Eversheds CEO Bryan Hughes’ finance-focused style suited the recession, but his challenge now is to take the firm to the next, global, stage
There was an element of theatre to Eversheds’ 2012 partner conference, held in Vauxhall’s Park Plaza hotel in June, and it was not to everyone’s taste.
The Park Plaza conference was an important one for Eversheds. The firm was launching its new three-year plan and its longer term ‘2020 Vision’. The strategies were developed following a thorough consultation with partners and were predicated on creating a unified standard of quality across Eversheds’ international network. After a short video about the business and an introduction by chairman John Heaps, it was chief executive Bryan Hughes’ turn to take the stage.
“Bryan had his hands-free microphone around his ear and was roaming the stage with his chest puffed out like a scary Michael McIntyre,” says a source who was at the conference.
Another person watching the management presentation that day said it felt like the firm was trying to build a cult of personality.
“The lights went dark and then they came on stage, says the source. “It didn’t feel very human. It was almost like they were trying to manufacture themselves into leaders in the same way that politicians do.
“I don’t think Hughes is a natural performer. He was telling bad jokes and there was a sense of him trying to be too matey with the audience, which didn’t ring quite true. People were thinking, ‘what’s this Welshman doing?’ He made his money running a volume churn business. Is he really the right person for this?”
Ignoring the Welshman jibe, the question goes to the heart of where Eversheds is now. Although the firm has spent the past three years ridding itself of bloat, its partners know Eversheds must start tapping its international network more effectively if it is not to become a zombie firm, where hopes for survival rest on a white-knight merger.
In short, Eversheds will live or die according to its vision of becoming a global business adviser. The question is – is Hughes the right man to deliver that goal?
“It’s a valid question,” agrees Hughes, who certainly looks the part of a chief executive with his slick mannerisms and pin-striped suit. He has a genial patter too, although you get the impression that this aspect of his character runs nowhere near as deep as his determination. It is not hard to believe colleagues of his – both past and present – who say he is an ambitious man and not to be crossed.
Hughes concedes that he is stepping out of his comfort zone with the new strategy and that he has a lot to prove, but adds: “I think that the jobs I’ve done up to this point have given me credibility in delivering on things.”
Certainly, Eversheds’ partnership thinks Hughes is the man for the job – or, at least, nobody at the firm is willing to challenge him. Hughes’ second four-year term as chief executive, which begins in May, was confirmed in September 2012 following an uncontested election. But Hughes is correct when he says that he has achieved much, but still must prove himself. To some extent, the points are linked.
Hughes’ period in charge so far has given him the chance to prove himself time and again at what he does best, but little chance to show anything beyond that.
Game of thrones
Hughes came to power as chief executive of Eversheds in May 2009 on the back of another uncontested election. Such coronations seem to be the norm for Eversheds.
The firm’s only hard-fought race was in 2002/03, when David Gray narrowly beat Michael Brown (Adrian Bland, who is now at Wragge & Co, also stood) in a divisive contest that resulted in acrimony and the firm’s dirty linen being washed in public, and left little appetite among the management to do it again.
Hughes had certainly been groomed for the top job, serving as then chief executive David Gray’s number two for six years. When Hughes set out his stall to partners ahead of becoming chief executive it was on a continuity ticket. His plan was to continue Gray’s efforts to turn what was still a disparate bunch of regional offices (Eversheds only came together as a unified firm in 2000) into a cohesive commercial outfit, to increase the size and prominence of the London office and to expand overseas.
Of course, all this was mapped out before Lehman Brothers collapsed in September in 2008. In the wake of the global financial crash in 2008/09, Eversheds’ turnover nose-dived from £390m to £365.9m, while average profit per equity partner (PEP) cratered by 27 per cent, from £552,000 to £404,000. And Hughes’ priorities changed.
“What I’d have liked to have done more of in the past four years is what we’re doing now,” says Hughes, “but unfortunately the credit crunch intervened and visionary thoughts had to be put to one side. I had to make sure the firm came out of the crisis at least as strong, if not stronger, than it had been before.”
For all that Hughes laments that his jokes about spending his whole time as chief executive in recession have “come back to bite me in the arse”, there is an argument to be made that the situation has played to his strengths.
