Founded by twin brothers Percy and Edward in 1896, for many years Simmons & Simmons liked to think of itself as a mini-Linklaters. It had a similar client base of financial institutions allied to a technocratic, somewhat straight-backed, establishment culture. Strategically, however, the two firms diverged markedly. For every international office launch at Simmons & Simmons there has been a closure. For every series of hires there has been a string of defections. And profitability has been up and down
Founded by twin brothers Percy and Edward in 1896, for many years Simmons & Simmons liked to think of itself as a mini-Linklaters. It had a similar client base of financial institutions allied to a technocratic, somewhat straight-backed, establishment culture. Strategically, however, the two firms diverged markedly. For every international office launch at Simmons & Simmons there has been a closure. For every series of hires there has been a string of defections. And profitability has been up and down too.
There have been endless three-year plans at Simmons & Simmons. Growth and profitability have waxed and waned. In the early years of the century Simmons & Simmons was trying to ride the gathering boom, having come through a difficult period in the 1990s when US firms were hiring many of its partners.
The declarations came thick and fast. It would pursue a worldwide property expansion strategy, it was announced, with the hire of a Hong Kong partner. It acquired Portuguese and Dutch firms, and expanded in Japan through the first joint venture between English and Japanese law firms. It opened in Qatar and enjoyed success in India and Italy. In 2003 it even won a Queen’s Award for its “outstanding achievement in international trade, resulting in substantial growth in overseas earnings and in commercial success.”
And yet, alongside all the activity, profits fell three years in a row. In 2000/01 profit per partner had reached £412,000. By 2003/04 it had fallen to £275,000. That year, Simmons & Simmons paid a number of junior equity partners significantly less than their salaried counterparts at the firm (while the firm’s bottom of equity was officially £140,000. This included a merit-based element. Without that, pay for junior partners amounted to as little as £90,000, significantly below top-earning salaried partners at Simmons & Simmons).
Furthermore, its foray into Germany was spectacularly ill-judged. Desperate to do a deal at any price it took over Dusseldorf M&A boutique Kaiser in 2001. The merger and its attendant clearing up seared itself into the corporate memory of the firm; it might even have contributed to Simmons & Simmons’ subsequent timidity.
Times were tough. There was a period in 2004 when Simmons & Simmons was in the headlines on an almost weekly basis, succumbing to a raid here or undergoing a mass exodus there. When it was not being raided by Dewey Ballantine in Italy it was being targeted by White & Case in Germany. Despite this, on the graduate recruitment side the firm had a reputation on campus for being ‘cuddly’ – a nice sort of outfit on the fringes of the UK’s big 10 – the type of firm you would go to if you did not fancy the sharp edges of the magic circle. It was a reputation Simmons & Simmons played on to a certain extent, but it did not help woo the most ambitious students.
How did the management address the problems? By making a concerted effort not to be cuddly, for a start. It made redundancies, raised billing targets for associates to 1,700 hours, and de-equitised London partners. The firm finally voted through a change to partner compensation, introducing a floor that gave management a bigger bonus pool to placate star partners in bad years. (“David [Dickinson ex-senior partner] had a hard job to do, but he didn’t need to perform it like the grim reaper,” one ex-partner opined at the time.)
The first realisation that the firm was no longer in the top rank came with the accession to managing partner by Mark Dawkins in 2005. At that point the firm had not made it into the top 20 M&A deals table by value for three years straight. A practical solution was needed.
In 2005 the global partnership endorsed proposals to refocus Simmons & Simmons’ strategy along three lines: financial markets and institutions; energy, utilities and infrastructure; and technology and life sciences, threatening the future of several sector groups now deemed non-core. The private client group would leave in short order. That sector strategy remains in place today, but the firm has subsequently rejigged its areas of focus on financial institutions, asset management/investment funds, life sciences and TMT.
Under Dawkins profits bounced back, with the initial groundwork done under Dickinson acknowledged, if not exactly appreciated. By 2006 half the firm’s revenues were generated outside the UK.
While the recovery in profits was substantial – an 11.5 per cent rise in profit per equity partner (PEP) for 2006/07 took it well over the £500,000 mark for the first time – in hindsight it looks like the effect of the pre-recession bubble. At the same time, other firms were stealing Simmons & Simmons’ thunder: Ashurst overtook Simmons & Simmons and knocked it out of the UK top 10 thanks to its 28.5 per cent jump in turnover and a 36 per cent rise in PEP.
Dawkins was re-elected for a second term in 2008 and PEP hit £600,000 that year. It seemed that the firm had finally put its profitability woes firmly to bed. Unfortunately, then came the recession. International strategy went into reverse, with the firm closing in Rotterdam (moving all its Dutch lawyers to Amsterdam) and Portugal, and downsizing in Moscow. Profits started to fall again.
With the Dawkins era over the Jeremy Hoyland era began, a period that has been characterised by a ferocious attention to sectors.
Launches have become more targeted, such as the Luxembourg opening focused on funds, while the firm has also opened in Bristol, where it now has nine partners.
The missing piece of the jigsaw? For years, senior Simmons & Simmons partners have quietly admitted they want or, rather, need a US merger. The finance-heavy firms against which Simmons & Simmons traditionally used to benchmark itself – Allen & Overy, Ashurst, Denton Wilde Sapte (now Dentons), Hogan Lovells and Norton Rose (now Norton Rose Fulbright) – have all, with the exception of Allen & Overy, globalised through cross-border combinations. Simmons & Simmons, to its growing chagrin, has found a tie-up elusive.