Never speak too soon. It’s an old adage that must be running through the minds of a fair few DJ Freeman partners this week. In 2002 the firm celebrated its 50th anniversary, and in its annual review it declared that it was “looking forward to the next 50 years”.
Almost no one knew what lay in store for 2003 – least of all, perhaps, those lawyers at a firm whose very foundations were once so firmly rooted in the property market. And anyone who predicted that the bulk of the property team would soon be housed at what is widely regarded as a technology, media and telecoms (TMT) firm should probably seek work as a clairvoyant.
But for Olswang the mass property hire wasn’t as surprising as it might initially appear, despite the fact that the deal was completed in just 16 days.
Last October, Olswang’s chief executive Jonathan Goldstein announced at a partnership meeting that he wanted to bulk up the firm’s property department to around 20 per cent of turnover (it currently pulls in around 15 per cent). At that stage, however, Goldstein and department head Tim Westhead hadn’t planned exactly how they would go about it.
Imagine their surprise, then, when a solution was served up to them on a plate just six months later. Mind you, Olswang wasn’t about to swallow the DJ Freeman dish whole – it instead picked out the tasty morsels and pushed the leftovers to one side. Indeed, it is arguable that it was left to Goldstein to do the dirty work that wasn’t done at DJ Freeman, although DJ Freeman chief executive Laurence Harris had himself started the culling process just a few weeks before negotiations started.
The bulk hire sees Olswang take on five property partners, plus consultant Michael Cassidy and 10 assistants. It will be a big adjustment for the 10 partners and 17 other fee-earners who currently make up the Olswang property team.
It should bring in around £3.5m-£4m worth of turnover to Olswang’s property team alone (remembering that some of those partners at DJ Freeman who were sat in the property department will now be residing in corporate). Goldstein and Westhead are hoping that the trimming they’ve done will boost the department’s recently lagging profitability. The predicted boost to income should see the property department bringing in almost 25 per cent of turnover.
For some that is as surprising as the DJ Freeman demise itself. Indeed, it has been a fairly rapid rise for Olswang in the property arena. Six years ago the department generated just £1.9m in turnover; this year that figure is predicted to reach between £12m and £14m.
But despite its low profile, Olswang has acted on its fair share of good-sized deals. In the last 12 months it has advised Capital & Regional on the £670m formation of the Mall Limited Partnership with Morley Fund Management, and Woolworths on its acquisition of 150 new leases following the company’s demerger from Kingfisher. It also acted for key property client Minerva, with which Goldstein has a close relationship, on its £135m acquisition of more than 50 stores in connection with the takeover of Allders. Last year the firm secured a place on the Land Securities Trillium panel.
Assuming that Jonathan Lewis and his team from DJ Freeman can convert their clients, Olswang stands to receive a number of coveted property names, including Great Portland Estates, Grosvenor Estates, Land Securities, Wickes and War-ner Estates. The hires will also cement Olswang’s current relationship with Capital & Regional, a key client of the DJ Freeman group.
The soon-to-be-formed Kendall Freeman’s lack of a property capability means that Olswang is probably the odds-on favourite to pick up the work, but it’s not a 100 per cent guarantee. No doubt clients will be wondering if the troubles that have rocked DJ Freeman’s property department in the last couple of years will be passed on to Olswang like some kind of curse.
Such a dramatic move by any firm will lead clients to at least re-evaluate the performance of current advisers. They will also have to be convinced that Olswang can provide the corporate, tax and finance support that is becoming an increasingly important part of everyday property transactions. Mind you, Olswang has a stronger corporate practice than DJ Freeman ever had, and the firm’s head of tax Kay Butler runs a small but well-regarded department.
But what of DJ Freeman’s four-partner property fin-ance team that at the beginning of March announced its departure to DLA? Its move has been largely overshadowed by the events at DJ Freeman the following week. Nigel Knowles must be more than a little annoyed that his usual media limelight has been stolen by Goldstein.
Indeed, DJ Freeman’s property finance head John Clark and his team were regarded as the more profitable part of the property department, last year advising on over £1.8bn of transactions. The team will be well known to DJ Freeman property clients, and it may well be that more than a few of those will also be evaluating the strengths of the DLA property group – and the cost savings that can be gained from a firm with regional offices.
As well as converting clients, the other challenge for Olswang will be keeping the DJ Freeman team in place. No doubt the headhunting vultures will be circling, with the possible whiff in the air that some partners may not be happy with their lot.
But profits, partners and clients aside, Olswang has undoubtedly achieved one key thing: it has raised its profile in the property arena. People are talking – and that’s rarely a bad thing.