Hughes’ six years spent running Eversheds’ internal operations (prior to that he was the Cardiff office head) allowed him to hone his reputation as a tough manager who is good with a spreadsheet: the perfect skill set to manage a business in a downturn.
“What we needed at the time [of Hughes’ first term as chief executive] was recessionary leadership, and that’s what we got,” says a partner at one of the firm’s regional offices. “Bryan is very focused on numbers. Throughout his tenure his strengths have been in finance disciplines, but that’s what we’ve needed throughout his tenure.”
Few would doubt that Eversheds is a tighter ship than it was before Hughes took over. The firm is as profitable as it has ever been, with average PEP now £632,000. Its profit margin has also risen – marginally – from 20.5 per cent in 2007/08 to 21.7 per cent in 2011/12. And since 2004/05 profit per lawyer has doubled, from £33,000 to £66,000.
In addition to keeping on top of the numbers Hughes has spent a lot of time getting partners and staff to re-engage in the business in the wake of the four separate redundancy rounds between 2008 and 2009, which resulted in around 735 job losses and had a crushing effect on morale.
“For the past few years my focus has been on internal stuff,” says Hughes. “I’ve spent a lot of time talking to people, telling them where we are as a firm. Morale was at rock bottom, but we’ve managed to pick that up again.”
Even those who are not enamoured with Hughes admit he has done a good job running the firm’s operations and managing it as chief executive throughout the recession.
“You’ve got to give credit to Bryan because after the redundancies he kept the ship level,” says one source close to the firm, who nonetheless questions Hughes’ credentials in other aspects of leadership.
One criticism of Hughes’ first few years as chief executive is that the belt-tightening and drive on performance hurt the firm’s culture.
“Eversheds always used to talk about its culture and about people who wanted to be ‘Eversheds people’,” says one former partner. “That was one of the problems with the redundancy thing – it shifted the scales a bit.”
“Hughes has presided over a more bean-counting approach and that’s affected the way the staff feel about being part of the business,” says another former Eversheds lawyer. “But I’m not making a value judgement or saying that the firm shouldn’t be doing that – when I first joined, I thought its approach to finance a bit slack. You can’t have it both ways.”
“We’re more hard-edged as a firm but we still have all the good bits of Eversheds,” he insists. “We’ve brought more of a business focus to the firm but the really good people welcome that. You can have it both ways; you can be collegiate and profitable.”
“I think the fun is still here in the firm,” says one Eversheds partner, supporting Hughes’ contention. “I like to think that we’re a bit different and our culture should always remain. Sure, it’s different because it’s much more international now, and with that comes expectations about flexibility.”
Still, the culture quibble is a half-hearted criticism at best. If Eversheds continues to be successful, people will forgive most cultural shortcomings. Just ask Linklaters.
The bigger concern is that while the downturn has given Hughes the chance to prove himself as a wartime leader by forcing him to stick closely to the operational running of the firm, it has also robbed him of the opportunity to show that he has the vision and presence to take Eversheds to the next level – into the boardrooms of UK plc companies and around the world as a global business adviser. Unfortunately, for Hughes, that is where he has most needed to prove himself.
“Bryan Hughes is very much a regional lawyer,” says one former Eversheds partner. “He’s not a London person and it’s quite apparent that he’s not. If you look at the people he has surrounded himself with, his close confidants, they’re all regional people who have later come to London.”
“He seems very determined and able, but also a bit lightweight,” says another source familiar with the firm. “It’s not like at Pinsent Masons and Wragge & Co, which said they were going to conquer London and where the management are all City types.”
Although not precisely the same thing, in an age when commercial law firms are desperate to be seen to be promoting social mobility at the junior end of the profession, it is sobering to see such a negative interest in Hughes’ pedigree.
Undoubtedly, Hughes’ path to leadership has been a little different from your average City firm manager. He joined Cardiff firm Phillips & Buck – which later became Eversheds’ Cardiff office – as a trainee in 1984. He qualified as a commercial litigator and practised a broad mix of insurance litigation, mostly on the defendant side.
“I did the big, messy stuff,” he says.
To make equity at the firm Hughes was forced to move over to the banking and finance team, where he took charge of a small commercial recoveries business. By all accounts he excelled at making money out of this volume business and went on to build other litigation practices at the firm before being made Cardiff managing partner in 2000. Hughes says this grounding has given him a good steer for today’s legal market.
