Focus: DLA Piper: Bob slay?
28 September 2009 | By Kit Chellel
DLA Piper’s finance and projects lawyers are going to have to prove their worth to incoming chief Bob Charlton - after all, they saw what happened at Freshfields
Given the events at Freshfields Bruckhaus Deringer a few years ago, the appointment of finance partner Bob Charlton as head of DLA Piper’s global finance and projects practice was bound to raise eyebrows.
Charlton, along with another then-Freshfields finance partner Perry Noble, oversaw one of the most brutal partner culls in magic circle history.
Up to 100 equity partners ended up leaving the firm between 2005 and 2007, during which time Charlton was London head of finance.
It is a fact clearly not lost on partners in his new department, DLA Piper’s finance and projects (F&P) group in Europe, the Middle East and Africa (Emea).
Charlton, who arrived at DLA Piper a week ago, declined the opportunity to discuss his plans for the department. But the first question is obvious - and indeed, is anticipated by one of his senior colleagues.
“People here have asked me, ‘Have you brought Bob in to do what he did at Freshfields?’” says Andrew Darwin, the firm’s European managing director. The answer to that question, Darwin assures The Lawyer, is an emphatic no.
But that does not mean anyone in the F&P group should rest on their laurels. If Charlton’s appointment signals one thing, it is that the management at DLA Piper is looking to shake up the practice.
One of his first jobs will be an overarching review of what the practice does. Or, more accurately, what the practice does best. Charlton himself is keeping shtum about his plans until he has completed his audit, but he has hinted that he wants the practice to be more focused on areas of strength.
“It’s a good time to look at which areas need investment,” says Darwin. “Are there any areas that aren’t going to recover that we need to look at more critically?”
The practice Charlton inherits is resolutely mid-market, but holds ambitions to move further up the food chain.
For the past few years it has been run entirely incongruously from Vienna by Stefan Eder, who will now return to fee-earning.
Considering that the London office made up some two-thirds of the £88m generated by the F&P group in the Emea region during 2008, it was always a bizarre situation, says one former DLA Piper partner. “It was basically to give the Europeans some sort of carrot in terms of management,” he adds.
The practice emerged in its current form three years ago, following the merger of the finance and projects practices at the start of 2007.
At that point the DLA Piper management set out a three-year strategy for what was to become an increasingly important area for the firm.
The practice already had panel places with all five major UK banks - Barclays, HSBC, Bank of Scotland, Lloyds TSB and RBS - particularly on leveraged finance, corporate finance and asset finance issues.
The plan hinged around developing those relationships further with these banks, both in terms of lending and projects work.
The strategy was a qualified success. You might not often see DLA Piper advising banks on the headline-grabbing deals, but the firm has maintained strong relationships with RBS, Lloyds TSB and Barclays, particularly for mid-market work.
For example, in August 2009 finance partner Peter Crichton advised RBS on the provision of £103m of facilities to First Corporate Shipping, better known as the Bristol Port Company.
At the beginning of last year, albeit in more optimistic times, the firm, again led by Crichton, was called in by Lloyds TSB and RBS for the management buyout of shoe chain Kurt Geiger.
“It’s fundamentally a mid-market business, doing bread-and-butter things for clearing banks. But they’re clearly committed to it,” comments a former partner.
A claim of two halves
However, it has not been all plain sailing since the merger of the two teams. Within the projects half of the group there is a sense that the practice has been neglected in favour of the higher-profile finance team.
Several projects partners left after the two groups combined, including Birmingham head of projects Nicholas Iliff to Pinsent Masons in December 2007, and the exits have continued this year amid claims of a lack of clear leadership.
“There was no plan for projects, no vision. There was a deep scepticism by finance people for the projects team,” reveals one lawyer who recently departed the firm.
UK F&P head Michael Burton denies this. “It’s a smaller practice,” he says, “but it continues to have equal levels of investment.”
The claim rings slightly hollow given how much the projects group is overshadowed by finance, especially in the UK, where finance makes up 80 per cent of the F&P group’s revenue, although in Burton’s defence both parts of the practice received three new partners in the 2009 promotions round.
And yet projects, which has been patchy, is a practice worth investing in. One of the largest deals of recent times was a £7.5bn high-speed train deal awarded in February. Partner Mark Swindell acted for the successful Agility Consortium, which includes Hitachi and Barclays Private Equity.
Here and there
Charlton will also have to get his head around an issue he would never have faced at Freshfields: the increasing divergence between DLA Piper’s global clients and its local ones,
the latter being serviced from Birmingham, Leeds and its other UK offices.
It is a problem unique to the firm, a symptom of its remarkable growth from a small Northern outfit into a global powerhouse.
“The regional and the London offices went off in different directions,” comments a source close to the firm. “The problem in the regions is that there’s no clear reason for them to exist other than the fact that they’ve always existed.”
The firm’s talismanic joint CEO Nigel Knowles insists there is no tension between the international and provincial faces of DLA Piper, but critics question whether the same firm could, or should, be advising Barclays on a multibillion-pound financing deal (the sort of upmarket instruction that Knowles covets) and small waste disposal projects in Manchester.
Charlton will also have to call on all his experience of the Middle East to tackle what can only, politely, be described as a febrile atmosphere in the firm’s offices in the region.
F&P is the firm’s single largest practice in the Middle East, but redundancies and internal strife have taken their toll on morale.
Comments posted on TheLawyer. com illustrate the widely held theory that the Dubai office in particular is viciously divided along national lines between the UK and Antipodean lawyers.
What is certain is that strong leadership is needed to get the practice back on track.
And there, at least, Charlton will not lack support from management. Knowles has indicated that F&P is fundamental to his future plans.
Revenue for the group in 2008 was up by around £10m to £88m compared with 2007, helped by growth in Continental Europe and the Middle East.
And there are even rumblings of more stellar lateral partner hires being negotiated.
After reviewing the size and shape of the practice Charlton will unveil a new three-year plan; and given the upheaval in the financial markets over the past few months, it will be a good time to do so.
“A lot of the basis of the last three-year plan has changed very dramatically,” states Michael Burton. “Because of all that we feel we need some new ideas and a new focus.”
Fears of another Freshfields-style cull might be wide of the mark (although rumours of equity partners being forced out continue to swirl around the practice), but one thing is clear: change is coming - and the man appointed to bring it about is not afraid of making tough decisions.