That's an extremely ambitious strategy and it will be very difficult to achieve."
He also questions the notion of a top-10 firm. "It's a phrase people were using five or six years ago. You have to see the market in terms of the premier division, five or six firms below that and then the rest."
He says the firms below the top five all have issues they must address as business becomes concentrated with the premier firms. They have to ask whether they want to be pale imitations of the top five.
But Knowles says: "This is a firm that's got it right, so just watch out."
Dibbs' criteria for a top-10 firm
Top 10 in London league tables
Top 10 in terms of corporate/banking teams
Comparable fee levels and profitability
Attract more FTSE clients
Develop 'City' services
Achieve true 'City' quality in people, service delivery and systems
Invest in IT
Develop brand and image
Secure a credible European capability