There is a look on the face of Hammonds managing partner Peter Crossley. It says: “I am astute, focused, determined – a man who can get things done.”
That is a good thing. Hammonds needs someone who can distance it from its recent past.
Over the past few years Hammonds has suffered a mass exodus of partners and near insurmountable financial troubles, which took place against a backdrop of the firm’s overly ambitious international expansion plans.
Many expected Hammonds to go under as a result. And when it emerged that the firm’s were audited by a two-partner firm, it became virtually a laughing stock.
But Crossley has in less than two years turned around the firm’s fortunes. If, as he hopes, he is re-elected for a second term as managing partner, he may be the man to lead Hammonds to a gleaming future. The question is: what form will that future take?
Crossley’s tenure as managing partner is almost up. However, as revealed by The Lawyer (22 October), he will be standing for re-election.
Exactly what his ambitions for Hammonds are, however, remains a closely guarded secret.
“That’s under wraps and for now is just for my manifesto.” he says.
Crossley may prefer to keep his powder dry, but his options for the future must surely be limited by the firm’s recent past. And if he won’t say what his plans are, then interested onlookers are more than happy to offer their views.
“Hammonds has two options,” argues one law firm strategy consultant. “Either it focuses on building strength in its domestic corporate and finance practices to become a solid second-tier mid-market player, or it looks for a US merger.”
Most immediately, Crossley has to ensure that the firm’s dark financial days are behind it.
One former partner says it is obvious in retrospect where the financial problems arose – the firm’s strategy of continual mergers. “We grew too fast,” he says. “Within the space of four years we weren’t just in the UK, but France, Germany, Spain and Hong Kong, to name but a few. That was simply too much expansion for a respected but smallish outfit such as Hammonds to take, which led to the books naturally going awry.”
Dramatic international expansion is unlikely to feature in Crossley’s secret manifesto. Although Hammonds’ finances rebounded last year, with average profit per equity partner (PEP) breaking £400,000, the investment fund for opening foreign offices is unlikely to be particularly generous. Plus it’s unlikely there’s much appetite among Hammonds’ battle-weary partners for growing the firm abroad.
The reality is that Crossley’s hands are tied when it comes to making outlandish pronouncements about his firm’s future. He is head of a firm at which the partners have not only endured one of the most torrid times in recent UK legal market history, but they are also locked in.
It would be virtually impossible for Crossley to say publicly that Hammonds’ future focus is going to be on building corporate or finance (much needed though that is), as that would inevitably exclude those ranks of partners not in those areas who have stuck with the firm through its darkest hours.
As another consultant puts it: “Crossley will have to outline to the partners what the firm will focus on over the next three to five years, but he’ll make it clear it will be an evolutionary process to get there. He can’t afford too many grand gestures.”
The roots of Hammonds’ woes stretch back years. One of the firm’s downfalls was a lack of financial control by management and its loyalty to its longstanding two-partner accountant Fletcher Greenwood, which struggled with Hammonds’ exponential expansion.
In the summer of 2005 PricewaterhouseCoopers informed Hammonds that it would have to absorb a £1.6m write-off of fees from three years prior, as no formal terms of engagement had been agreed with client HM Customs and Excise.
In addition, Hammonds was hit by £1.4m in reorganisation costs in 2004, including the culling of 60 employees. At the same time it emerged that the firm had overpaid partners by a total of £3m in drawings.
This April Hammonds sued 14 former partners for not paying back what they had allegedly overdrawn.
Against this backdrop the firm saw a steady exodus of partners from core areas, which left it, in the words of one consultant, “seriously holed”.
But since Crossley became managing partner in 2004 his role has been to keep the firm alive. In the opinion of most onlookers, he has done an extraordinary job. But any thoughts of Hammonds now rivalling DLA Piper or Macfarlanes are ancient history.
At the same time, arguably, he has helped the firm become more focused.
Hammonds’ mergers and international expansion “all happened in a short space of time”, he says, between 2000 and 2004, leading to inconsistent services in the various offices, with each having a different culture, working style and ethos.
But sources at Hammonds say Crossley is turning this around.
“Before Crossley there was a feeling of them and us,” explains an insider. “It was as if we weren’t allowed to know what was going on with our own firm; but Peter changed that, as he tries to open up the dialogue a lot more with the firm’s staff.
