Macfarlanes is planning to reposition its practice by increasing the firm’s focus on advisory work, disputes and investigations, in an indication that it has admitted it was over-exposed to the deal market during the downturn.
Senior partner Charles Martin has outlined the firm’s aims for a business balanced between the three areas of transactions, advisory and disputes in a move likely to see deal lawyers carry out more work in the other two areas.
In 2011/12 Macfarlanes’ litigation practice brought in only 16.8 per cent of total revenue, with corporate at 37.4 per cent, finance at 18.4 per cent and real estate at 13.3 per cent. Private client accounted for 14.1 per cent of firm revenues.
But the firm aims to dramatically increase its revenues in disputes, covering litigation and investigations, and achieve a rough equilibrium between this area, transactional work and the firm’s growing advisory practice.
Transactions include real estate and finance, while the advisory practice covers general advice to corporate and private clients. The investigations group, meanwhile, will be focused heavily on the financial services sector.
Martin told The Lawyer: “We see our practice continuing to evolve over the next few years: it is becoming more balanced between transactions, advisory and disputes and investigations. This is about what our lawyers are doing for our clients, how they spend their time. It’s a functional evolution and is a direct response to a market in which you need to be very clear about where you can add value and how you do that.”
He added: “Transactional work of the right quality will always be an important part of our practice. But it will be a very long time before it recovers to historic levels. We will be there when it does, rest assured. But we need a broader, better balanced practice, as I have explained.”
Martin also highlighted the firm’s policy of “being uncompromising about the quality of our people”, which he said makes the firm “more adaptable” as “smart people find it easier to turn their hands to new things”.
But he added: “We don’t see a need to move people around or pigeon-hole them to achieve the rebalancing of the practice that I’ve described. For example, corporate lawyers wouldn’t want to do only advisory work and it wouldn’t be good for them as lawyers if they did.”
The structure of practice groups and their heads will remain unchanged, but Martin confirmed that the firm’s private equity deals, private equity funds, hedge funds and real estate funds practices had been merged into an alternative assets group.
The development came amid the firm’s increased focus on the hedge funds market last year through the addition of West End boutique D Harris & Co International (16 January 2012).
A headhunter supported the firm’s plans, commenting: “What they do have is a cracking brand. They’ve got a brand that really matters. If you were a corporate client, you’d be happy to use Macfarlanes. So it might make sense. The magic circle have been doing investigations and advisory work for years. Most firms’ disputes partners are making money. They’re definitely starting to change at the firm.”
Macfarlanes was severely hit by the credit crunch due to its focus on private equity and M&A. In 2008/09 it unveiled an 11 per cent revenue drop and a 31 per cent fall in average profit per equity partner (PEP) to £846,000 (16 July 2009) and smaller drops the following year to a PEP of £710,000 (12 July 2010).
But financials have since rebounded, with turnover going back through the £100m mark in 2011/12 and PEP jumping 20 per cent from the 2010/11 figure of £752,000 to £903,000 (6 July 2012).
Recent disputes instructions have seen the firm hired to carry out an investigation into alleged financial irregularities at mining group Bumi, while litigation partner Iain Mackie represented investment company Salford Capital Partners in a chancery case brought by Boris Berezovsky that the Russian oligarch withdrew (13 September 2012).