Focus: Osborne Clarke, The joy of sectors
7 March 2011
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Osborne Clarke is at a crossroads. After five years of retrenchment, it is suddenly re-embracing internationalism
When the marketing gurus got hold of Osborne Clarke ahead of last year’s rebranding project, sporting their ubiquitous Soho haircuts and open-necked shirts, one of the first things to be consigned to history’s dustbin was the old logo.
Apparently, the image of a two-dimensional panther walking away from the firm’s logo was not the dynamic branding necessary to promote a firm that saw itself as aggressively attacking the market.
Now the former silhouette has become a fully formed, sinewy 3D beast, strutting majestically into a bright future, ready to pounce on any straggling competitors dropping off the back of the herd.
The idea, no doubt, is to convey the image of an entrepreneurial firm preparing to leave behind its regional origins in Bristol as it strives to become an international player.
On the nuts and bolts side of the piece - the bit that matters beyond the graphic design ghetto of Soho - what the firm did was reorganise itself along sector lines, with four newly created groups designed to allow it to make surgical strikes at particular sweet spots in the wider market, and subsequently to improve the quality of work it wins.
The difficulty so far is that the transformation has not communicated itself to the market.
“Nobody ever really talks about them any more,” intones one recruiter, before adding that Osborne Clarke is nevertheless a “well-run firm”.
The four sectors groups that have now been operating for a little under a year are: digital business, led by Mike Turner; financial services, led by Paul Anning and Tim Boyce; real estate and infrastructure, led by Leona Briggs; and energy and natural resources, led by David Ferris.
Osborne Clarke hopes that what it calls its ’sector-first’ approach will help it achieve parity with some of its bigger, more resourceful peers in certain targeted areas. There’s a tacit acceptance that the firm cannot be all things to all clients, and that to fulfil its occasionally vaulting ambition it will need to pick its battles with care.
“The sectors are pretty broad,” admits managing partner Simon Beswick. “What we have to do is take the niches where we have a good foothold in the market and build off those.”
Beswick highlights financial services regulation, venture capital, cleantech and renewables as examples of those successful niches, but it is the combination of these that Osborne Clarke is trying to find. It is that combination that produced the practice groupings that ultimately formed the four sectors.
“When we get something that can overlap in about three areas, that’s when we think we’re on the money,” continues Beswick.
Internally, the revenue garnered from work that combines the firm’s various areas of expertise has come to be known as ’relevant turnover’.
“It’s relevant because it’s what we want to be famous for,” explains Beswick.
What precisely Osborne Clarke wants to be “famous” for is a difficult question, however. The firm insists that there is no identity crisis. While crisis would certainly be too strong word for a well-managed firm that has kept both profit and morale at a good levels through two recessions, outsiders struggle to identify precisely what sort of beast the panther is; and even some within the firm find it hard to pinpoint direct comparator firms.
Yes, there is a highly regarded media practice there, but a client list that includes such corporate heavyweights as Electronic Arts, Google and News International suggests a subtly different firm to the brash Holborn swagger of an Olswang, with its trendy film and TV company client list, while the recent success of Bird & Bird in revenue terms makes a comparison with that outfit equally tenuous.
However, try suggesting that Osborne Clarke should set any of its Bristol rivals up as a benchmark and you can almost feel the hackles rise.
But while the more parochial ambitions of, for example, Burges Salmon and TLT have produced impressive results, Osborne Clarke’s growth has been more a case of steady as she goes.
A look at the firm’s turnover in the past 10 years is informative. Revenue rose steadily from £50m in 2000-01 to a peak in 2007-08 of £95.3m. It has since dropped off slightly in the face of the recession to stand at £83.7m. Over the decade this represents a healthy increase of 67.4 per cent. Burges Salmon, meanwhile, has doubled its revenue in the same period, while TLT has more than trebled its turnover.
Meanwhile, another technology-driven firm, Bird & Bird, has more than quadrupled its turnover from a near-identical starting point, and notably has put its money where its mouth is in the international expansion stakes. However, if you use profit per equity partner (PEP) as your preferred metric, progress has been pretty much identical, with Osborne Clarke’s figure rising by 17 per cent compared with Bird & Bird’s 16 per cent. To some this is a statistic that reveals an intrinsic conservatism at the former firm.
“If you compare Osborne Clarke now against its peer group, it’s fallen behind,” says a source familiar with Osborne Clarke. “It’s gone backwards slightly as a firm when it shouldn’t have had to, but at the same time PEP’s gone up because it’s kept costs tight.”