“I suppose he realises that a happy ship makes good business sense.”
Crossley does see the lack of a united front as a major weakness for the firm, as he believes that an organisation that is perceived to gel well appears more efficient, and therefore more desirable, to a client.
“It’s about providing a more consistent business structure in which a client can expect the same level of service from Hammonds wherever in the world they are,” Crossley argues. “So whether you’re a German employment lawyer or a corporate finance partner in Leeds, there’s a set of core values and standards that everyone subscribes to. It’s important that everyone feels that they’re part of one firm and integral to the structure of the business.”
Crossley brought in offsite away-day events for the international divisions to get together to meet their counterparts to promote more cooperation between offices. A simple idea implemented at most law firms already – but still an important team building initiative nevertheless.
A strategy review, conducted by Crossley’s right-hand man, partnership board member and tax partner Bernhard Gilbey, and which was kick-started in 2004, led the partnership to reorganise the firm’s practice areas, cutting them from eight to four divisions, namely: real estate; corporate, strategy and finance; human capital, including pensions and employment; and commercial and dispute resolution.
The review, which Crossley had promised in his managing partner manifesto despite having stood unopposed, also came up with a simple solution to get Hammonds out of its quagmire.
“There are two main ideas behind the strategy, and that is to continue durable growth into the business and create one firm from a structural point of view and from a cultural perspective,” says Crossley.
Arguably, Hammonds’ international growth has been a casualty of the refocus. Notably, Hammonds chief of international projects and finance William Abraham resigned earlier in October in a last-ditch attempt to force Hammonds to reaffirm its international intentions (The Lawyer, 8 October).
“The firm wasn’t addressing Abraham’s concerns that his international practice had been sidelined following its strategy review, resulting in a more UK-focused approach,” says one former partner who knows Abraham.
Crossley categorically denies that the firm is sidelining its international practice, however.
“The firm is an international firm, albeit that most of the revenue still comes from the UK,” Crossley insists. “Our approach has seen 25-30 per cent of our turnover, which stands at £127m, now coming from our international offices, which wasn’t the case a few years ago.”
Jack of all trades
Whether Hammonds’ strategy proves to be more UK or internationally-focused, the fact is the firm does not have a unique selling point. Crossley concedes that no single practice is more important than another.
He claims that what gives Hammonds an edge is its client’s perception that the firm understands the needs of business. This is hardly groundbreaking stuff.
“We’re a business, but we’ve confused it by calling it a profession, when really we’re just selling another product like the other guy on the street,” he argues.
Crossley’s profile on the firm’s website offers yet more evidence of this: it includes six simple statements, all using the word ‘business’: “business is our language”, “business-minded” and “let’s talk business”. Rumours that Crossley also originally had a seventh – “there’s no business like showbusiness” – could not be confirmed.
As part of this move to a more ‘businesslike’ approach, Crossley recently replaced the firm’s senior partner role with two non-executive directors on the partnership board.
“Management consultants Bain & Co’s managing director Crawford Gillies and Capgemini’s UK CEO Clive Williams bring a massive amount of external experience and ideas into the firm,” explains Crossley.
A quick straw poll of Hammonds’ current partners gives Crossley a thumbs-up and the belief that he will not be challenged for the crown.
“There’s still a lot to be done and I have a clear vision of how to take Hammonds forward,” says Crossley. “We’ve transformed this firm in the past two years. Former partners may say other things, but that’s now all history, and where the firm is now means we’re moving forward.”
Moving forward to where, for the moment, can remain Crossley’s secret. But should he be re-elected for a second term, the time will come to let the market in on it.
Name: Peter Crossley
Number of fee-earners:
Peter Crossley’s CV
Economics and accountancy, Bcom, University of Kwazulu/Natal, South Africa; LLB, University of Kwazulu/Natal, South Africa; Law BA, St John’s College, Cambridge; Solicitors’ finals, College of Law
1986-88: Articled clerk, Richards Butler
1988-92: Assistant, Richards Butler
1992-95: Assistant, Hammonds Studdard
1995-99: Partner, Hammonds Studdard
1999-2004: Head of commercial disputes resolution, Hammonds
2004-present: Managing partner, Hammonds