TMT central strategic plank once more as real estate is relegated
Olswang is investing 10 per cent of its annual net profit each year into funding its international network.
Although not mandatory, the move underlines the firm’s ambitions for expanding its base beyond the UK and amounts to an acknowledgment that the previous strategy was failing.
In 2009-10 – the most recent financial year for which figures are available and the first year that the investment was made – Olswang’s net profit stood at £25.2m, giving the firm a £2.5m war chest.
CEO David Stewart confirmed that, as a result of a firmwide partnership poll, Olswang had begun setting aside a portion of its profit to fund overseas expansion.
“We canvassed the partners and asked them whether they believed our current strategy was the right one, whether we needed to grow and, if so, which sectors, service lines and geographies,” said Stewart. “We also asked, ’are you prepared to invest and, if so, how much?’.”
Partners were asked to choose the percentage of profit they were willing to pay, with a range of between 5 and 50 per cent being offered.
Despite most partners plumping for around 15 or 20 per cent, the firm decided to take a slightly more conservative line.
“Our eventual view was that we should invest around 10 per cent of the firm’s net profit into international growth,” said Stewart.
The past few years have seen Olswang take steps away from being a UK-only practice to one with outposts in Brussels, Germany and Spain.
It is expected that the firm will open at least one more overseas office this year.
One London-based legal market consultant commented: “This development shows the need for firms to differentiate themselves in an increasingly competitive market.”
Stewart said the review highlighted the need for Olswang to use its sector focus as the lead strategy for international growth, with the primary emphasis on media and technology.
That move will be interpreted externally as a reversal of the firm’s attempts to broaden its practice area coverage, seen most clearly in its 2003 acquisition of the property business of the now-defunct DJ Freeman.
That ambition was hit hard by the economic climate, which left Olswang’s UK real estate headcount 25 per cent lower than at the start of the recession.