23 October 2000
The clock is ticking. Six months have passed, and the nine-month benchmark is fast approaching. Tony Williams, senior partner at Andersen Legal UK and managing partner of Andersen Legal worldwide since March, will have to start delivering soon. The man who was instrumental in shaping Clifford Chance for the merger which made it the largest firm in the world now has another massive task ahead of him: not only must he coordinate a global network and woo high-flying partners with high-paying clients, he must also integrate the regional network of Garretts in England. The first task is second nature to Williams - sorting out offices in Birmingham, Cambridge, Leeds, Manchester and Reading, though, will be more of a challenge.
No doubt he would like a little more time to think on that one, but time is of the essence. Integrating the offices is the most obvious issue facing him and is what, eight months into the job, everybody is waiting for him to take a stand on. A lawyer at a rival accountancy-tied law firm says: "I think that he has a huge mountain to climb, because my take of Garretts' strategy, up to where Williams joined, was that it was very much a national firm, with more lawyers outside than inside London."
Another adds: "I just question the strategy of having a number of regional offices at a time when Andersen Legal is trying to look more international. Are they an Eversheds or are they a Clifford Chance?"
Williams is no fool - far from it. He knows that if Andersen Legal is to make any headway in the City at all, it may have to ditch the strategy which has seen the firm limping along unremarkably for the last seven years. The time is fast approaching when Williams will have to confront the regional question. The question is, given Andersen Legal's attempt to reposition itself at the heart of City practice, should it not pull out of the regions now?
Despite its strong beginning in 1993, the short history of Garretts has been a chequered one. Launching with a whimper with Colin Garrett, an in-house lawyer from 3i, the firm made a series of opportunistic moves, luring teams away from firms such as Pitmans and Simpson Curtis, successfully spreading its coverage within England. It did particularly well in Leeds, where it managed to capture a number of highly-rated partners in corporate, banking and property.
Things reached a high point in mid-1997 when Dundas & Wilson, Scotland's premier legal practice, was captured by the Arthur Andersen legal network. Garretts seemed unstoppable. With bated breath the market awaited the sign-up of a City firm, but the market was to be disappointed. Negotiations with Simmons & Simmons produced nothing, and in 1998 Arthur Andersen messily backed out of a deal with Wilde Sapte, which everyone had thought was about to be signed. Then the departures began: first went the head of IP/IT Richard Kemp, who left to set up his own practice, then managing partner Julia Chain jumped ship, closely followed by the head of banking Peter Richards-Carpenter, who left to join Rowe & Maw. After these three key departures, the head of corporate development in Manchester left, a whole slew of people in Leeds and the head of banking in Manchester all joined the flood out of Garretts. Only a £1m-a-year man from Clifford Chance in the form of Williams seemed capable of stemming the flow. The last departure was acquisition finance partner Brian Rutherford, who left to join US firm Altheimer & Gray in March, and he had already tendered his resignation by the time Williams had come on board.
Williams - a man with proven City credibility - was a sign of commitment to the legal network by Arthur Andersen, and his arrival has already settled the stormy waters. One former partner says: "He arrived in response to the requirement for Garretts to be seen doing work at a much more senior level. He was a big name and had become perhaps a minister without portfolio in his latter days at Clifford Chance. It was the perfect job for him."
In January Williams spoke to The Lawyer about his plans to elicit a new start for the firm. He said then: "I would hope that the determination Andersens is showing - and in part my appointment - will start to draw a line under some of the knocking copy that has been provided over the last two years on the Wilde Sapte thing, which was clearly not a great event. But these things happen."
On what his plans were, he added: "Obviously, having only just been appointed, to roll out a strategy would be a bit premature, I think. But there's only a limited range of options in reality. You've got to recruit and retain good-quality people. There are some very good-quality people already within Garretts, but you've got to recruit more at all levels."
That was January. This rainy October day, Williams is sitting comfortably in a bland meeting room, looking back on an eventful summer where he has made the process of bagging top partners appear easy. Just back from a trip to the Middle East and Asia with his global managing partner hat on, he finds that his home in Hampshire has been hit by the floods. He can still raise a smile, though.
The Andersen Legal strategy remains the same - to attract partners and clients and move more work between the various offices. That he has done, this year tempting nine partners to join, including banking partner Douglas Colliver from Dewey Ballantine in London, head of capital markets Gilles Thieffry from Norton Rose, and just last week the head of insolvency at Manches, Ashley Booker. It is notable, though, that Thieffry and Booker arrived through personal contacts - Thieffry knew Colliver when they worked together at Norton Rose, and Booker is a former colleague of Williams from Clifford Chance who had never really settled in at Manches. For the moment, Andersen Legal will have to rely on Williams' considerable powers of persuasion; recruiters have often found Garretts/Andersens a hard sell. As one recruiter says: "When you speak to a candidate and tell them it's a multidisciplinary partnership, nine out of 10 times they don't want to know." And, according to one source, among undergraduates Garretts' recruitment campaigns have also been ineffective. "Students are just confused about them," he says.
