A serene transfer of power and the goodwill towards Lawes belies a harder edge at the top of Freshfields
During the run-up to the election of Will Lawes as senior partner at Freshfields Bruckhaus Deringer, one firm insider commented that, as far as he was aware, most of his colleagues ”couldn’t care less” who won.
That sounds suspiciously like a dissenting voice at what, to the outside world at least, seems the most unified of firms.
In fact, the firm has been quite happy to have the senior partner battle viewed by the market as something of a damp squib. The contest, between Lawes and chief executive Ted Burke to become Freshfields’ first solo senior partner since the turn of the century sounded more like a saccharine meeting of a mutual appreciation society than the tooth-and-nail fights other firms have been subjected to in the past. And that is the way both contenders like it.
In what seems to have been a remarkably amicable contest, Burke pulled off the trick of running both against and with Lawes, agreeing to serve as his managing partner – effectively a rebadging of his previous chief executive role.
The third spoke in the management team’s wheel, Stephan Eilers, has slipped into the new executive partner position under Lawes. Had Burke won, Eilers would have been his managing partner.
Keep on keepin’ on
It all seems like a cosy arrangement; a feeling backed up by some poorly attended hustings during the election and a general sense that the contest elicited little more than apathy among the partnership.
“Will and I couldn’t have run together if there were fundamental differences,” concedes Burke, who nevertheless insists that a contested election was important so that the firm could give partners a chance to put their views forward.
And most of those views, according to the trio now steering the firm, expressed the feeling that things were going well, with Freshfields having had at least as good a recession as any of its rivals.
“We feel the firm’s in good shape,” continues Burke. “There’s a lot of positive feeling and the mood’s generally positive, so we don’t believe we have any major internal issues.”
With everything apparently going so swimmingly, it should be no surprise that partners were not agitating for a significant changing of the guard. However, the sense of continuity should not mask the fact that the new regime will see one or two major developments at Freshfields.
The move to having just one senior partner is in itself significant. It is a sign that, 10 years after the event, the firm sees the era of integrating the twin German mergers of 2000 as over. Instead Freshfields now thinks of itself as a global firm, no longer requiring the security blanket of having twin German and UK figureheads.
“You couldn’t say the old system didn’t work,” says Lawes, “but we wanted to move towards having one person do the job. Once that decision had been made people coalesced around it.”
That said, one of the critical elements of the new team is that it has retained an international mix, with Eilers continuing to represent the German partnership once current co-senior partner and fellow tax partner Konstantin Mettenheimer goes back to full-time fee-earning in the New Year.
Eilers, whose new role will see him take on some of the day-to-day operational duties that Burke has made his own in the past five years, says the idea that Germany needs representation at the highest level is fading.
“Most partners, and especially those who’ve only been partners in the merged firm, don’t really care about whether there’s a German representative or not on the ground in London,” he says. “They just want to see that the machine keeps running. I don’t see myself as just a German partner. I have a global role, as we all do.”
The word ’global’ crops up time and again when talking to all three of Freshfields’ new leading lights. It illustrates that the big issue facing every member of the magic circle in the coming decade is how to position themselves not only at the top of the domestic game, but also as a truly international player.
“The most important thing is to get partners to think globally,” says another senior magic circle partner. “The challenge is not only with the clients, but also getting partners to think of themselves as part of a global firm.”
Lawes, who grew up in New Zealand, agrees that perception is vital. He stresses that the nationalities of the members of the management trio do not matter as much as the impression given by keeping the international mix.
“It’s unbelievably important that those in leadership roles reflect the broad international spread of the business,” he adds. “It’s what partners want.”
A largely uneventful election and serene succession suggests that most in the firm think the Freshfields machine only requires a gentle oiling.
“That’s why they got voted in,” says one Freshfields partner. “It’s like a golf swing – you don’t discard the stuff that works.”
But there are tweaks to that swing that will allow the firm to push into one area where it has perhaps not punched its weight in the past few years – the US.
“We might see Ted have more of a role in America,” adds the partner. “Stephan will bring a harder financial management edge to the trio, so Ted won’t be so constrained by having to deal with management issues.”
During his five-year tenure as chief executive, Burke subsumed managing director duties and later business development responsibilities. Eilers will now take on a large chunk of those responsibilities and divide his time between the Frankfurt and London offices. Burke, for his part, will spend more time in the US.
Lawes does not entirely rule out a transatlantic merger, and it is no secret that Freshfields would be amenable to a tie-up with one of a few hand-picked firms. However, with none of those top-table firms likely to appear on the merger market for a while, the US strategy that Burke will spearhead is more limited.
“We haven’t ruled out the merger but we don’t need it,” Lawes confirms. “There are two challenges there: first, to make sure we’re the firm of choice for our US clients for their work in the rest of the world; and second, to build our business in the US. So far we’ve been very careful in picking our spots.”
As in the rest of the world, expansion is not going to be the name of the game for Freshfields under Lawes’ stewardship. He seems to have learnt the recessionary lesson that keeping a tight rein on costs is critical.
“We’re not into opening offices all around the world,” he asserts. “It’s not necessary and it’s not what clients need. The market isn’t going to return to 2007 levels in the five years of my term, so we’ll have to be sensible and flexible about where we invest.”
One area of expansion, however, is likely to be in the capital markets space. Freshfields has already taken the rare step of recruiting high-yield lawyer Gil Strauss straight into the partnership after having been a counsel at Simpson Thacher & Bartlett. Sources at the firm confirm that more capital markets laterals are expected in the coming months.
“The thing that’s going to be vital is trying to spot where the new opportunities are going to be and marshal our resources accordingly,” says Lawes. “At the start of the recession we spotted that the work was going to be in restructuring, so we moved people there. As new-money deals return, at some point we’ll have to focus more resources into that space.”
Seen and heard
Another change that is likely to come when the new team takes over the firm next year is more subtle. Lawes is one of the most liked and respected lawyers in the City; he is likely to have a much higher profile with key corporate clients than either Mettenheimer or Guy Morton, the other half of the current senior partner duo.
“He’ll be much more outward-facing than the previous team,” says another partner at a magic circle rival. “Will was a classic M&A partner, so therefore he should have a lot more visibility.”
Having been one of the leaders of Freshfields’ financial institutions group means Lawes also has strong banking relationships. He knows that his reputation, both with corporates and banks, means he will be expected to be the most extrovert of the trio.
“I’ll have to do the senior partner thing,” he says. “It’s going to be ambassadorial of course, but the focus will be to get stuck in.”
However, what is unique about the set-up at Freshfields is that the three positions, while distinct, are designed to be more or less interchangeable.
“We’re very much working as a team,” confirms Eilers. “We have really important stuff that we’re doing, and we’re doing it together.”