We lead with two big-firm strategy stories this week. First there’s Freshfields, which is still suffering from a touch of whiplash after its shake-up. Its bid to refocus on its core area of corporate has effectively sidelined finance.
The management is insistent that finance is still a key part of its offering, but the secret is all in the packaging: it can’t afford a bloated practice when its finance lawyering is done for corporate sponsors rather than bank clients. (Yes, that sounds like a service department to me too, but don’t say that out loud to the management.) Hence the decision to promote associates to partners, but not into the equity.
And yet in some ways Freshfields has a clearer task to accomplish than Herbert Smith, whose partners spent the weekend in Cannes discussing their strategy. Freshfields simply had to admit defeat and restructure. Lender-facing leveraged finance never took off, while whole swathes of previously lucrative business were falling away into a pricing black hole: project finance, asset finance and even some parts of its formerly market-leading structured practice. Freshfields’ management had little choice but to act. Herbies, on the other hand, has no such apocalyptic decisions to face. Senior partner David Gold’s task is a little more diffuse than Freshfields CEO Ted Burke.
Yet Gold badly needs to reposition a firm that has not kept up the pace it enjoyed in the early part of the decade. I don’t know how much Herbies paid its consultants to come up with the idea that India, Russia, China and Dubai were the next big things, but half the City could have told it that for free.
Sure, Herbies’ corporate group has been busy this year, but it was essentially saved from obscurity by the Tata-Corus deal, which saw a return to form. Its Indian connections are among the best in the City, so why has Herbies been so behind the likes of Clifford Chance and Linklaters in the subcontinent?For all its robust reputation, Herbies is one of the most conservative firms in the City. I suspect Gold probably prefers cosy old Herbies to the cold winds blowing through the magic circle. He is, after all, a specialist in partner disputes. And which firm’s former partners currently make up much of his current client base? Freshfields, of course.