“Some people might see volume work as a pejorative term, but we were managing high volumes of complex work, with the bank clients being very canny on rates,” he says. “So we were experiencing 10 to 15 years ago what firms are going through now.”
Hughes was brought into the senior management team in 2003 by David Gray, who asked Hughes to be his chief operating officer (COO) when he ran for chief executive (or managing partner, as it was then). Following that, Hughes spent three years as COO of Eversheds and another three as its UK managing partner running business services, practice group heads and budgets before graduating to the chief executive role.
But, rightly or wrongly, even though Hughes has spent the past 10 years at Eversheds’ highest level of management, many current and former Eversheds lawyers interviewed for this article still tend to think of him as the volume-business lawyer from Cardiff, especially when Hughes talks about London, and moving up the food chain with clients.
Although London is now Eversheds’ geographical headquarters, there is a lingering feeling that the office has never really punched its weight. The portion of revenue attributable to work done in the capital has only increased from 20 per cent to around 24 per cent since 2001. There is also the feeling that Eversheds as a firm lacks any figures with sway among the City’s top corporates.
“Eversheds is process-oriented and it streamlines itself well, but it clearly targets mid-tier work,” argues another former partner. “There’s no doubt that Hughes knows how to get the best of people who do mediocre work for large companies, but can he rock up at a meeting with a key FTSE 100 account and understand what that client needs from its adviser? I don’t think so.”
“That would be the view of someone who didn’t know me,” retorts Hughes, “because that’s exactly what I do. I go to forums and dinners – I’m travelling to meet Louis Dreyfus in Lyon tomorrow, for instance – and I speak to clients, although I admit I’d struggle if they started asking me for advice on a hostile takeover.”
Another argument put forward by one former Eversheds corporate finance lawyer is that, in his experience, the firm’s strategy of moving up the food chain with clients did not work.
“I’d talk to bankers and ask for work, and mention the work we were already doing for the bank,” he says, “but they’d always reply that it was a different area – that we just did debt collection work in Manchester or Leeds. So we were disadvantaged.”
Hughes adds that it is not true Eversheds has failed to move up the food chain in terms of quality of work with clients. One example given by the firm to refute the claim is Tyco. In 2007 Eversheds signed a deal with the company – which has since been renewed – to provide it with legal services across Europe, the Middle East and Asia. The firm says that in the early days of the contract it billed £5.2m a year on volume work, whereas now it bills £2.5m a year for “basic scope work” and £7.5m on more complex matters.
The problem, suggests one external consultant, is that Hughes does not draw enough attention to himself, combined with a prejudiced conviction among the market that “anyone outside London must be chewing straw”.
“I think he comes across as quite low key and doesn’t bang his chest,” says the source about Hughes. “But he is quietly effective and the progress Eversheds has been making is pretty impressive. Profitability is up, it’s been developing key clients and it has done a lot of work on integration. It’s not all exciting, but it’s exactly the sort of thing that the management should be concentrating on.
“People say that the firm does just second-tier work but you wouldn’t get to the level of PEP that Eversheds has if that were true, even if the firm is flattered a little by its ratio of equity to non-equity partners. It has an impressive roster of FTSE clients, too. It’s not on the bet-the-farm stuff, but it’s still a list that a lot of people would die for. It has clients such as Boeing, Du Pont, Volvo and Smiths Group, which are demanding companies and won’t put up with a firm that is not delivering.”
Hughes agrees that he’s not used to “beating his chest about things” but tempers that by repeatedly stressing that it’s not all about him. And he flat-out rejects any claims that the firm is interested in creating a cult of personality.
“Some firms have a cult of the individual,” he says, “but that’s not Eversheds. Here, it’s about the brand. I do have a part to play in delivering that brand, but it’s not all about me.
“When I was re-elected I said that there are many types of managing partner – charismatic leaders and visionaries, for example – and although you have to tick all the boxes in some respects, that’s not really what I’m about. I’m here to make sure the business runs properly, has a sound financial platform and a good strategy.”
Undoubtedly, Hughes has put his back into ensuring Eversheds’ strategy is the right one and then articulating that vision to his partners. Hughes began the consultation that led to the three-year plan and the 2020 Vision at a partners meeting in Madrid in 2010, although it gathered pace at the beginning of the 2011/12 financial year – and strived to sit down with every partner in every office.
