One lawyer who knows particularly well the scale of the impact the GFC has had on the strategies and fortunes of the world’s biggest law firms is Jonathan Blair.
In 2009 Blair was managing partner of Newcastle firm Dickinson Dees when it was forced to cut headcount in the aftermath of the debacle around client Northern Rock.
Now he is managing partner of Bond Dickinson, the result of his firm’s UK merger with legacy Bond Pearce which next month will merge with US alliance partner Womble Carlyle, securing it a place in the Global 100 largest firms.
Blair recalls that back then the idea of redundancies in a law firm was still almost “unheard of”. But around the time of the layoffs, firms also starting making other moves that had previously seemed unlikely. In November 2008, for example, Dickinson Dees sold its volume arm D3 to Capita. D3’s largest client had been Northern Rock.
“From the moment Lehman went down I was expecting a call from Capita to say the deal’s off,” admits Blair, “though of course that never happened. It was a sobering period but also very instructive.”
Blair recalls reading a comment made around that time that “in high winds even turkeys can fly”.
“I remembered that as being a valid criticism,” says Blair. “It might have been a bit trite and flippant, even offensive, but there was some truth in it. For the first time, law firms were being strategically faced with some searching questions. Do we have a USP? How do we survive? Can we survive? Many law firms up until then had operated on the basis that they were fine as they were.”
Blair trained at legacy Wragge & Co [now Gowling WLG, following that firm’s own series of mergers], a firm for which he says he has “enormous respect”. He says that when he was at the firm at the tail end of the 1980s the view was that it could conquer the world from Birmingham.
“Look at where they are now,” he says. “Dickinson Dees had a similar mindset, even if it was articulated differently.”
Blair says that the typical law firm view of strategy pre-2008 was simply “not good enough” post 2008.
“The financial crisis forced people to think long and hard about how to grow, prosper and succeed,” he argues. “At Dickinson Dees the answer was that size does matter and that being in a single site location wouldn’t be good enough in the future. We needed a bigger presence, and recognised that not being in London would damage our ability to compete. The ‘merger’ word in Dickinson Dees was a frightening word because of that mindset, that we could do anything from here [Newcastle]. But the world had changed, and both of the two businesses [Dickinson Dees and Bond Pearce] set out on a trajectory to enter into a UK deal.”
Within that strategy was also an international element, says Blair.
“As far back as 2009 there was a clear recognition that the world had clearly changed and internationalised,” says Blair. “It was a priority in both Dickinson Dees and Bond Pearce to make the merger work but also to internationalise. So we very deliberately did some research. We sat down with the CBI and said ‘talk to us about FDI and the UK’s top five trading partners’. [Brand index] Acritas was also very useful, because they talk to GCs.”
It was also quite handy that legacy Dickinson Dees had advised Acritas founder Lisa Hart Shepherd on the establishment of the company 15 years earlier and so Blair & Co knew precisely who to turn to for market insight.
“Lawyers are suckers for information,” admits Blair. “So the next question was what does it mean. Acritas talk to GCs about their spend, their needs and which countries they have legal requirements. It was really no surprise that the answer was the US, then Germany and France, followed by Spain and Holland. We had a relatively blank sheet of paper but you can’t do everything so we focused on those countries.”
In 2014 the firm formed an exclusive strategic alliance with German law firm Redeker Sellner Dahs Bersay. It also struck an alliance deal with French firm Bersay. And then came Womble.
The merger with the US firm will go live at midnight on 31 October, tying in with the UK firm’s half year. The relationships with the two Continental firms meanwhile will remain on the same alliance basis, while any moves towards Spain and Holland are currently filed in the ‘interested and curious’ folder.
“Now the absolute priority is to get the revenue play of the US working,” admits Blair. “You can’t afford to do things sequentially and ignore the things that need attention. We’re still absolutely committed to our German and French relationships and in fact there’s significant German interest in the Carolinas [Womble was founded in Winston-Salem in North Carolina in 1876].”
Blair has no doubt that there is a direct link between the financial crisis and legal market consolidation.
“Without any doubt,” confirms Blair. “2008 was a bruising time, but it was also an illuminating time, a time when the legal profession for the first time saw itself brought into the real world. Certainly in my career, we suddenly we recognised that budget setting wasn’t just about saying ‘let’s put 10 per cent onto the top line’. We suddenly realised that external legal spend was being reduced, and it was a competitive market that was getting more competitive.”