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Overview
Rarely in recent years have the words ‘Hammonds’ and ‘crisis’ failed to appear together in press coverage of this ambitious national firm, but the signs are that the firm is emerge from a turbulent period, leaner, meaner and perhaps a bit fitter.
In 2007, Hammonds announced a 23% jump in profits per equity partner, from £328,000 to £404,000, its best financial performance in many years. Better still, the firm's infamous overdraft – few law firms have had their finances dissected more thoroughly by the press – has reportedly been slashed from £30m to £10m.
Hammonds also seems to have slowed, if not entirely stemmed, the flow of partners leaving for other firms and has scored some notable client wins. One of the main players among the regional firms that started to seriously challenge mid-tier London firms in the 1990s, Hammonds retains a good reputation in many of its secondary and niche practice areas, such as employment and sports law, but still has ground to make up in its core corporate and property areas, especially in London, where many would say it has the weakest offering of the national firms that have tried to build a serious City presence.
And while profits may have improved over the past two years thanks to internal efficiency gains and fewer mouths to feed, this has not yet been matched by significant improvements in fee income, which grew by just 2.5% (to £127.6m) in the 2006-07 financial year, and by 4% the year before, one of the slowest rates among the top 50 firms.
History
Hammonds' roots go back to 19th-Century Bradford but the catalyst for Hammonds' ascent to the UK top 50 was the decision to open a Leeds office in 1983, which remains the firm's strongest office to this day.
From there, alongside the firms that are now Addleshaw Goddard, DLA Piper, Eversheds and Pinsent Masons, the brash but dynamic Hammonds used the experience gained from acting for Yorkshire's then-burgeoning plc sector to launch an assault on the national market, grabbing market share from mid-tier London firms and building its own presence in the capital.
Hammonds was also ahead of many of its national rivals in building its own fully-integrated network of international offices – which now extends to Berlin, Brussels, Hong Kong, Madrid, Munich, Paris – rather than going down the alliance route. (Hammonds also has an association in Italy, a representative office in Beijing and a joint venture in Moscow.)
However, the wheels began to come off the Hammonds bandwagon following the lull of corporate work that followed the dot.com bust in 2001, when the cost of assembling international expansion really took its toll and the firm's aforementioned overdraft ballooned to £30m. The effect this had on profits led partners to desert in droves – it lost 42 partners in 2002-03 alone – forcing the firm to require the remaining partners to sign a 14 month lock-in agreement in 2005 to give management time to put the firm on a sounder footing.
To some extent, they appear to have succeeded. The anticipated exodus of partners following the end of the lock-in period in July 2006 failed to materialise - thanks to a marked improvement in partner profits, which now stand north of £400,000, and the introduction of some performance-related remuneration for partners.
The modernisation process is far from over. Hammonds has two management consultants from Bain & Co and Cap Gemini as non-executive director and non-executive chairman respectively and recently appointed new office heads for its London, Leeds and Manchester offices. A recruitment campaign has been launched, with the focus being corporate and property in London and Manchester (the latter being promised 15 extra partners) while the creation of firmwide practices groups is aimed at fully exploiting Hammonds' expensively-assembled chain of overseas offices, with growth expected in France, Germany and Spain.
Hammonds' management seems to have stopped the rot but if the firm is to realise its long-held ambition of becoming one of Europe's top 10 law firms, much will depend on its success in restocking its corporate and property teams, especially in London.
Culture
Hammonds has an interesting cultural history. In the late 1990s, when the firm’s dynamism made it one of the most admired and influential law firms outside of London, its distinct culture was seen as a real strength. A side-effect was that the firm was regarded as being perhaps a little too tolerant of individualistic behaviour. Certainly the firm was put in the 'work hard, play hard' camp although Hammonds is regarded to have modernised and moderated its style considerably in recent years.
Although Hammonds has never been renowned for taking the touchy-feely approach to management issues, inmates generally tend to describe the firm as a friendly place to work with high levels of co-operation and teamwork. Hammonds, like most firms with regional roots, places a high premium on client networking. Senior management are praised for their efforts to keep staff informed of what's going on and the firm's troubles seem to have developed a degree of esprit de corps among the remaining troops, not to mention some gallows humour.
