Hammonds: a sorry tale of mismanagement
In the 1990s, Hammonds was known as one of the most thrusting national firms in the UK, with strong ambitions to make it in London. It opened in the capital in 1991 and made a series of quality lateral hires.
The merger with Edge Ellison gave it extra resources, but the management’s fond wish that they should be on a level with Macfarlanes was spectacularly deluded.
The ambition was there, but the management simply was not. Under managing partner Chris Jones and senior partner Richard Burns, the firm lurched through a series of bolt-ons that added little to the overall offering – and in the process nearly ruined the firm.
In February 2005 Hammonds admitted that it expected profit to slump by 25 per cent due to an exceptional charge of reorganisation costs. The Lawyer subsequently revealed that the firm had been forced to dump its auditors – a two-partner firm in Bradford – and was ordering its partners to repay £3m.
There was a cost-cutting and redundancy programme too, but even more shocking was The Lawyer’s revelation in July 2005 of another £8m cash hole in the accounts – which also had to be clawed back from partner profits.
It signalled the beginning of a dispute between the firm and former equity partners, which at the time of writing still continues.
In August, Burns stepped down as senior partner, with managing partner Jones leaving the firm a month later, leaving new managing Peter Crossley to clear up the mess.
At the time of writing, Crossley appears to have stabilised the ship, partly through an equity partner lock-in and partly through a more communicative and inclusive management style.
All that, and for nothing
In November, The Lawyer broke more litigation news, with the revelation that the liquidators of the Bank of Credit and Commerce International (BCCI) had dropped the £850m misfeasance claim against the Bank of England.
It was an end to 256 days of speeches and aggressive cross-questioning by lead counsel Gordon Pollock QC of Essex Court Chambers (who had landed a £3m brief fee on BCCI) and Nick Stadlen QC of Fountain Court Chambers for the liquidators and the bank respectively.
“This is unconditional surrender,” declared Stadlen. “It’s time for the spotlight to shift to the other side of the court and for scrutiny to be brought to bear on the manner in which this hopeless case has been prolonged.”
The collapse of Coudert
Coudert Brothers, the first international firm, collapsed in 2005 after its global network unravelled in a matter of months.
In May, the entire UK partnership quit for Orrick Herrington & Sutcliffe, prompting a crisis at the firm. In June a swathe of exiting partners demanded dissolution, and the Berlin, Frankfurt and San Francisco offices closed within a week – although the management continued to claim the ‘slimming down’ was all part of the strategy of securing a merger.
Coudert finally threw in the towel in August following the collapse of its merger talks with Baker & McKenzie.
Slaughters: we won’t always have Paris
In December Slaughter and May’s 40-strong French office was merged into its best friend Bredin Prat, although two partners quit beforehand; one to Debevoise & Plimpton, the other to Berwin Leighton Paisner.
‘Better late than never’ story of the year
It took long enough – 18 months, to be precise – but in March Herbert Smith finally opened its in-house advocacy unit with a bang. It bagged 11 Stone Buildings’ Murray Rosen QC and Ian Gatt QC of Littleton Chambers.
Equitable Life gets cold feet
In September, Equitable Life settled its £2.6bn claim against Ernst & Young (E&Y) – an agreement heralded as a massive climbdown by E&Y lead counsel Mark Hapgood QC of Brick Court Chambers.
The Lawyer Awards 2005
Law Firm of the Year: Slaughter and May
Chambers: Matrix Chambers
In-house Commerce and Industry Team: National Grid Transco
In-house Banking and Financial Services Team: Capital One Bank (Europe)
In-house TMT Team: Sony Electronics
European In-house Team: Pfizer Consumer Healthcare (Europe)
Public Sector Team: Kent County Council – Legal Services
Barrister: David Kitchin QC, 8 New Square
Partner: Nigel Knowles, DLA Piper Rudnick Gray Cary
David Childs, Clifford Chance
Clifford Chance spent the early years of the decade trying to put its house in order in the US. With David Childs’ ascent to the top job, the world’s largest law firm underwent another spring- clean.
The Lawyer revealed his ferocious £40m cost-cutting exercise, which included the centralising of all internal business services and the abandonment of its $150m (£82.42m) private placement, closing a chapter in law firm financial management.
Child’s mission to improve profitability at the magic circle firm bore fruit in 2007 when he took plateau partners’ profit share past the million-pound mark for the first time.