BLP’s Eisenberg blames PEP slump on not-so-magical undercutting
For Berwin Leighton Paisner (BLP) managing partner Neville Eisenberg, one of the most frustrating things is not the extraordinary 40 per cent slump in PEP in 2012/13 or the 20-odd partner departures over 18 months, but undercutting by major City firms on pitches.
“One of the things we found during the year was a degree of competitive behaviour between firms we’d never expected before,” he says bluntly. “It was particularly noticeable among the top 10, including the magic circle. It wasn’t unusual for us to be undercut by 50 per cent, by very high-quality firms.”
Eisenberg declines to name which firms have been playing rough, however.
Complaints like these are regularly aired by managing partners with varying degrees of credibility. However, with general counsel getting tougher on fee packages, the pricing issue is hardly going to go away. Eisenberg acknowledges this, pointing out that the firm has prioritised process-mapping across its practice areas and consulting clients about fee and service levels.
He cites four areas where BLP can make efficiencies. They include process-mapping itself; the lessons learned from the Managed Legal Services project, which has now been scrapped as a standalone initiative; outsourcing to firms outside London and a low-cost centre in the regions.
“We’re at the closing stages of integrating an integrated proposal which is a menu of options for particular assignments,” Eisenberg explains.
BLP has not had the easiest time of late. The firm’s high-profile partner recruitment drive – it hired 40 laterals between 2010 and mid-2012 alone – has been only patchily successful. As The Lawyer noted in November 2013, there was internal friction over guaranteed payouts for laterals, some of whom did not deliver.
In May the firm made 102 legal and secretarial jobs redundant. Its average partner profit figure – £401,000, compared to the previous year’s £660,000 – was announced very late in the financial results cycle, a delay that led to even more external speculation about the financial health of the firm. The LLP accounts for that year also show that net debt grew from £14.78m to £34.59m, an increase of 134 per cent.
Eisenberg argues that those speculating need to consider the wider context.
“If you look at the two to three years before 2012 we’d brought a lot of new partners into the firm and opened a set of new offices,” he says. “In the difficult years of 2011 and 2012 those partners were taking more time to build up a book of business.”
The firm posted 6 per cent turnover growth at the half-year. The man at the helm is taking the long view. Will outsiders do the same?