LG’s partner profits fell last year. So can new offices, a new name and a new international strategy help the firm regain some momentum?
When LG (formerly Lawrence Graham) announced in June a flat revenue of £66m and a drop in average profit per equity partner (PEP) from £465,000 to £445,000 for the 2006-07 financial year, managing partner Penny Francis was quick to blame the firm’s move from the Strand to new offices at More London Riverside in May.
Rent-related costs equated to around £35,000 per partner and maintaining three buildings for the past 12 months put enormous pressure on the financial results.
“We had a lot of work to do in terms of realigning the business and renewing LG in preparation for the move,” says Francis. “We’ve come a long way since a few years ago and these investments are completely necessary to the future of our firm.”
The firm’s move to swanky new offices and subsequent name change and rebranding as the abbreviated LG may have cost a fair amount, but Francis is confident that this is all key to building the LG of the future, which has its sights set firmly on India and the US.
LG joined a host of firms that have opted to spruce up their images, including Nabarro, which dropped the Nathanson, and Barlow Lyde & Gilbert, which launched its new rust-coloured image on its conversion to LLP status in May this year.
While rebranding seems to be the latest craze, Francis insists it is not about keeping up with the Joneses.
“It was simply time for a change,” she says. “We’d been based at the Strand for some time and we thought it was best to have a completely fresh start with a new image as well. It’s very exciting for us all.”
Finding the firm’s new home was one of the first tasks Francis embarked on when she became managing partner in 2002, after being head of real estate for four years.
The lease at the Strand was coming to an end and finding the appropriate setting for LG took some time, explains Francis. “It’s a mammoth task and you have to consider the shape and culture of the firm as well as how the firm is likely to grow and expand,” she adds.
A new office and a new name are not the only things that have changed. Traditionally LG has focused on its commercial property practice, with further strength in mid-market corporate.
But the firm’s corporate practice does not have the same level of private equity and big-hitting M&A clients that other firms have benefited from during the last financial year.
While other firms have stormed ahead with big private equity deals, LG’s lack of clients in this area has left it out in the cold.
“M&A and private equity have been astonishingly busy and that’s why many firms have had a storming year in corporate,” Francis says. “We don’t have this client base. We have a very different type of practice and we focus on different areas.”
Over the last three years the firm’s focus has shifted from Europe to the US and Asia – particularly India in the last 12 months – and the numerous AIM listings the firm has advised on have become much more of a highlight.
Last month (4 June) The Lawyer reported on the top-performing UK firms advising companies floating on AIM. LG came fourth in the rankings ahead of AIM heavyweights Berwin Leighton Paisner and Eversheds.
“You have to respond to the market and be aware of where you can develop strengths all of the time. AIM has been a great benefit to the firm and our India practice has really advanced this,” Francis says.
The Indian technology sector has proved to be a lucrative generator of mandates. Last year LG advised six of the 10 largest Indian technology companies on key deals. For example, the firm was instructed to advise on Indian power project developer KSK Power Ventur’s sole AIM listing in November 2006.
Small wonder, then, that LG’s growing focus on Asia has coincided with an extensive overhaul of the firm’s European strategy.
Last year LG disbanded its European alliance network after deciding that the system, which was first established in the 1980s, was outmoded (The Lawyer, 18 January 2006).
At the time LG operated exclusive referral relationships with one firm in each jurisdiction, such as Puopolo Sistilli Geffers & Luise in Italy and Verhaegen Walravens in Belgium. This has since been opened up to looser associations with two or three firms in each major jurisdiction, which include France, Italy, Germany, the Netherlands and Spain. LG is now embarking on a review of its US referral relationships.
Refurbishing LG’s international strategy into something fresh and up to date will be key to the firm’s future success. “Looking at all the options presented to LG is a must,” says Francis. “We’ll focus on what works for us and try to take full advantage of the opportunities presented to us.”
It is a sunny response. But with domestic growth stalling, developing internationally is now imperative for LG.
Name: Penny Francis
Firm: LG (formerly Lawrence Graham)
Title: Managing partner
Firm turnover: £66m
Number of fee-earners: 265
Penny Francis’s CV
Education: 1981 – Bristol University LLB
Work history: 1982: Beachcroft Stanleys, trainee
1984: Beachcroft Stanleys, associate
1988: Lawrence Graham, associate
1991: Partner, real estate
1998: Head of real estate
2002: Elected as managing partner
2005: Re-elected for second term as managing partner