Can BLP find its way out of the AIM ghetto to challenge the top tier?
For many firms, keeping corporate turnover at more or less pre-recessionary levels throughout the past 24 months would be a feather in the cap. But at Berwin Leighton Paisner (BLP), the impression persists that the firm’s corporate arm still plays second fiddle to areas such as real estate.
BLP’s corporate results have been remarkably steady since 2006 in terms of both revenue and headcount, which is not an achievement to be sniffed at.
The problem, though, is with identity. When the firm made waves with the hire of former Linklaters and Kirkland & Ellis private equity partner Raymond McKeeve in 2009 it was a sign of the ambition of the practice. What had been a strong mid-tier group with a solid stable of AIM mandates and plenty of work flowing through from BLP’s perennially impressive real estate department was beginning to get big ideas.
Before McKeeve joined the firm, senior figures in the practice, including corporate finance chief David Collins, had set the corporate team a target of becoming one of the go-to shops outside the magic circle. However, since 2005-06 BLP has hovered between 16th and 19th in The Lawyer’s UK corporate league table. Consistent, yes, but silver circle standard? Perhaps not.
“They’re not [as high] in the rankings in the way they’d like to be,” says one recruiter familiar with the firm. “It’s been a problem area for them. They’ve built up an outstanding finance practice over the past 10 years, which is punching above its weight, but it’s been harder to do that in corporate.”
It is certainly true that, while many of the firm’s star hires over the past few years may help
to service corporate clients, they have not tended to be brought into the corporate group itself.
The appointments of acquisition finance partner Andrew Bamber, a 2009 lateral from Allen & Overy, and real estate partner Chris de Pury, who joined from Herbert Smith the previous year, were both aimed to some extent at elbowing into the private equity space. But there are critics who still question BLP’s ability to break into the upper echelons of any sector away from its property sweet spot.
Perversely, part of the problem for the BLP corporate group derives from what is one of the firm’s greatest strengths – its relationship with Tesco. More accurately, it is the fact that the firm’s biggest-billing client by some way still turns to Freshfields Bruckhaus Deringer for much of its big-ticket corporate work.
As one former partner says of the practice: “It’s a strong group doing lots of good work, but it struggles internally because there’s a large gap between a trophy client in Tesco and the next tier.
They’ve always wanted to grow into that gap.”
And while Tesco generates a huge amount of revenue firmwide, the relationship with the property group continues to give the impression that corporate lags behind in the internal pecking order.
“I don’t think there’s an identity issue, but we’re not quite there yet,” admits one BLP corporate partner. “It’s part of a journey. Real estate’s there already, tax and finance are getting there, but so are we.
“If you look at Tesco, we’re getting more of a share of that [work] than we have done historically.”
Head of corporate John Bennett echoes the sentiment. “If you look at our growth, it’s been across the whole firm and has been mirrored in corporate,” he explains. “It’s a work in progress because we’re very ambitious and are working in a tough market.”
For Bennett, the ambition is to see BLP go toe-to-toe with the magic circle, if not across the corporate spectrum at least in certain areas and with a select group of big-name clients. Successes so far have included winning buyout roles for private equity house Blackstone, thanks in part to McKeeve’s influence and an increasingly strong relationship with Balfour Beatty over the past five years.
On the other side of the balance sheet, Freshfields took the mandate acting for Betfair on its IPO last year. The betting exchange has been one of the star clients of Collins’ well-respected gaming practice, although the firm insists that the client has always distributed work across a number of firms.
However, Bennett accepts that playing with the big boys has its drawbacks. “With these clients there’s always going to be some work we’ll lose to the likes of Freshfields and Linklaters, and some we’ll win off them,” he says.
Even those mandates that have been touted as evidence that the push into the higher end of the market is paying off have not tended to be the plum roles. The firm muscled in on Blackstone’s acquisition of the Broadgate estate in September 2009, working alongside former Clifford Chance corporate heavyweight Adam Signy shortly after his move to Simpson Thacher & Bartlett.
As with another Signy-led deal – Kohlberg Kravis Roberts’ £955m Pets at Home acquisition – BLP’s role was not on the mainstream corporate aspects of the deal. However, the firm did lead on another, smaller Blackstone transaction when it advised on the purchase of healthcare staffing company Independent Clinical Services last summer and the subsequent bolt-on of rival business Pulse.
The question remains as to whether the ambition of the group means it wants to jettison its reputation as a consistent mid-market player, characterised by its AIM successes.
“We don’t want to lose that, but we’ve been trying to move the centre of gravity and add more high-end work,” says Bennett.The recently announced key client programme, aimed at its top 30 relationships, could well help this, but in the short term it is recruitment and retention of talent that will make the difference.
The firm has historically made a success of raiding magic circle firms for senior associates, but this month’s move of corporate finance partner Karen Davies to become a counsel at Ashurst less than three months after joining from Clifford Chance does not send the right message.
Bennett accepts that growth in headcount has not come as quickly as intended.
“We’ve had a very successful recruitment programme,” he says. “Yes, I’d have liked to grow faster, but it’s a very competitive market.”
But with turnover this year understood to be up by as much as 30 per cent at the half-way stage, he and the rest of the group remain confident that their ambitions are not misplaced.
Outsiders, inevitably, are more sceptical.
“It’s going to be difficult for them,” adds the recruiter, “but they’re not a firm that’s likely to give up.”