Olswang's lofty property ambitions leave the firm with much to prove
19 June 2006
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Olswang's lofty property ambitions leave the firm with much to prove" />Olswang chief executive Jonathan Goldstein has declared his firm to have "one of the top-three property practices in London" (The Lawyer, 1 May 2006). It was a bold and brash statement from a bold and brash firm and it elicited more than a few chuckles from real estate lawyers across the City.
"It's a media firm just dabbling, isn't it?" said one partner at a respected City property practice. Another dismissed the claim as "plainly ridiculous".
"Olswang has not got massive strength in depth, but its lead partners are pretty good," commented a partner at a rival firm.
But according to Olswang head of property Tim Westhead, the firm isn't looking for reputation among its legal peers.
"Ten years ago, when I joined the firm, no one had heard of Olswang on the property side; and since then we've focused on our work rather than our marketing," he says.
"People within the property industry now recognise Olswang for its property work and most are not even aware of the fact that we do technology, media and telecoms.
"For the legal industry, there is a lag in the reputation, but it doesn't hamper us in our business development or recruiting."
Goldstein was inspired to make his claims about the firm during its latest foray into the recruitment market. Olswang had just announced its acquisition of West End property boutique Kanter Jules, the latest in a succession of property firm acquisitions over the past few years.
In October 2002, Goldstein informed the partnership that he wanted to beef up the firm's property practice to about 20 per cent of turnover. At the time it was closer to 13 per cent, a figure that had been been in decline for a couple of years.
The arrival of DJ Freeman's property practice in May 2003 helped, although the effects of that move were not felt as immediately as the firm had been hoping.
Olswang was expecting the DJ Freeman group to help drive the firm's property turnover up to between £12m and £14m (The Lawyer, 24 March 2003). It actually hit just £9.7m for the 2003-04 financial year.
Indeed, figures provided by Olswang (see box below) show that the firm has not yet hit Goldstein's target of 20 per cent of turnover, although it did pass the £14m mark for 2005-06.
"We often hear from some of the bigger City firms that property is not as profitable as it once was. But here it continues to be," claims Westhead.
The addition of the DJ Freeman team did spike the property team's fees by nearly £3m in the 2003-04 financial year. The firm received another spike of £3m for the 2005-06 financial year following the acquisition of Julian Holy Solicitors in June 2005.
"We've been very successful at taking on laterals and getting more out of them than in their previous posts," claims Westhead.
"We look to on-sell our corporate to their clients and we've found that to be effective. It's a classic Olswang play - we take the property clients, add in all the other services and get more out of the client than the previous firm did."
Julian Holy himself had a rough patch when his firm was assimilated into Olswang - he was struck off the solicitors' roll by The Law Society over breaches of accounting rules, conflict of interest on loan transactions and other matters.
Holy famously said (The Lawyer, 31 May 2005): "I didn't realise that I shouldn't be acting for both sides on a deal."
In May, Holy lost his appeal to the High Court and Mr Justice Newman suspended him from practice for four years (The Lawyer, 15 May 2006).
But Westhead claims: "Julian acted with the highest integrity in the way he brought his clients and lawyers over and did everything for us that he said he would do, got them embedded into the firm and then hit the golf course."
With a laugh and a smile, Olswang managed to breeze through what could otherwise have been a very damaging blow to its reputation.
Inevitably when talking to Olswang partners, the subject of the firm's culture comes up. Lauded by those who work there, disparaged by others as having an advertising agency culture, Olswang has never quite fitted into convenient pigeonholes.
But beneath the branding, a rather tightly held partnership, and even tighter equity, has kept Olswang profitable.
Indeed, only three of Kanter's 11 partners made partnership at Olswang, and only one - Simon Kanter - joined the equity.
For the firm's associates, the outlook could be considered bleak - just one partner has been made up in property in the past three years.
Westhead counters that lateral growth brings new opportunities for the firm's associates and "there are many stars bubbling underneath the surface".
For now, the firm maintains a high retention rate, but those stars may become easy pickings for rivals much more ready to offer the partnership carrot.
Olswang puts itself alongside other noted City property practices such as Berwin Leighton Paisner, Macfarlanes, Nabarro Nathanson and SJ Berwin. Unsurprisingly, many property partners contacted by The Lawyer at those firms don't quite see it that way.
But maybe they should think again. Earlier this year, Olswang landed Brixton as a regular client, sharing the workload with SJ Berwin, and is becoming a regular face alongside the usual suspects on major property transactions.
Olswang also counts Land Securities Trillium, Berkeley Homes, Protego Real Estate Investors and Prestbury among key clients, while Minerva has been the firm's longest-standing property client.
But what does Westhead make of Goldstein's bold declaration? Mention of it brings a nervous chuckle and a seemingly embarrassed glance at his shoes. Goldstein may have been premature, but the firm's ambition is unmistakable.
"We are very clear on our target: to be a lead player in the real estate market," Westhead says.
"But to do that, we know we still have a way to go; we still have to grow. We do want to be in the top three, but when we'll get there, I can't tell you."