Benjamin Franklin was famously quoted as saying: “The only things certain in life are death and taxes.”
Given this assurance, should year-on-year double-digit revenue and profit growth in Berwin Leighton Paisner’s (BLP) broad-based tax department, which includes everything from corporate tax to estate planning for ultra-high-net-worth individuals, be taken for granted? Or does the explanation lie elsewhere?
The department’s chief Michael Wistow, who joined in 2007 from Clifford Chance, might have something to do with it. Before he joined the firm BLP split its tax capability between private client on the one hand and so-called corporate tax on the other (the latter essentially being a catch-all for everything from real estate to structured finance and corporate). It was Wistow’s initiative to group these diverse areas together and to diversify the corporate offering, going on a massive hiring spree that saw him bring on board a team that included VAT specialists Alan Sinyor from Freshfields Bruckhaus Deringer, Linda Adelson from Lloyds Banking Group, structured finance expert Matthew Kellett from Linklaters and contentious tax partner Liesl Fichardt from Dorsey & Whitney, while also making up Elizabeth Bradley.
The motivation stemmed from Wistow’s experience of what he calls “overcorporatisation” at his previous firm. “I couldn’t foresee the downturn,” he admits, “but I knew that a tax practice that was overspecialised couldn’t fare so well. I came with that mantra to BLP. I outlined that I’d welcome the opportunity to map out from the base of 13 partners across two groups.”
The department now has 22 partners, eight of whom are private client specialists, with 14 working on corporate tax, which accounts for 65 per cent of the £19m total departmental revenue. The growth has only been in one direction. Revenue was up 14 per cent this year, 22 per cent last year and 16 per cent in 2007-08. If it is not already there then the firm is certainly close to its goal of having the largest and broadest tax practice in the City.
Nevertheless, the decision to combine such diverse capability under one roof has drawn criticism. “I’ve never really understood the decision to lump private and corporate tax together – the expertise is completely different,” says one private client partner at a smaller firm.
But Wistow defends the decision, saying “it hedges the business,” and “we’re not tied to a purely transactional market”. In addition, he points out that through combining these two practices the team has been gifted clients including Barclays Wealth, Credit Suisse and Merrill Lynch, all of which operate in both spaces.
The decision to add charities into the mix (a small but historic specialism at the firm) also has its detractors. A lawyer with knowledge of the firm points out: “For a charity client the main consideration is fees – they’re more inclined to go to smaller firms. BLP’s charities practice has survived through the transformations that have taken place, if only because the senior partners – including [son of Paisner & Co founder Leslie Paisner] Martin Paisner – do a lot of charities trustee work and rely on the firm for assistance.”
But as with private client and corporate tax, Wistow points out that this is a case of exploring ”synergies” and only targeting the most profitable work. “We’re not acting for a charity walking in off the street,” he says. “We act for a number of billionaires and half-billionaires [and] sometimes they take the decision to go all philanthropic on us.”
To what extent has BLP’s success been related to the decision by a number of larger firms, such as Allen & Overy and Clifford Chance, to downsize their tax practices or exit certain areas such as private client altogether?
“The magic circle’s had some exceptionally able people, but is very narrow in terms of people and clients in securitisation and M&A tax,” says Wistow. “They don’t have full-time tax litigators. Our expansion hasn’t been just into these areas, we’ve gone broader.”
In so doing the firm has also managed to pick up some clients previously more closely associated with the likes of the magic circle. For example, BLP handled the complex tax and real estate work for Clifford Chance client Blackstone on its joint venture with British Land, acting as co-counsel with former Clifford Chance partner Adam Signy, now at Simpson Thacher & Bartlett, who handled corporate matters; it worked for the National Pension Service of Korea; it acted for Tesco on the tax matters of a sale-and-leaseback deal; and for Oxford Properties and UBS in relation to the letting of Watermark Place to Nomura. All were real estate-heavy deals.
So does this undermine the firm’s claim that this is a standalone department?
Wistow responds that, while some of it is sourced from real estate, a lot of the work the tax department is engaged in is tax-led. “A lot of the way you get deals is via doing the tax structure,” he says. “You’ve got to have finance capability as well, it’s very much not a support function.
“We don’t spend a lot of time doing routine tax on real estate or corporate, our business model is to be self-sufficient.”
BLP’s tax stats
Tax practice turnover
Number of tax partners:22
Head of tax: Michael Wistow
Recent hires include:Linda Adelson (from Lloyds Banking Group), Kevin Cummings (Allen & Overy), Liesl Fichardt (Dorsey & Whitney), Michael McKenna (Goldman Sachs), Murray North (Clifford Chance), Alan Sinyor (Freshfields Bruckhaus Deringer)
Major clients:Barclays Wealth, Blackstone, Canary Wharf, Credit Suisse, National Pension Service of Korea , Merrill Lynch, RBS, Tesco, Thames Water, UBS