Hammonds' partner remuneration system was overhauled in 2005, with a greater emphasis on individual and departmental performance in a bid to stem the flow of partners from the firm. This is being introduced over the course of the next three years and while not quite an 'eat what you kill' remuneration scheme, it is a bit early to gauge the impact the retreat from lockstep has on internal cohesion.
Key departments
Hammonds' rise from the regions came largely on the back of its corporate prowess; however, its corporate team is still seen as lacking the strength to get on to the biggest deals, although it retains a strong reputation for mid-market and AIM work, despite one or two key partner losses.
The property practice has big clients including Waitrose, employment is a strong national practice, as is energy (especially renewables) and dispute resolution. Banking is strong in the regions and the firm has developed a number of valuable practices in more niche areas such as sports law, advertising and marketing, health and safety and pensions.
Construction, a traditional strength in the past, has lost some key partners but still boasts a strong team.
National/international coverage
Hammonds' strongest office remains the one where its ascent began – Leeds. The firm's Manchester office was opened in 1993 but has always been in Leeds' shadow, although this may change if the 15 additional partners promised transpires. Hammonds' other major regional presence, Birmingham, was acquired through the merger in 2000 with the already ailing Edge Ellison, an acquisition that has been the source of more partner defections than any other part of the firm, although local rivals now say the practice is a solid performer.
Although the expense of building the international network was the root of many of Hammonds' subsequent problems, it does now enjoy a much more integrated overseas presence than its major national rivals with offices in Berlin, Brussels, Hong Kong, Madrid, Munich, Paris, an association in Italy, a representative office in Beijing and joint venture in Moscow. Management is in the process of aligning their work more closely with the UK offices and plans to grow its German, French and Spanish corporate capabilities.
However, Hammonds does have the task of rebuilding its Brussels office following the departure in 2006 of competition head José Rivas and trade partner Edward Borivikov.
Key clients
Despite the firm's problems, Hammonds' client list remains impressive and the firm claims to act for 30 of the FTSE100. Clients include Allied London Properties, Amec, BWD Securities, Barclays, English Partnerships, FKI, Kelda Group, National Grid Transco, British Energy, the Co-operative Group, The Royal Bank of Scotland and the Royal Mail.
There were some notable additions in 2006-2007 in the form of Tesco (for employment work), Honda, Urban Splash and Matalan, as well as being appointed to Barclays' corporate recovery panel for the first time.
The key issue for Hammonds, however, has not been adding big names to its client list but getting the juiciest instructions from them. The firm's relative weakness in London means it often finds itself passed over for the biggest deals in favour of City firms.
Leading partners
Seinor departures have inevitably left holes but as a genuine full-service firm, Hammonds' top names are widely spread across the practice. Respected operators include David Hull (corporate), Simon Price and Ian Forrest (pensions), Liam Buckley (property), David Whincup and Sue Nickson (employment), David Goodman (energy) and Robert Wegenek (advertising and marketing).
Career prospects
As a firm looking to rebuild, good. Hammonds promoted 28 to partnership in 2006 and 2007 (bringing the total to 183) and the firm's assistants and associates are more optimistic about their partnership prospects than most.
The outflow of partners has created room at the top, while management's ambitious growth plans suggest plenty of vacancies in future. Indeed, the main thrust of Hammonds' strategy for building in London is to appeal to senior associates at City firms “who’ve reached a glass ceiling and who we can promote,” according to managing partner Peter Crossley.
Salaries
In the regions, Hammonds is at the top end of the scale, paying its newly-qualifieds £40,000; it has also hiked its NQ rate in London by 25% to £60,000. In addition, Hammonds has also introduced a benefits package that includes provisions for increased holiday entitlement and a fresh bonus system. Solicitors are entitled to a bonus worth up to 10% of salary, with associates and senior associates in line for potential bonuses of 12% and 15% respectively.
The firm also offers a pension, which it contributes to.
Recruitment
Work-life balance
Not the best for work-life balance but not the worst either, with billable hours targets around 1,300 a year. Whether this will change as a result of management efforts to instil a “more dynamic performance culture” to the firm remains to be seen. Ten per cent of staff work on a part-time basis.
Diversity
