Mixed emotions for BLP's real estate team as big-hitters come and go
11 February 2008
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30 October 2013
"I wanted to be part of a team that was part of the real estate industry, rather than a corporate powerhouse," Chris De Pury says of the reasons for his recent move to Berwin Leighton Paisner (BLP) from Herbert Smith.
However, De Pury's keenly anticipated arrival at BLP on 17 January was overshadowed by real estate partner Vinay Veneik's departure three days earlier. As reported on www.thelawyer.com (15 January), Veneik resigned. BLP stated that at the end of some deals he had omitted to pay stamp duty and register the transfer of property.
At this stage it is not clear whether Veneik has been referred to the Solicitors Regulation Authority, but the regulatory body confirms that it is aware of the reasons for his resignation. Formal disciplinary procedures would take at least four months to reach a tribunal, but new rules also allow for the alternative of a reprimand and a fine of up to £2,000.
Veneik's departure clearly wrongfooted BLP's real estate practice, which had been looking forward to the arrival of De Pury, who is widely acclaimed as a star in the real estate arena, since last summer.
That said, real estate head Robert MacGregor says the group is coping pretty well. People move on from such events, they are adaptable, he reassures The Lawyer.
Which, of course, he would say. But what will happen to prized BLP clients such as Legal & General and Great Portland Estates, hitherto dealt with by Veneik?
And will De Pury, who had a stint at investment company Three Delta between leaving Herbert Smith last August and joining BLP last month, be able to attract high-profile clients such as the Qatar government across from his former firm?
On this point it is worth bearing in mind the long-term nature of property transactions - and the fact that Herbert Smith senior partner David Gold tried to enforce a restrictive covenant that would have held De Pury at the firm for a 12-month notice period and barred him from working with particular clients for a year after his departure. The details of his eventual leaving package remain confidential, but it can be surmised that some clause regarding client poaching was included.
In terms of Veneik's clients, one would expect BLP to put them in the capable hands of someone like De Pury. The lawyer is, after all, known for his ability to establish and maintain client relationships. At Herbert Smith he helped secure the first acquisition for Carlyle Group's European real estate fund and advised longer-standing client Hammerson on its real estate investment trust conversion mandate. There will be big expectations that he will be using his 'people' nous to expand the client list at BLP.
Both firms insist that it is too early to tell whether De Pury will succeed in using his charm to bring his former clients with him. However, Herbert Smith real estate head Iain Rothnie admits that he "would be very surprised, knowing Chris, if some of his clients didn't move with him".
Although De Pury's big pull is his client-facing skills, his background is more in the highly structured real estate market. He is perhaps better recognised for the acquisition and refinancing of One America Square for the government of Qatar and for his time at Three Delta than for the kind of asset management work that is currently taking up the corporate slack in many real estate departments.
It is in this light that De Pury's hire can be seen as epitomising BLP's commitment to growing the corporate dimensions of its real estate practice. The logic is not hard to understand - even in current market conditions.
Having been known for decades for its mid-market and plain vanilla capability, where it competes with national firms, BLP wants to give the magic circle more of a run for its money when it comes to multidisciplinary work, where the pricing is more attractive. Revenue per partner at the likes of Herbert Smith, Linklaters and Freshfields Bruckhaus Deringer - firms that almost exclusively rely on this kind of work - is several hundred thousand pounds higher than at BLP, a fact that is driving the firm's current strategy.
"We were looking for someone with real estate private equity and real estate M&A experience. To have a real estate partner who has that breadth of skills is very unusual - I think that brings a hell of a lot more power to our offering," MacGregor says of De Pury's appointment.
This is in line with BLP's recent recruitment strategy. The firm has brought in a number of real estate specialists who sit in other practice groups to assist in taking up more complex work. These include real estate securitisation partners Tamara Box and Paul Severs, tax specialist Michael Wistow and disputes expert Wendy Miller.
Some of these hires helped frame BLP's brand of 'offer you can't refuse' practice growth. And as the real estate practice moves forward, MacGregor says that investing in high-profile partners will continue to form an integral part of the growth strategy.
But how efficient is this as a long-term expansion strategy - particularly considering the effect news of new-joiner packages has on the morale of those that have grown up with the firm?For one rival real estate head, the model is not one to be followed. "We want to grow numbers in real estate and we wouldn't be averse to the right lateral hire, but we'd only take people within the lockstep criteria and someone who we thought would fit in," he says.
BLP operates a hybrid lockstep structure, which managing partner Neville Eisenberg argues rewards performance. The argument is that attracting rainmakers also improves the client list, benefiting everybody involved.
"Inevitably there's a bit of self-instilled pressure to perform," says MacGregor. "Even in this market, Chris is immediately generating work - it's an opportunity for the rest of the team."
Eisenberg agrees, saying: "People think it's fantastic and positive - there's no damage to internal morale."
The fact that the rate of internal promotions has been quite robust in the past few years - six were promoted to partnership in the practice last year - suggests that there are also rewards for internal climbers.
Perhaps more damaging to internal morale - and to external reputation - is the revelation that a senior-level partner covered up errors in work he should not have been handling in the first place.
Veneik may be long gone, but experience shows that mud sticks, and it may well take more than a high-profile team addition to give BLP's real estate brand a clean bill of health.