The source identifies the problem as an unwillingness, certainly in days gone by, to invest in areas in which it has traditionally overachieved.
“You have to promote excellence in one or two areas, put dollars behind it and stick to the plan,” he emphasises. “That’s what they’re trying to do now, but it could have been done years ago.”
Preparing for lift-off
Beswick himself denies charges of conservatism, while accepting that consolidation through the previous decade was a necessary precursor to the expansion he now predicts.
“If you compare the law firm to a person growing up, the 1990s were our teenage years and we needed to mature in the 2000s,” he says. “We needed to institutionalise the firm and that’s what we’ve been doing. Now we’ve got the internal process up to speed in terms of size and ambition and we’re about to go on to the next level of our growth journey.
“I wouldn’t say we’re at all obsessed with PEP. I’m a great believer that a law firm has to grow and improve in all areas at the same time. We have to build clients, profits and profitability together. Moving PEP on its own wouldn’t take the firm in the way we’d want it to go.”
Cutting costs was a feature of the past decade, highlighted as much as anything by the deal with Integreon that saw a large chunk of the firm’s back-office functions transfer to the legal process outsourcing (LPO) provider. It is a deal Beswick is proud of, but the firm would like to turn its attention to expansion rather than belt-tightening.
Osborne Clarke now pitches itself as a City firm with a European reach that just happens to have been born and raised in the West Country. In time it would like to be an international firm, pure and simple, if not one that can challenge the big boys across the full range of sectors or practices.
City corporate chief Adrian Bott admits that there is an ongoing battle against old perceptions.
“Clearly it’s a frustration to some degree,” he says of the persistent ’Bristol firm’ label. “We’re not trying to deny our roots, but our aspiration would be to get people to understand that, as we build scale and reach, we’re actually more of an international firm than a national one. That’s what we’re aiming for and focusing on.”
Beswick also warms to the theme.
“When you look at the clients we want to act for in five years’ time, they’re likely to be significant international businesses,” he says. “So when you try to look at what type of law firm they’d instruct, you’d think it needs to look more international than Osborne Clarke does today.”
Today the international aspect consists of a successful, mainly transactional German offering based in Cologne and a small Silicon Valley office, run by lone partner Steve Wilson, providing solely European law advice mainly to digital media clients. Away from its own offices Osborne Clarke has a network of alliance firms in Belgium, France, Italy, the Netherlands and Spain. Not bad, but hardly a global powerhouse yet.
“We’re not a believer that we have to be everywhere and offer all services to all people,” insists Beswick. Yet growth is certainly coming.
“We’re going to have more dots on the map for sure, over time,” asserts senior partner Tim Birt. “What we’ve learnt from Germany, though, is that we have to start with the right people. It’s all very well having a strategy, but you need the people to [put it into practice].”
It all sounds as if more slow and steady building is the way Osborne Clarke wants to do things, and the same goes for its client base. But the accumulation of higher-value work has already begun from both new and existing clients.
The firm was instructed by News International, advising on IP issues relating to establishing a paywall for The Times, with two partners in the digital business group, Theo Savvides and Nick Johnson, leading. The pairing is a prime example of how the sector initiative works, with the two coming, respectively, from IP and commercial advertising backgrounds.
“What’s happened is that, while there used to be a number of people who had a fully integrated sector focus, now everyone’s thinking along those lines,” explains digital business head Turner.
Turner himself accepts that his part of the business is slightly ahead of the rest in terms of the integration of practice areas as well its global reach.
“That’s partly because this sector’s very international,” he says, almost apologetically. “A number of our clients are international businesses.”
He points to examples such as longstanding client Yahoo! and the more recently won Facebook as typical of the clients for which Osborne Clarke would like to act.
But other significant instructions, away from the digital arena, have also come since the change in emphasis. These include advising another existing client, Eurostar, on pensions matters (a mandate that had previously been the exclusive domain of Clifford Chance) and winning a place on construction giant Galliford Try’s southern panel. Both pieces of work came out of Briggs’ real estate and infrastructure group.
Briggs herself, a litigator placed at the heart of the real estate group, is emblematic of how the firm’s strategy is now about trying to think how it can work for clients in different ways.
“We have a great existing bunch of clients within the sector,” she explains. “We want to do more for them, and if they can get more out of their legal advice from us it works both ways.”
And what goes for Briggs’ sector goes for the firm as a whole. While some firms have fallen into the trap of becoming jacks of all trades, Osborne Clarke just wants to be a master of some. It is getting there, but it will not happen overnight.
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