6 October 2003
Two pods, different peas. At first glance, last year's acquisition of former Garretts offices by the two technology, media and telecoms (TMT) stalwarts Olswang and Taylor Joynson Garrett (now Taylor Wessing) looked like mirror image deals. For both firms the offices represented their first significant forays in the UK outside London. Both were known for their focus on TMT, and both took their first steps outside the capital by picking up offices that had formerly belonged to the Andersen Legal network.
But that is where the similarities end. Taylor Wessing's tiny Cambridge office is a sharply focused spearhead for the firm's broad corporate technology practice. Olswang in Reading is a full-service mishmash in comparison. Nominally a technology-driven venture to capitalise on the plethora of multinationals that populate the Thames Valley, the Reading office is more of a moon to Cambridge's satellite. They do have one other thing in common, however: they both have a lot to prove to their City partners.
Rather neatly, the birth of the two offices (see box, 'A tale of two cities') illustrates the cultural differences between Taylor Wessing and Olswang. One was preplanned, methodical, systematic, the other entrepreneurial chutzpah at its best.
It is, of course, no secret that the firms are fundamentally different culturally. "You could put 20 Taylor Wessing partners in a room and 20 Olswang partners in another room and you'd be able to tell which was which straight away," says a recruitment consultant, who prefers to remain anonymous. "It's a massive generalisation, but Taylor Wessing partners tend to be dullish personalities and bright minds, with no real dynamism. Olswang would at least like to think of itself as more energetic, dynamic and egalitarian. Could a 32-year-old become managing partner at Taylor Wessing? Never."
The styles of the two offices certainly contrast. Taylor Wessing's two permanent Cambridge partners, David Mardle and Malcolm Bates, are conservative and guarded in interview. Bates in particular, a life sciences specialist with a PhD in biotechnology, comes across as a bit of a boffin. Marshall Leopold, managing partner of Olswang Reading, is more obviously engaging and considerably warmer. He could schmooze for England. According to a rival, Leopold has "been in Reading for ever", and has been crucial for establishing Olswang's credentials in the area.
Equity or not equity
Taylor Wessing's Cambridge office might display all the personality of an algorithm, but that will not matter if it can turn a healthy profit. The signs are, though, that that is still some way off.
Last September Taylor Wessing made one corporate associate and a junior associate redundant. The firm says Cambridge is "on budget" for this year, although that represents less than £1m in turnover. It is headed by a part-time partner, in the sense that Simon Walker splits his time between London and Cambridge every week. Mardle, the permanent senior partner in the office, is not a full equity partner. Indeed, he is the only one of the six surviving Garretts partners that Taylor Wessing took on board (including five in London and Cambridge-based Simon Crossley, who left for technology company Accelerys earlier this year) not to be a full equity partner.
The office is also effectively a department of six fee-earners that runs as one office and is treated as such in the accounts. Mardle points out, however, that charging rates and structures are no different from London. "We charge London rates. We're offering a service that clients will go to London for," he says. "It isn't a local service at a local price, it's a local service at a premium price."
Olswang's Reading office, in contrast, "exceeded" its first year target, although Leopold dodges the rates question. "What we try to do in relation to our charging is manage the work by reference to the skill sets that are needed," he says obliquely. "I don't think it would be appropriate to give you specifics on charging rates, but let's just say that it wouldn't be unreasonable for a London corporate partner to work on a transaction that would involve the same charge-out rate - or very close to the same rate - as a Reading partner."
Only one partner (Leopold) of the total eight that came on board has so far made it to full equity. "We didn't have the time to analyse them from an equity perspective," admits Olswang chief executive Jonathan Goldstein.
Change of direction
Taylor Wessing's long-planned Cambridge office emphasises its commitment to what the firm's managing partner Gary Moss calls "the technology market in its broadest sense".
However, it is moving towards the completion of a consultation period on its strategy. Moss remains adamant that the results will see no shift away from the technology market "in its broadest sense".
Walker also trots the 'broadest sense' mantra out at every mention of the word 'technology'. "What we mean by technology is not a narrow band involving IT and software," he says. "We mean advising those clients that are seeking to exploit and develop technology - the complete band, including IT, telecoms, life sciences, IP-rich companies, the whole gamut." He agrees, however, that the firm has had to "adapt" to reflect the worst downturn in the IT industry's history. Five partners have left the firm's once-chunky pure IT team this year.
The future, locally and globally
Olswang's move on Reading hinted at this year's deal with DJ Freeman, which further diluted the firm's tech brand. Instead of pure TMT, Olswang now sells "TMT and property".
In typical Olswang style it took the boldest step, the swooping coup at the last minute. But one year of success is not a fait accompli. Reading's full-service approach might spread its risk, but it is the bigger office and, consequently, the bigger gamble. "Reading exceeded our expectations in its first year," claims Goldstein. "Now, of course, whether they can do it for a second year running is always the business test that you have in mind. But we've got no reason to believe that shouldn't happen."
There is always the risk with an impulse buy that when you get it home you will have changed your mind. Goldstein, however, appears committed to Reading and will obviously remain so while it pays. In a sense, Olswang Reading has more to prove than Taylor Wessing, emerging as it did from the post-Enron wreckage of Andersen (the Cambridge team left Garretts just before the firm's collapse). But the move out of the Andersen building into the glossy and airy Apex Plaza, conveniently built into the Reading Train Station complex, is a 10,000 sq ft statement of intent.
So far new clients have included Avis, Quintiles, PeopleSoft and Royal Bank of Scotland. The banking team got off to a cracking start by winning first-time instructions from Handelsbanken. Banking is the area where the firm is most keen to recruit, followed by IP/IT. The latter certainly needs attention following the departure of former IT head Alison Harrington for family/lifestyle reasons.
