The Hogan Lovells love-in continues – but don’t mention remuneration
24 May 2010 | By Catrin Griffiths
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AT THE Hogan Lovells annual press party last week co-chief executive David Harris gave a short speech. As always, there was a strategic theme. This time the new American partners were in town, and three weeks into the merger Harris was keen to push the firm’s perennial line that this was a deal between equals. “I know this looks like a coalition,” he said, “but neither of us is the Nick Clegg in this relationship.”
Perhaps not, but the Cameron-Clegg love-in was being enthusiastically replicated last week by Harris and his co-chief executive Warren Gorrell. Both men were diligently demonstrating their personal chemistry, to the extent of indulging in a spot of joshing. They have certainly had time to practise their double act; at the firm’s Asia regional conference the week before last the pair had a live interview where they had to share a sofa and take questions from staffers. “I sat under the bright lights,” says Gorrell, “because I have more hair than David and there wouldn’t be a glare.”
“We talk every day,” says Harris. “One of the things we found very easy is that we have a very similar view of the market. We’re coming from a very common position, and we both have a sense of humour.” This is, perhaps, just as well. Up until now Gorrell has run the Hogan & Hartson show on his own, and observers of Hogan Lovells endlessly speculate on how he is going to let someone else have equal say.
Gorrell claims that such is the strength of the months-old relationship that he can already second-guess Harris’ reaction to any given management issue. “David’s very hands-on and focused on details. We both share that quality. I could probably predict what his answer would be.”
Nowhere is the meeting of cultures more evident than in partner remuneration. Hogan & Hartson’s merit-based pay always contrasted starkly with Lovells’ lockstep system. Gorrell is rumoured to be on $11m (£7.68m) - a far cry from Harris’ plateau earnings of £736,000 last year. The merged firm now operates what Harris terms a ’glidepath’ towards a more flexible system of partner pay. “We’re not coming from poles apart,” argues Harris. “We’ve had a managed lockstep and we manage performance quite actively.
Still, the Americans have won the first lexical battle. Asked about remuneration generally, Harris checks himself. “Oh, we don’t say ’remuneration’ now,” he says, as Gorrell nods in agreement. “We say ’compensation’.” Quite why ’remuneration’ has become a non-word within Hogan Lovells is difficult to work out, but the following day The Lawyer gets some clarification. Apparently it boils down to accepting the American term, which is “more widely understood as a term around the world, not just in the US”.
While Gorell and Harris are working hard on communicating their new enhanced global capability to clients, they both recognise there is a slog ahead of them.
“The question is, will we be able to sit here this time next year and tell you examples of the business that we wouldn’t have got without this merger,” says Gorrell. “But I have to say that we already have mandates that we wouldn’t have got before the merger.”
Part of the integration project is sorting through conflicts. As The Lawyer reported earlier this year (8 February 2010), the biggest headache is keeping News International (Hogan) and ITV (Lovells) happy. “There are certain industrial sectors where we both have a significant involvement, but that’s a strength,” says Harris, who is not entirely at ease commenting on client relationships on the record. “ITV is an important historic Lovells client and we’re trying to manage arrangements with it and News International.”
The pair’s enthusiasm to highlight the greater capacity makes Hogan Lovells sound uncannily like Clifford Chance and the way it sold its Rogers & Wells merger to a dazzled world 10 years ago. As the past decade has proved, that transatlantic union has not been the happiest, but Harris is not one of that deal’s detractors. “People were critical of the Clifford Chance/Rogers & Wells deal but I’m not. It was a different landscape at the time.”
The Hogan Lovells approach to the new global legal marketplace does not as yet include any reengineering of the practice, or wholesale outsourcing. “I’m sceptical that there’s a new school of thinking in law firm business models,” says Gorell.
Harris politely disagrees. “We will look at different service models,” he says quickly. “This merger provides enhanced ways of looking at different service models.”
There are still some differences to emerge in this coalition.
#For more on Hogan Lovells’ China operation, see page 23