Having navigated a charmed passage to the upper echelons of the UK legal community, Berwin Leighton Paisner (BLP) has hit troubled waters at the beginning of 2007.
In the last three full financial years BLP has seen its turnover grow by 42 per cent, or £43m, while average profit per equity partner has rocketed by 41 per cent, up by some £200,000. Its top of equity is more than £1m and the firm has nearly doubled its annual net profit to £47m. BLP has been on an upward curve that until now showed no signs of abating.
Buoyed by a booming real estate market, where the firm’s real strength continues to lie, BLP has been a voracious recruiter that is not afraid to pay above the market rate to get the lawyers it wants. A £1.3m pay packet to lure real estate heavyweight Robert MacGregor in October 2004 has been worth the investment, and the firm broke the £1m salary barrier again for securitisation star Paul Severs.
Departures, particularly at the partner level, have been few and far between. By contrast, the recruiting has been full steam ahead, with more than 30 lateral partners added to the ranks since April 2004.
Therefore, when two partners departed in a week, and three in as many months (from a partnership of 170), the inevitable questions about the inner workings aboard the good ship BLP start to rise.
The departure of international projects head Jonathan Simpson was a surprise to many, especially BLP itself. Simpson’s arrival at the firm in October 2005 from Dewey Ballantine was heralded as a breakthrough for the firm’s international ambitions, which were still being developed at the time.
Brought in to tap into lucrative business in Central and Eastern Europe and the Middle East, Simpson was key to securing work that a firm without a physical presence outside the UK might otherwise struggle to get. He was also the partner who spearheaded a recruitment drive in his native Australia, which netted the firm 11 assistants at a time when others were scrambling to fill empty seats.
Upon his departure BLP moved to play down Simpson’s importance to the firm’s international capabilities. A press release lauding Simpson’s arrival in 2005 trumpets him as “head of [the] new international projects team”, but a spokesman said that was “more of a working group than a team”.
BLP’s international strategy has been something of an enigma among UK firms. Appearing to be a ‘let’s have our cake and eat it too’ approach, the firm has a list of ‘non-exclusive preferred referral firms’ as long as your arm.
To hold the reins of this seemingly unwieldy international programme, the firm recruited John Taylor, who has 35 years’ experience of working in law across Europe, the US and Australia. Some 90 partners have jurisdictional responsibility for managing the relationships under the watchful eye of Taylor.
Another pressing question for BLP centres on the future of the firm’s investment management practice. When Kaye Scholer lured away US and UK dual-qualified investment management head Timothy Spangler to head its global investment practice back in October, it left only Simon Firth and Geraint Lloyd as partners in the group with private equity experience, and only Firth had significant hedge fund experience.
As it happened, Firth handed in his resignation soon after Spangler, enjoying an extended Christmas break and severing ties with the firm in November. Firth starts at Kaye Scholer today (8 January), tasked with building the US firm’s UK domestic practice.
Industry sources hardly blame Spangler and Firth for jumping ship – BLP was never going to be the player in the funds market it wanted to be without its much-sought-after private equity star. That is one recruit that has continued to elude, or outprice, the firm in the face of competition from US private equity firms such as Kirkland & Ellis and Weil Gotshal & Manges, which have been busy snapping up UK talent.
The normally effusive BLP managing partner Neville Eisenberg declined to comment on the recent unrest among his partners, but The Lawyer understands that the firm has drafted in Taylor, who was deputy general counsel of Amvescap – the world’s largest listed fund manager – as the interim head of the investment funds practice.
An emergency cross-department team has been assembled as cover, with financial services partner Jonathan Marsh, a recent recruit from Hunton & Williams, central to the recovery plan.
Between covering for the investment management practice and dashing about attempting to patch the holes left by Simpson’s departure, Taylor is going to be a busy man. It is not panic stations for BLP, but the industry will be watching with interest to see how one of the steadiest performers of the past few years reacts.