As for Cambridge, at the time of the deal Walker said the firm would "like to think the technology market has just about hit rock bottom and that, when it picks up, we'll be an established part of the professional services scene". Fast forward to October 2003, and Walker, a bit like Gordon Brown, is still waiting. "I'd like to think that, as the market improves it will mean there'll start to be M&A and IPOs, and our job is to stop that M&A and IPO work going to London. That's our challenge." It is some challenge too. The firm is excellently positioned in Cambridge to capitalise on the rebirth of the tech stock market, but it will take more than great contacts in one of the UK's technology heartlands to guarantee picking up the floats when they come.
It is at a strategic level, however, where the differences between the two offices - and indeed the two firms - are most revealing.
And for both firms the bigger strategic issue is international. In the same way that Reading and Cambridge are emblems of the two firms' differing styles, overseas expansion is likely to come down to opportunity versus long-term goals. Taylor Wessing is taking its next step towards being a pan-European firm, with the arrival of the team of lawyers from Landwell in Paris. The review, when it concludes, will see no shift from that ambition. As for Olswang, the current financial year will see its turnover, thanks to the arrival of an estimated £12m from DJ Freeman, hit the magical £60m mark. It will be enough of a financial platform to launch itself into Europe should it wish. Whether it does or not, as always, with Goldstein & Co, will come down to the right opportunity, with the right people, at the right time.
|A tale of two cities|
| Hermann Hauser, boss of Amadeus Capital Partners and bastion of the technology industry, is responsible for Taylor Wessing's presence in Cambridge. The firm was hosting a reception at the Globe on the South Bank towards the end of 2000 when Hauser, a client, pitched the idea to corporate partner Simon Walker. "When people like that make a comment like that, you take it seriously," explains Walker, sitting at the main boardroom table in the living, breathing office three years later. |
In true cautious Taylor Wessing style, the deal took its time. In April 2001, the management board approved a paper prepared by Walker and managing partner Gary Moss proposing a greenfield site in Cambridge. News then broke that the Garretts Cambridge office was looking to move. Negotiations with Garretts partners David Mardle and Gerry Fitzsimons were well down the track when in mid-September Fitzsimons was offered a job at TTP Ventures. "To be quite clear, we didn't pick up this office on the rebound from Gerry saying 'I'm out of here'," says Walker. "It was just something that happened along the way." The office opened on 1 January 2002.
Olswang's story is faster. When in February 2002 Andersen voted to merge with Deloitte & Touche in the UK, Garretts was not part of the deal. Two weeks is all it took for crack dealdoer Jonathan Goldstein,Olswang's chief executive, and his team to open negotiations, do the due diligence and close the deal, besting Charles Russell, Field Fisher Waterhouse and Osborne Clarke.
| Feedback from current Reading and Cambridge clients suggests that, whatever the style, both offices have gone down well. Biotech business Paradigm Therapeutics instructed former Garretts Cambridge partner Gerry Fitzsimons on its first fundraising in December 2001, when it raised £1m. The company looked around when Fitzsimons left the firm, but stuck with Taylor Wessing for its second round on 29 November 2002, when it raised £12m. "David Mardle is always there when you need him - he puts the hours in," says Paradigm company secretary Jim Sutcliffe of the Taylor Wessing partner he now instructs. |
Geoff Ruddock of Total subsidiary MAPA Spontex has used Garretts Reading, primarily for employment and property work, since 1995. He says that nothing has changed since the takeover by Olswang last year. "I've been to the London office and they have the same way of dealing with clients, the same way of doing business," he says. "They're able to talk to you at a level that's easy to understand and they're always available."
The clients also appear to back the local-presence strategy behind the moves. Sutcliffe says of Taylor Wessing's aim to offer a City intellectual property (IP) and venture capital service locally: "Cambridge gives us much more of a personal service, it's far less anonymous. If we were dealing with the London office we'd probably be the smallest client they had." Likewise, Peter Wynn, a director at Amadeus Capital Partners, says that it is useful to have "local lawyers that match the calibre of London lawyers".
Both offices also claim to have hung on to all the Garretts clients, with the former Andersen referral contacts (now at Deloitte & Touche, which acquired Andersen in February 2002) said to be "excellent" in both cases.
|Reading: the deals, the dealmakers|
| The Reading office launched in May 2002 with 30 lawyers, including eight partners. |
Turnover: Approximately £6m.
Partners at time of deal: Marshall Leopold (corporate), John Castell (property), Gary Henderson (employment), Alison Harrington (IT), Debra Kent (property), Andrew Peddie (corporate) Catherine Drew (corporate) and Tim Clark (litigation); another Garretts partner, Angus Phang (intellectual property (IP)) left at the time of the merger and is now at Willoughby & Partners.
Departures since: IT partner Alison Harrington (family) and property partner John Castell (now part time at Moorcrofts).
Main practice areas: Commercial litigation, commercial property, corporate/commercial, employment and pensions and IP/IT.
Clients include: Thames Water, Vodafone, O2, Avis, Svenska Handelsbanken, Quintiles.
|Cambridge: the deals, the dealmakers|
|Cambridge launched on 1 January 2002 with three partners and four other fee-earners. |
Turnover: Approximately £1m.
Partners at time of deal: David Mardle, Simon Crossley, Simon Walker
Departures since: IT partner Andrew Crossley has left to join biotech company Accelerys, while two other fee-earners have been made redundant.
Recruitment so far: Malcolm Bates, partner, from general counsel role at Genset, France.
Main practice areas: Intellectual property (IP) and technology investments.
Clients include: Amadeus Capital Partners, Paradigm Therapeutics, TTP Communications, Alphamosaic, First Cambridge Gateway Fund.