Clifford Chance: the start of something big
The merger of the year, if not the next decade, was that between Clifford-Turner and Coward Chance. The negotiations were conducted in the utmost secrecy in a client’s flat off Berkeley Square.
“We’re putting together two successful firms,” Keith Clark, a partner at Coward Chance, told The Lawyer. “We’re combining depth and width in the London market and creating a comprehensive range for international coverage.”
Clark, who would later become chief executive of the firm
and lead the tripartite merger negotiations with Rogers & Wells and Pünder Volhard Weber & Axster in 1999, is now general counsel at Morgan Stanley.
His point about depth of resources was well made. The combined firm would have more than 169 partners and a total of 630 fee-earning staff worldwide – overtaking Linklaters in the London size league. Clifford Chance’s combined turnover at the time was estimated to be more than £200m. “I admire them for their bravery,” said one City partner.
But such faint praise was an exception; most lawyers were bowled over at the audacity of the move. “I think it’s first class, magnificent, a sign of things to come,” said DJ Freeman senior partner David Freeman (DJ Freeman became Kendall Freeman in 2003).
Looking back on the merger, Geoffrey Howe, who would become managing partner of Clifford Chance between 1989 and 1998, says: “It was clearly an event which caused many people to think hard about what their firms would and should be doing. It created the biggest firm and a very clear strategic rationale for what was being done.
“The single thing we did and were clear about wasn’t so much about size, it was the international one-firm model.
“Before then we had people who dabbled. In those days there was just Baker & McKenzie, which looked uneven, but our model was one integrated law firm, one management structure and one profit pool – and not just practising
The first 20 partners to be made up to the joint firm were an illustrious bunch. They included corporate partners Adam Signy and Ian Sellars (the latter is now a partner at private equity house Permira) and banking partner Mark Harding – now general counsel at Barclays.
Lawyers get ad break
In January 1987 a pilot issue of The Lawyer reported that the Law Society had removed many of the restrictions on solicitors’ freedom to advertise, send out mail shots and sponsor events.
The Lawyer said: “This decision, unthinkable just a few years ago, is just the first step along a path that might eventually lead to mixed partnerships and incorporation.”
However, the Law Society Council meeting rejected a proposal to allow solicitors to make business arrangements with non-solicitors.
The debate was the first shot in a longer battle over the issue of mixed partnerships between solicitors and non-solicitors – something that would take 20 years to resolve.
The adoption of new marketing and PR techniques was a slow process, reported The Lawyer.
“The public relations advisers have been concerned not to
frighten off their new clients. And some lawyers have been reluctant to allow their new colleagues much room for manoeuvre,” The Lawyer said.
Firms had already embarked on producing glossy brochures.
“With the relaxation of Law Society rules concerning advertising, there will be a rapid further increase in the range and distribution of these pamphlets. Already McKenna [now CMS Cameron McKenna] produces a newsletter for its clients and it is certain to be followed by other firms,” said The Lawyer.
By June 1987 things were moving fast. The decision by Carlisle-based PI firm Burnetts to advertise on television made headlines in the magazine.
Later in the year The Lawyer reported that Rambert School of Ballet was hoping to profit from the Law Society’s new publicity code on sponsors, and was contacting Linklaters & Paines to discuss opportunities.
In May that year The Lawyer reported that Northampton firm Howes Percival was paying £50,000 to sponsor the Orchestra of St John’s, Smith Square, in a series of concerts to raise money for paraplegic and quadraplegic victims of accidents.
Little then large: the boutique boys’ experiences
Although 1987 was the year of the mega-merger, voices were raised in defence of the small firm. The Lawyer profiled two-partner commercial boutique Brafman Morris, which was making a healthy living in small- to medium-sized corporate and property work, while a litigation lawyer called Tony Morton-Hooper wrote to The Lawyer protesting that niche firms such as his had a “very exciting and rewarding future”. What happened to them?
Twenty years on and Morton-Hooper is head of litigation at Mishcon de Reya, while Bill Brafman of Brafman Morris joined Cameron Markby Hewitt/CMS Cameron McKenna until he left for US firm Kaye Scholer in 2000.