Since Williams took over, the focus has been London, London, London. The launch of the securities practice with Thieffry at the helm, the first of its kind among the accountants' law firms in London, shows he is targeting the cream contracts.
On the corporate side, the Andersen Legal strategy is also clear - get a foot in the door of major FTSE companies, and then, as Williams puts it, "ratchet up those relationships". He adds: "We act for about 15 of the FTSE 100, and we do about a quarter of a million [in fees] for each. But we're building relationships where the spend is increasing each year, which is very encouraging."
But talk to Williams about the regions and his tone is less sure. "We've been looking at the regional offices and identifying our strengths there," he says. "I think the key issues have been to look at the extent to which that operation is working well with the local Arthur Andersen operations, the extent to which those operations are consistent with what we're doing nationally with Garretts and internationally with Andersen Legal, and the extent to which they're differentiating themselves from the local markets. I think we'll always look at offices to make sure they're satisfying those criteria, and at the moment the very encouraging thing is that most of them are."
Still, while no one is suggesting that the Andersen Legal regional offices are basket cases (an organisation as hard-nosed as Arthur Andersen would have closed them long ago if they were), they are hardly setting the world alight. Reading has made inroads into the local mid-market, with deals in the sub-£20m bracket, such as the £14m sale of Zeuros to the AIM-listed Harrier Group. Williams argues that Cambridge, too, is a neat little office: "You look at Cambridge and what they're doing, and they're providing a City service there - it's very focused." With deals such as the £68.6m initial public offering (IPO) of TTP Communications and the £150m merger of Dalehead Food Holdings and Roach Foods, he has a point. The other offices can certainly pull in the odd chunky piece of work - Manchester did the £44.4m acquisition of Spanish hotel managment company Hotel San Pedro, while Leeds advised on the £50m AIM float of Kazoo (though given Arthur Andersen's corporate finance involvement, it would have been a shock not to have got that job). Yet none of them are anywhere near the top tier in their local markets - quite the reverse, in fact. Despite seven years of investment, the plain truth is that Andersen Legal simply has not broken the mould in the regions. "It was difficult when you were cut off from 80 per cent of the [referral] marketplace," says a former partner, alluding to the importance of accountants as work-generators outside London. "The offices aren't mega-players, as per a Wragges or a Pinsent Curtis, but we don't want them to be," protests Williams.
Williams may claim that the offices will stay, but what he cannot get away from is the fact that the market does not believe him. One source says that there is genuine fear in some parts of the regional network that they are living on borrowed time, and there is a constant sense of bewilderment from rivals as to why those offices are still in existence. When pressed, Williams says: "The expansion is going to be in London." But when pressed further on whether he is going to invest at all in the regional offices any more, he adds only: "I would be opportunistic. I certainly wouldn't rule it out, but I envisage that most of the expansion is going to be in London."
According to The Lawyer 100 survey 2000, Andersen Legal reached a fees-per-fee earner figure last year of £140,000 nationwide. But in London the figure was an astonishing £225,000, which would have put it in twelfth place on the ranking, just above Allen & Overy on £222,000. Surely, the time must have come for Williams to really make his mark and close the offices outside London, which are draining both the firm's earnings and its credibility.
Refocusing away from the regional offices would free up more time to concentrate on Europe - obviously high on the agenda, given the hiring of Thieffry to build a pan-European securities practice as much based on corporate issuers as the banks. In turn, that European network, which includes such strong players as Garrigues in Spain and Luther in Germany, requires an equally strong UK base.
Andersen Legal may have picked off Dundas & Wilson in Scotland, but the English practice is not comparable to the premier coverage elsewhere. Whether Williams will have the courage or the inclination to make the bold move and shut the regional offices is yet to be seen. He must know he has to shape the practice to look more like a City firm than a national one, but whether he would get the backing to pull it off is questionable.
One ex-Garretts partner sums it up best: "If they're going to achieve their ambitions to create a top-rate law firm, they have to create an atmosphere similar to those you get in the top five firms. It seems to me that they've now changed direction and got back to internationalisation rather than retreating back to a UK core. With the regional offices, they obviously aimed to copy Eversheds or DLA rather than take on Clifford Chance head on." Clearly, there's nothing wrong in aping the national firms, but whether it fits with the plan for world domination of professional services is questionable.