Focus: David Gold: As good as Gold
05 October 2009
20 January 2010
5 February 2010
15 December 2004
20 January 2010
11 January 2010
Is there anyone at Herbert Smith capable of filling David Gold’s shoes if he steps down as senior partner at the end of the year? Or will he make the shock decision to stand again?
If there’s something Herbert Smith senior partner David Gold can do well it’s theatricality. As one of the City’s leading litigators, his performances are legendary. The melodrama reached a new level at a recent partner meeting. Gold took centre stage - literally - to address the masses, but the normal seating arrangement was ditched in favour of concentric circles.
With Gold’s five-year term as senior partner nearing an end, this could have been one of his final performances at the helm and Gold was in his element.
The symbolism of the set-up was not lost on competition partner Jonathan Scott or litigation partner Tim Parkes. With many partners arriving early to ensure a seat as far back from the action as possible, Scott and Parkes strode straight to the inner circle. Theirs were virtually the only voices that broke Gold’s flow. They are widely seen in the partnership as the two men most likely either to challenge Gold for the senior partner seat or run against each other to succeed him.
Whether the meeting was indeed the beginning of a long swansong for Gold is a moot point for the firm, with the man himself keeping tight-lipped about his future plans. One thing is for certain though: the City litigation powerhouse is gearing up for a mass management shake-up.
Gold may be top dog, but when his five-year term comes to an end in April next year so too does litigation head Sonya Leydecker’s, corporate chief Michael Walter’s and finance head Jason Fox’s. All the key positions in the firm are, therefore, potentially up for grabs.
In itself this situation is not unusual - it is, after all, just under five years since the firm was faced with a similar electoral extravaganza. But while it is widely anticipated that Gold - whose individual leadership style has divided the firm almost equally into Gold-lovers and Gold-haters - will not seek another term in office, he has so far not made his intentions public and speculation about the firm’s future direction is rife.
That former executive partner Parkes will stand is clear - he tells The Lawyer his hat will certainly be thrown into the ring.
Scott, who ran the firm’s competition practice for 12 years until he stood down at the end of 2007, was on sabbatical as this article went to press, but it is taken as read within the firm that his name will also appear on the ballot.
In any case it is unlikely that Parkes, a litigator, will stand unopposed: although Gold’s election to senior partner marked the first time in 20 years that a litigator had held the post, sources at the firm suggest there is a desire for the job to go to a corporate partner this time.
That said, Gold went some way towards appeasing any dissidence from non-contentious practice areas when he named corporate partner David Willis as managing partner in April last year. The appointment has proven popular, with the two Davids seen as complementary to each other, in terms of personality as well as management style.
Potential outsiders who could be interested in running for senior partner include Walter, but he is thought unlikely to challenge Scott, and it is not certain that he will even seek another term as corporate chief. James Palmer is hotly tipped for that role should Walter return to practice.
Leydecker could make history as the firm’s first female senior partner, but is understood to be unlikely to want to give up the litigation practice. Fox, whose practice had an excellent year in 2008-09 and who has not yet achieved his goal of finance contributing a fifth of the firm’s turnover, is not seen as a contender and, in any case, at 46 is seen as too young to win the role.
Walter declines to comment on any of the elections while Leydecker says she is “not able to help” in relation to them. They say it is too early to think about elections. As Fox adds: “The partnership council won’t be turning their attention to this until later in the year. It’s rather too early for input from me.”
This is despite the fact that last time round Gold was named the victor of a contested election before the end of October and had set out his vision for the future of the firm in an interview published in The Lawyer on 1 November 2004. Walter and Leydecker, who both stood unopposed, were confirmed in their posts by the end of 2004 while in March 2005 it was announced that Fox would replace former finance head Clive Barnard, who stood down a year early.
Essentially, the ball is in Gold’s court. Although none of the practice heads are likely to stand against him if he does seek another term, there is a slim possibility that Leydecker or Walter would consider succeeding him. But until Gold makes a definitive decision, it is difficult for the practice heads to make their own plans public.
Gold’s decision, when finally revealed, could well be an anti-climax, in that it is widely expected that he will stand down. Indeed to seek another term could be problematic, not least because he would turn 60 - the firm’s normal retirement age - in March 2011, less than a year into the role.
Sources at the firm say it is possible that Gold could decide to serve only part of the term, particularly as neither Parkes nor Scott, who in reality are the only serious contenders for the role, are seen as having the gravitas to cut it as senior partner.
A source close to the firm says it is possible that Gold will use the option of an extra year so he can groom someone else for the role.
Alternatively, Gold could seek to raise the firm’s retirement age to allow him to serve a longer second period, although this would be fraught with difficulty.
Since becoming senior partner, Gold, who remains one of Herbert Smith’s biggest fee-earners even while running the firm, has taken a tough stance on partners who take out more in profits than they contribute in billings. As he told The Lawyer in October 2007, he would take a hard look at partners who were not net contributors to the firm, ultimately asking the worst offenders to leave.
Although this has not resulted in a mass exodus - just five have left the partnership in the last year - sources at the firm say a number of plateau partners have been encouraged to retire early, earning the name ‘early-to-leaves’ among their colleagues. Of the five who have left, just one resurfaced at a new firm. Of the four who are not at a new firm, two are in their mid-to-late 50s.
It is possible to stay with the firm after reaching 60, although those who do take a much less active role. Having given up partnership for the role of consultant in May, Richard Fleck, who stood against Gold in the last election, still does some fee-earning, although he now works four days a week. Similarly, since reaching 60 Anthony Macaulay does one day a week as a consultant in the corporate practice while John Farr is an employment consultant.
Regardless, the anticipation is that there will be more early leavers in the months ahead, with one source at the firm describing the quiet cull of partners as something akin to the night of the long knives, with endless emails being circulated to partners announcing that so-and-so is taking some time out to “consider their options”. It is not unusual for partners to take four-month-long unpaid sabbaticals while doing their ‘considering’.
Raising the firm’s retirement age, for whatever reason, would only serve to exacerbate this. Finding ways of freeing up some up of its tightly held top-heavy equity is already an issue for Herbert Smith, whose ranks of non-equity B partners - who will get a third of a vote each in the management elections - feel marginalised by the unattainability of the equity.
Whatever the outcome of the senior partner election, the victor will have their work cut out for them building on the firm’s international presence, something that has preoccupied Gold during his tenure.
But with some partners suggesting that a full merger between Herbert Smith and its European alliance firms Gleiss Lutz and Stibbe could finally take place within the next three years, Gold could well stick around to finish what he started. It may be a controversial move, but if there’s one thing Gold has proved during his time as senior partner, it’s that he is not afraid of controversy.