Brafman says: “Twenty years ago Tony Morris and I had been busy establishing a successful niche practice, Brafman Morris. We were lucky in our timing. I started up in 1983.
Tax rates, thanks to Margaret Thatcher, were on their way down, from 83 per cent on earned income to 60 per cent, and then today’s 40 per cent. The slowdown that was caused by the restructuring of the industrial and economic landscape, which Thatcher commenced, was followed by the more open, entrepreneurial style that has done so much to reshape our economy.
“I was aware, though, that while we were very lucky in our practice in having supportive clients, and in Tony a fellow controlling partner in whom I had total trust, the days when small firms without big resources would be trusted with big transactions were numbered. We also feared a recession.
“We received a regular stream of merger offers, due to our profile and profitability, until we were approached by Cameron Markby, which was trying to pull off a three-way merger with us and Hewitt Woolacott & Chown. This was a chance for us to merge with a counter-cyclical practice with partners who I still respect and look up to. I had to give up a large slug of profit share to do this, as did Tony; but in 1990 the recession struck and CMH’s profits shot up to more than compensate for that.
“In 20 years I’ve come full circle. I am again in a ‘small but beautiful’ environment, but this time with a muscular and in some areas market-leading firm. I continue to enjoy my professional life.”
Morton-Hooper says: “My old firm was a boutique practice just off Broadgate. We observed Big Bang from the sidelines, ever watchful for new gaps in the market. I’d moved from the sleeping giant that was Norton Rose.
“There were three of us to start with: we soon grew to 30-strong. Our business model was based on the hope that the phone would ring. We had nobody to mentor or guide us, least of all our bank, which was a source of consistently poor advice.
“Our finances were always a bit too vulnerable to the effects of profit squeezes and poor cashflow. To be
entirely self-supporting is both thrilling and nightmarish. Being lawyers and running a small business were two separate functions that we struggled with. Although we were well trained, effective and results-orientated lawyers, we never mastered the art of firm management.
“Property was a core business and like many others we were hurt by the decline of the late ’80s and early ’90s. But we learnt the basics of building our practices. The practice attracted some good clients. Many were loyal and
appreciated that the survival instinct meant we were driven to succeed for them and for us.
“We found our different niches, but each outgrew our little boutique. It was a launch-pad that propelled me to Mishcon de Reya, where I’ve been happy for 16 years.
“I learnt then that, as a litigator, you have to be willing to shape yourself to suit the market, and that means you have to be adaptable and quick on your feet. I regret we’re required to be so obsessed with process and form. The essentials of giving clear and independent advice and always fighting hard for your client, are being relegated.”
Look, a doomed merger
Withers merged with Crossman Block in August 1987 to create a 24-partner firm, one of the biggest in the City at the time.
But familiarity – the firms’ offices were less than 100 metres apart – bred contempt.
By August 1989 The Lawyer reported that the firm had decided to demerge because of a ‘culture clash’.
The Crossman partners had precipitated the demerger; Crossman was taken over by Radcliffes over a decade later. Withers remained
But look, a better one
Just seven months after the Clifford Chance merger, a second mega-deal took place. Lovell White & King and Durrant Piesse signed a deal to create the second-largest firm in the UK after Clifford Chance and overtaking Linklaters.
Durrant Piesse’s banking reputation – particularly its relationship with Barclays – made it an attractive candidate, although it had less than half the number of partners – 32 – as Lovell White, which had 68.
The Slaughter and May view
“The trends are tending to favour the big firms and the business is tending to be concentrated on fewer and larger firms.”
Michael Pescod, corporate partner, Slaughter and May, 1987
And the Travers Smith view
“You can’t have the City run by two or three firms. We’re a firm with a distinctive style. We place a lot of emphasis on having a close relationship with the client.”
