Clifford Chance’s new managing partner and corporate head are turning around the firm’s conservative reputation by taking an axe to the leadership team and getting tough on partners’ remits.
Just months after Matthew Layton stepped into David Childs’ shoes in May and Guy Norman put on Layton’s (27 November 2013), the firm’s management committee had been cut, partner elections were no more and the position of London corporate head was hanging in the balance (24 July 2014).
Clifford Chance is hardly in poor health. Last year it stormed ahead of rivals again with a 7 per cent revenue rise to £1.359bn, up from £1.271bn at the end of 2012/13 (1 July 2014).
But US firms are snapping at the magic circle’s heels and have taken some of Clifford Chance’s corporate stars. Layton and Norman clearly think some things need to change. The firm’s corporate Batman and Robin, who have been working together for 16 years, say it’s time to scrap the complacency, drive efficiency and cut costs.
First step on the efficiency drive? The management committee. Once a 16-strong committee including regional managing partners and practice group heads, the group is now a 12-strong executive leadership team with three global business units instead of practice areas and several key exits (12 July 2014).
“I sat on the management committee for six years and there were a lot of strengths in the breadth of that group, but there are also downsides in having such a large leadership team,” says Layton.
“We hadn’t really changed its structure since the 2000 mergers but since then there had been some fundamental developments within Clifford Chance, across our client base and in the legal market. It was apparent that we could run the firm efficiently and effectively with a simplified leadership body, where individual members covered a wider range of groups within the firm.”
Layton’s quiet demeanor belies a steely radical streak. As well as overhauling the structure of the management committee, he scrapped all partnership elections, cutting short all committee terms and putting them up for appointment by his selection (25 July 2014). That meant longstanding finance head Mark Campbell and capital markets head David Dunnigan both gave up their crowns. But Layton stands by his choice.
“During my discussions with partners, it’s been very clear to me that they recognise the benefits of the managing partner appointing the members of the leadership team, rather than relying on the election process,” he says.
“The market is changing fast and – having set an agenda for the firm – partners want to see our senior leaders fully bought into that, and focused as a group on driving the firm forward with the minimum of distractions.”
It certainly brings the firm in line with others in the magic circle. Linklaters also splits its departments into three groups – corporate, commercial and finance and projects – and its executive committee is appointed rather than elected.
However what of more radical changes to the partnership structure? Layton has been flirting with the idea of bringing all partners into the equity, something he says “gives a degree of flexibility in the model”. Is he also tempted to introduce more merit-based elements to the nine-year lockstep?
In a word, no. Merit-based remuneration, eat-what-you-kill models and individualism have no place at Clifford Chance and never will. Lockstep is “a fundamental pillar of the firm”, says Layton, adding that a move to a US-style, merit-based remuneration model would be a “breakaway” from its cultural heartland.
Layton and Norman both agree that the answer to keeping clients, and partners, happy is by focusing on the firm’s young partner talent pool.
For Norman, who dedicated a large chunk of his 12-point manifesto to “people” and “team work”, the urgent thing is to bring younger partners into strategy planning and solidify clear client targets (25 February 2014).
By 1 May he tasked each corporate partner to have five key client targets with a sector focus overlaid on top of it. The energetic and self-proclaimed people person wants to craft teams with clear leaders in order to hammer home one of his key messages, “focus”.
“You can’t develop new relationships with everyone in the world,” he says. “You need to be focused about who to target.”
Is part of that a bid to make sure the firm’s clients are spread among its young talent, protecting them in the face of losses like private equity stars Kem Ihenacho and Tom Evans to US firms (21 February 2014)? Norman will not acknowledge the depleted team as an issue, though it has lost eight heavyweights in four years.
Norman says the focus is all about motivating the whole partnership. He is also bolstering younger partners’ engagement by appointing a junior partner and associate to the department’s ‘Vision 2020’ team – the eight-partner strategy group launched 18 months ago in a bid to catapult Clifford Chance to being the world’s leading corporate and M&A practice by 2020.
Layton is keeping a close eye on this plan. Last month the new team met to talk through it, with the aim of updating its four-part vision divided between operational excellence, clients, leading reputation, and developing people.
The planning group might have stayed the same size but Norman is not averse to a bit of streamlining. When he took up the role, London corporate head Simon Tinkler stood down to return to fee-earning, leaving an empty chair.
“I did think about whether we could remove a role by me taking it on,” says Norman, while adding: “Even with various lieutenants taking on specific roles, a huge amount would still have found its way back to my desk.”
He flirted with the idea of creating an area head for people as well as one for leadership and training. But it didn’t take long to realise the corporate job was “massive”. Step in Mark Poulton, the new London corporate head who started his four-year term on 1 July.
Poulton’s appointment might mark the end of Clifford Chance’s musical chairs for now, but it is certainly not the end of change as Layton and Norman continue pursuing their mission of refocusing the firm towards the future.