Herbies chief delays management exit to oversee Freehills integration
Firm expects to appoint a single chief executive when David Willis stand down
Herbert Smith managing partner David Willis has been forced to delay plans to step down next year while he oversees the firm’s merger with Australia’s Freehills, after which the combined entity will be run by a sole chief executive – likely to be Freehills’ Gavin Bell.
Willis had intended to step down in April next year when his term as managing partner, which has already been extended twice, came to an end. However, Herbert Smith’s tie-up with Freehills (28 June 2012) invoked a transitional period written into the information memorandum on the merger, meaning that Willis will stay on for another two or three years.
When the merger goes live in October, Willis will serve as joint CEO along with Gavin Bell, currently Freehills’ managing partner.
When the transitional period comes to an end, Willis will step down and the combined firm will move to appoint a single chief executive. The appointment process will be overseen by the firm’s governance board and then ratified by a partner vote.
One source close to the firm said that Bell’s position means he is the most likely candidate to become the combined firm’s sole head: “My understanding is that David Willis was intending to retire this year, but will stay on because of the merger, and then Gavin will take over as managing partner,” said the source, adding that if that was the case it would give credence to talk that some Freehills’ partners consider their firm the stronger party in the relationship.
That said, Herbert Smith senior partner Jonathan Scott will head the combined firm’s governance board, which sits atop the management team.
Over the integration period, Herbert Smith and Freehills’ remuneration will align, subject to a consultation within the firm, creating a modified lockstep where partners are are awarded shares based on experience but also on performance. At present Herbert Smith has a pure lockstep, while Freehills has a modified lockstep.
It is not yet known whether Willis, a corporate lawyer by background, will stay on at the firm when he eventually steps down.
Willis became Herbert Smith’s first managing partner when he was appointed for a two-year term in 2008 (21 April 2008), but before that term expired it was extended to 2011, and then extended again in 2011 to 2013.
Readers' comments (12)
Anonymous | 24-Sep-2012 11:10 am
Is this a sly move by Herbies management intended to appease the Freehills naysayers? The merger isn't the most popular of moves. Too little too late is the phrase that springs to mind.
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Koala attorney | 24-Sep-2012 11:25 am
As more details emerge, it's more apparent that it is definitely an OZ reverse merger!
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anon | 24-Sep-2012 1:40 pm
Herbies management essentially sold the firm to the Aussies for cheap! Even managed to bust the sacred Herbies lockstep in the process - something David Gold tried to do for years without success. Will be fun to watch a handful of full time managers at the top of Herbies reap the rewards when they pay themselves nice big bonuses under the new "modified" lockstep. Too bad for the rank and file who actually work for a living.
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The Hatchet | 24-Sep-2012 2:16 pm
Willis is staying on to do what he does best... fire people! The only way this merger will be successful is if the new firm can do more with less.
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Herbies Partner | 24-Sep-2012 2:24 pm
This article makes no sense. We all know Willis retired years ago. He's just been hanging around annoying the rest of us since then.
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Anonymous | 24-Sep-2012 2:28 pm
Herbert Smith has a "pure lockstep"? Not for the 50+% of the partnership comprised of non-equity partners!
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Insider | 24-Sep-2012 2:36 pm
Ironic. Willis was made managing partner in 2008 to stop David Gold from destroying the firm's culture and to prevent a coup by unhappy partners. Then Willis ends up being the mastermind of a deal that sees the firm's culture radically altered by a reverse takeover and the loss of the firm's sacred lockstep. Does anyone at Herbies miss David Gold now? Guess he wasn't so bad afterall.
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Anonymous | 24-Sep-2012 2:49 pm
Kudos Freehills! How did they manage to pull off the biggest reverse merger of the legal world?
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The Aussies are Taking Over! | 24-Sep-2012 4:38 pm
The most striking aspect of this merger as the full details come to light, is that in terms of management, and hence control and strategic direction, Herbies will soon in effect become the obeisant London branch of a large Australian law firm. Quite incredible, considering Herbies was once a challenger to the Magic Circle.
If one adds Slater & Gordon's takeover of RJW, then we have two Aussie firms taking over UK firms, albeit in different parts of the market. Quite a shocker.
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Henry | 24-Sep-2012 8:10 pm
DW,
Best of luck - nice game plan. Henry
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Rolf Harris | 24-Sep-2012 9:22 pm
Can you tell what it is yet?
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What it is | 28-Sep-2012 1:52 pm
It's a mess. What more do you need to know. Seventy partners are threatening to leave.
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