Christopher Bell, senior partner, Travers Bell, 1987
“I’d hazard a guess that, by the year 2000, firms will be a great deal larger, they’ll have their own pools of advocates, who may or may not possess other specialist skills. The bar will exist, but not in the numbers that they presently enjoy. There will be a specialist bar, it will not have exclusive rights of audience – indeed, it will not need exclusive rights of audience.”
Tony Holland, Law Society Council member, February 1987
“Being a junior partner in a large City law firm seems to bear a striking resemblance to Lorenzo Tonti’s 17th century banking scheme. Patience, tact and a willingness to be played off against one’s contemporaries seem increasingly to be essential attributes for surviving the protracted career structures of the mega-firm.”
Jonathan Silverman, Silverman Sherliker, May 1987
“Every picture in the 21 May issue of The Lawyer is of men in suits. Is that why your analysis article in the same issue is entitled ‘Attracting the new boys’?”
Yours wonderingly, Anthea Vanden, Cardiff. Letter, 18 June 1987
The talk of the graduate recruitment round was Norton Rose’s video ‘A Law Business’, made for £40,000 by Broadwick Productions.
The M5 Group begins joint marketing
One of the most influential regional law firm groupings, the M5 Group, began to produce joint client bulletins in the wake of the Law Society’s decision to relax the rules on marketing and advertising. The group was then made up of Bond Pearce in Plymouth and Exeter, Burges Salmon in Bristol, Mills & Reeve in Norwich and Cambridge and Wragge & Co in Birmingham. They would later be joined by Addleshaw Sons & Tatham in Manchester and Booth & Co in Leeds.
Of the group, all have remained independent, apart from Addleshaws and Booth & Co, which merged in the mid-1990s and then took over Theodore Goddard a decade later, becoming Addleshaw Goddard.
The PI litigation of the year
Joint venture disaster litigation specialists Pannone Napier began coordinating solicitors representing victims of the Townsend Thoreson ferry disaster. Pannone Napier was set up in 1985 as an offshoot of Goldburn Blackburn in Manchester (now Pannone) and Irwin Mitchell in Sheffield and was almost immediately involved in cases such as the Blackburn train crash and the fire at Bradford City FC’s football ground.
Superb recruitment wheeze
Fifteen-partner Leeds firm Simpson Curtis (now Pinsent Masons) was having difficulty getting itself noticed by lawyers in the overheated recruitment market. So it began an advertising campaign that told students about comparative house prices in Yorkshire and London and launched a recruitment drive at the Savoy Hotel among London-based agencies.
Unfortunately the event was somewhat of a damp squib. Practice development partner Martin Shaw said the initial response from solicitors had been “disappointing”.
“We’re seriously interviewing two of the people who came,” he said.
Salaries ranged from £12,000 for newly-qualifieds to £30,000 plus a car for senior associates. Simpson Curtis’s emphasis on house prices was underlined by the presence of a Leeds estate agent who came to the Savoy with the law firm. So the price of a decent-sized house in Leeds in 1987? £25,000.
The international best friend from hell
There were red faces at Berwin Leighton in 1987 when it discovered that its US best friend Finley Kumble was falling apart – five months after the transatlantic link was set up.
The US giant – the third-largest in the country – had expanded too rapidly and due to the use of dubious business practices it was falling apart, with liabilities of more than $76m (£40.87m) and lawsuits pending.
The Lawyer reported: “Its methods attracted a great deal of hostility and it was client-orientated at the expense of internal relations – its own associates rated it the worst firm in New York for training and staff guidance.”
Sir Max Williams,
Sir Max Williams was one of the architects of the merger of the decade, but he was far from being your average City solicitor.
Educated at Pangbourne Naval Academy, in 1943 he accidentally burnt down the library and half the school with an illicit cigarette. During the inquiry that followed, he enlisted in the Royal Artillery.
“On the basis I’d inflicted on myself a far more severe punishment by joining the army than they ever could, I wasn’t expelled,” he said.
He qualified as a solicitor in 1950 in the family firm in Fishguard in Pembrokeshire, Wales, and then moved to London. Williams eventually became senior partner of Clifford Turner and after the merger became joint senior partner at Clifford Chance.