And it is true that most of Hughes doubters exist outside of Eversheds. Speak to partners close to Hughes and they all agree that he is keen on building a consensus and gathering opinions from those he trusts.
“Bryan is determined and he’s got a clear vision, but he’s also more consultative than David Gray was,” says one senior partner. “He has this tough-guy image – which is deserved, by the way – but he’s always very keen to make sure everyone has the chance to input their ideas.
“The other good thing about Bryan is that he’s straightforward. He’s also got emotional intelligence, in the sense that in any room of people at any time he’ll know where someone is coming from. If he thinks someone is holding back he’ll make sure he follows up with that person afterwards.”
Speaking to Hughes, you get the impression he is more comfortable talking practicalities than strategic visions and principles. When The Lawyer asks him what his philosophy is on practising law and running a firm – a popular interview question at one magic circle firm, according to a source – he screws his face a bit, as if he doesn’t really agree with the concept of the question.
“Just put the clients and the people first, really,” he says. “Don’t overcomplicate things. Clients want answers and clarity and they want to understand what they’re paying for. They want you to make them look good.”
Hughes knows as much as anyone that he is still a bit of an unknown quantity when it comes to delivering Eversheds’ ambitious strategy of becoming a global business adviser but he is putting his mind to the task, drawing on the experiences and strengths he already has. And his practicality and natural leaning towards prudent financial management, though it doesn’t lend itself to a statesmanlike leadership, does have its place in the firm’s future.
“He’s not particularly focused on any one legal direction,” says one source, “and for that reason he does have the ability to get to a deeper business level and say ‘stuff all the legal technicality, what makes this tick – cash-in cash-out?’”
Given that Eversheds is going to have to set about achieving its next three-year plan amid a relentlessly gloomy economy, it could be precisely the kind of leadership the firm needs, even if Hughes’ arch-practicality is not to everyone’s taste.
For Hughes’ Hot 100 video interview, click here.
The cuts still hurt
It may seem unfair to keep bringing up Eversheds’ redundancies almost three years after they occurred, but the cuts – which took place over four rounds and saw 735 lawyers and staff leave the office, many with just statutory packages – was a seismic moment at the firm, and partners still talk about the ravaging it got from the press.
“As with many law firms at the time, redundancies were new to us,” says Hughes. “When we met with our assessor from Investors in People he said one of the problems we had was that morale was so strong beforehand the firm had further to fall than most. I had to spend a lot of time getting people back onside and part of the morale problem was that we needed to get people busy again.”
Does Hughes wish he had done anything differently?
“We didn’t go far enough with the first round of redundancies – we thought key performance indicators would go back up but they didn’t. In terms of the payments to staff we’ve always been generous, but with the state of the economy at the time we couldn’t afford it, so we decided to protect the business.”
“You don’t have to make unpopular decisions [to be a law firm manager] but you do have to make the right decisions. I’m in the role to protect and sustain the business. If you can’t make difficult decisions you shouldn’t be in the job.”
Who’s Hughes? Seven quick questions
Q If you could go back in time, where would you go?
Back to Munich airport in 1958 and tell the boys to get off the plane.
Q When was the last time you watched live music?
It was with my eldest boy, who is a heavy rock fan. It was a surprise, we went to a Chinese restaurant and then ceremoniously opened an envelope to find his tickets to a Led Zeppelin tribute band. It was actually better than I describe it.
Q What’s your biggest fear?
Second biggest fear is doing interviews, first is reading the article. But seriously it is uncertainty, it destroys confidence and stymies growth. Plus, of course, we’re supposed to know all the answers.
Q What book are you reading?
Just finished ‘The Book Thief’. Now facing a choice of the autobiographies of Steve Jobs and Michael Johnson.
Q What’s your most treasured possession?
Quite a few things mean something to me, but that’s between me and them so I’ll be superficial and plump for my 1991 TVR V8 (which I need to sell before my eldest is 17).
Q If you could change one thing about yourself, what would it be?
Accepting that many traits can be both strengths and weaknesses, I’d like to be able to let things go.
Q If a movie was being made about your life, who would play you and why?
If Lee Ranson is unavailable, Danny de Vito. I like his refusal to be intimidated by people or circumstances. And that’s before you get to the uncanny physical resemblance.