Osborne Clarke makes its move
2 April 2012 | By Katy Dowell
4 September 2013
25 July 2014
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9 June 2014
Firm banks on ’sector-led’ approach as it dumps Euro alliance and sets out on the acquisition trail
Last week Osborne Clarke embarked on an ambitious journey to transform itself from a domestic firm into a European outfit after revealing plans to dismantle its longstanding European alliance and merge in Italy and Spain.
The decision to loosen the formal alliance with Belgian-based De Wolf & Partners, Rotterdam-based Ploum Lodder Princen and Stehlin & Associés in France, seems to be motivated in part by the firm’s desire to grow organic offerings across European jurisdictions. While a best friends relationship will be maintained for the time being, in loosening the alliance Osborne Clarke is paving the way for further acquisitions.
The firm has started out on the acquisition trail by merging with its Spanish and Italian alliance partners, Osborne Clarke Spain and SLA Studio Legale Associato.
The mergers will add 21 partners to the firm, bringing the total to 145, and are expected to increase global turnover to around £117m (€140m).
That will be a healthy boost to the coffers. At the 2010-11 year-end the firm posted a revenue of £90.3m, an 8 per cent rise from £83.7m a year earlier, but still not enough to break its pre-recession performance record in 2007-08, when it pulled in £95.3m.
Yet the proposed tie-up will give the partnership a boost and the impetus to push on with acquisitions.
Managing partner Simon Beswick said the firm had agreed unanimously that for it to be successful it needed to push up a level and target “more complex” and “more international” work.
Early indications that the firm was looking to overhaul its strategy came last year when it launched an accelerated lateral hiring programme. It made a series of appointments, including pensions partner Keith Webster in Bristol from CMS Cameron McKenna; Taylor Wessing finance partners Dominic Ross and Akmal Ghauri; and four additional London recruits in construction, banking, projects and real estate finance.
While that approach should be enough to give the firm a boost on the domestic level, Osborne Clarke recognises that to be a big hitter in the mid-tier it needs to reinforce its international platform.
Today, the international aspect consists of a successful, mainly transactional German offering based in Cologne and Munich and a small Silicon Valley office run by lone partner Steve Wilson, providing solely European law advice mainly to digital media clients.
This is not the first time the firm has considered a European launch through merging with alliance firms.
Following its decision to call off a tie-up in 2002 then managing partner Leslie Perrin told The Lawyer: “We want to be an integrated pan-European firm in eight or more jurisdictions by 2005, but it’s just a question of what you mean by integration.”
Its reticence in pushing forward a decade ago is still being felt. Instead of being ahead of the curve, the firm is playing catch-up in a sector already dominated by domestic rivals such as Bird & Bird and Olswang.
Osborne Clarke is pinning its hopes on what it sees as a key differentiator: a sector-led approach.
As it began planning its latest European onslaught Osborne Clarke held its usual quarterly meetings with alliance firms and informed them of its plans.
Beswick says the firms were told of the plans and of Osborne Clarke’s “firm belief in the sector focus”, which would underpin its international expansion. They were given the option of joining up and adopting the proposed Swiss verein model, but politely declined.
He comments: “When the alliance came together [in 1987] it was a grouping of independent firms. We take the view that we need to be an international firm and some members want to remain independent.”
Osborne Clarke Spain and SLA Studio Legale Associato, however, embraced the opportunity and the trio are close to signing heads of terms agreements that will give Osborne Clarke bases in Barcelona, Madrid, Rome, Milan, Padova and Brescia.
Beswick says both firms believe in the sector-led approach.
“Both firms have real strengths in the sectors we’re active in,” he explains. “This includes energy and natural resources, financial services, digital business, real estate, life sciences and pharma. They have excellent reputations in their domestic markets and wide experience of working on international matters.”
The anticipated mergers are expected to go live in July, by which time an international partnership board will have been established.
This radical change of strategy has been a long time coming for Osborne Clarke, and for it to be successful the firm needs to move quickly. According to Beswick, around 80 per cent of its US work arrives via Europe, while it is also seen as an attractive route for India-based instructions. Put simply, the firm wants a larger slice of the global pie and, given market conditions, it must act now or miss out.