Six partners gone, revenue low – but BLP bullish over projects saga

Six partners gone, revenue low - but BLP bullish over projects saga It has not been a good year for Berwin Leighton Paisner‘s (BLP) projects team. The department lost six partners over the course of 12 months and has seen revenue growth underperform the projected firmwide averages.

In ;2007 ;partners ;Sohail Barkatali, Agnieszka Klich and Jon Nash all joined Chadbourne & Parke, while Kevin Jordan left for McGrigors, Jonathan Simpson went to Paul Hastings Janofsky & Walker and Thomas Wexler joined Fasken Martineau. All six took with them significant emerging markets expertise, as well as contacts in the energy, mining and transport sectors.

Despite suffering so many losses, in that same 12-month period BLP added just one new projects partner via internal promotions, Deborah Greenwood. The firm also brought on board Bevan Brittan head of banking Phillippa Chadwick, who focuses on the domestic PFI health and accommodation sector.

The fall-off in seniority in the team may not necessarily be a bad thing. Gearing is currently quite high, with around 10 partners against a total of around 35 lawyers. But it does raise questions as to why it is happening.

The reduction in overall partner numbers marks a change after a growth spurt three years ago. Employing BLP’s emblematic combo of major hires and lavish marketing, the projects team managed to ascend the food chain in the space of a couple of years.

Barkatali, who spent just under four years at BLP from 2004, having joined from Denton Wilde Sapte, says the department was incredibly successful in making a name for itself and took the BLP brand to the Middle East.

Barkatali joined the firm at the same time as Nash, who had been at Milbank Tweed Hadley & McCloy for the previous six years. Four months later Nash managed to entice ex-colleague Klich across and the trio were mandated with establishing an energy and natural resources practice.

Barkatali managed to land BLP the Barka Independent Water and Power Project, advising the Omani government.

At the end of 2005 BLP began a raid on Dewey Ballantine (now Dewey & LeBoeuf), hiring Mark Saunders as head of energy along with Simpson and Adam Dann. The firm was on a roll.

But in 2006 BLP carried out a strategic review, ditching exclusive relationships abroad for a panel of preferred firms. Managing partner Neville Eisenberg argues that this was necessary to increase international capability, but one former partner believes it was a flawed move and blames it for the firm’s failure to embed its successful domestic brand internationally.

“BLP has the best real estate practice that you will find. [However,] it wanted a diversified projects practice to supplement domestic PPP, but it had no footprint abroad,” he says.

The result has been a patchy record in emerging markets – the generally recognised future of PPP/PFI given that the UK market hit a plateau some time ago.

Totting up the firm’s work in emerging markets, BLP projects partners flag up the third phase of the Barka deal and the Turks and Caicos PFI hospital deal.

However, Barka stayed with BLP because of Omani procurement rules that specify that the firm that is initially instructed must continue in that role, even after Barkatali, Klich and Nash had moved to Chadbourne.

Also, partner Jim Buchanan led on the $124m (£63.46m) PFI hospital project in the Caribbean, advising longstanding clients Interhealth Canada and the HSBC Infrastructure Fund. But although this deal was groundbreaking, it cannot be considered mammoth.

To be fair, breaking into markets dominated by the likes of Allen & Overy, Ashurst, Chadbourne and Milbank is challenging to say the least. Nash and Barkatali say that the opportunity to access an excellent client list was among the factors leading to the trio’s exit. As Nash says, BLP does not have the same “little black book” of contacts that his new firm enjoys. All three were also offered equity.

Nash adds: “We have access to legends like [global head of project finance] Chaim Wachsberger. Projects is not one of the peripheral practices – you feel the weight of the firm behind you. All the other firms are talking about India: we’re actually doing it.”

Nash is referring to the Mundra 4,000 megawatt power project (similar in size to the UK’s largest power station Drax in North Yorkshire), on which Chadbourne advised the lenders on a $4.25bn (£2.18bn) financing. A slightly different ball game from the Turks and Caicos deal. Eisenberg claims BLP is unfazed by what the Joneses are up to. “As a firm we tend not to look over our shoulder,” he says. “We concentrate on competing on our strengths.”

But since Barkatali, Klich and Nash left for Chadbourne, BLP’s energy projects capability at partner level has been slashed in half. Maybe the strengths Eisenberg refers to now lie in domestic PFI health, accommodation and military work. Saunders, who is believed to be on a guaranteed equity package that expires at the beginning of next year, was recently the subject of unsubstantiated market rumours that he was looking to move on, alongside Dann and Greenwood. The three lawyers – and BLP – deny this.

Eisenberg claims that the exodus of six partners – who all succeeded in landing the team significant deals and were recognised as among some of the best in the industry – “has not impacted upon morale, except to improve it”. He adds: “People left for a variety of reasons.”

BLP partner Robert Gross argues that the firm has been unlucky in that so many people left in such a short space of time.

But Dann counters: “If you’re going to lose people, lose them in one go and then you have time to take stock.”

BLP’s official line is that things have never been rosier. Eisenberg says that the projects team is “busier than it has ever been”. Head of finance Simon Allan concurs: “Business is performing at its best.”

However, the figures tell a different story, with the project team’s revenue growing by a sluggish 5.5 per cent in 2007-08.

The departmental record on attrition and revenue is not provoking any change of tack, says Eisenberg. “There’s no strategy review, no change of direction, no discussions about asking people to leave,” he states.

The projects team falls under Allan’s remit. He is seen as one of the historic big-hitters alongside corporate partner David Collins, who manages the Tesco relationship, and Eisenberg.

Allan tells The Lawyer: “I certainly don’t have any plans to move on. I’m assuming the firm has no plans for me to step down that they haven’t told me about.”

Eisenberg echoes this sentiment. “We’re not doing any restructuring,” he says. “Simon Allan is not moving out of his role.”

Satisfaction with such a top line could suggest that BLP has low standards. But a glance at the firm’s rapid rise to power reveals this is far from the case. The merger of Berwin Leighton and Paisner & Co, the first-class brand of the real estate department, together with the firm’s ability to attract some of the best in the industry mean the firm has bags of potential.

The decimation of the projects team has hit BLP hard. The firm will need to rebuild fast if its reputation is to survive intact.

The six who walked

Name: Sohail Barkatali
Left BLP: Autumn 2007
For: Chadbourne & Parke
Specialism: Energy and oil and gas, emerging markets

Name: Kevin Jordan
Left BLP: October 2007
For: McGrigors
Specialism: PFI hospitals and prisons

Name: Agnieszka Klich
Left BLP: Autumn 2007
For: Chadbourne & Parke
Specialism: Renewables

Name: Jon Nash
Left BLP: Autumn 2007
For: Chadbourne & Parke
Specialism: Energy

Name: Jonathan Simpson
Left BLP: January 2007
For: Paul Hastings Janofsky & Walker
Specialism: PPP transport, emerging markets

Name: Thomas Wexler
Left BLP: May 2007
For: Fasken Martineau
Specialism: Mining

For more on the financial results at all the top UK firms as they come in, see our Top of the PEPs 2008 blog here