Author: Mark Goddard
14 Dec 2009 | 00:13
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The legal juggernaut that is DLA Piper continues to plough ahead, having transformed itself with surprising speed from an obscure collection of regional UK practices into a potential global challenger. Though the firm attracts plenty of sniping from rivals, privately most would concede that DLA has been extremely successful at executing its ambitions, becoming in 2007 the UK's fifth-largest law firm (without counting its US practice). Indeed, the firm is arguably the most upwardly-mobile UK practice of the last 20 years, with the inevitable exception of Clifford Chance.
The hallmark of DLA under long-time UK head Nigel Knowles has been drive, execution, ambition and a big dollop of flash - a heady cocktail executed by some energetic and commercially-minded lawyers. Having made a career of ignoring what its many doubters predicted, the firm swiftly shrugged off a turbulent period in the mid-1990s to make one of the most successful assaults yet seen from a regional practice on the City. The late 1990s and early years of the new millennium would bring the launch of international alliances, furious expansion, high-profile rebrands and, finally, a massive transatlantic merger. At the start of 2009, Knowles' status as one of the UK profession's leading figures was underlined by the decision to award him a knighthood, an accolade that in times past was reserved for former presidents of the Law Society.
However, plenty of questions remain around the firm, including how its loosely-integrated US mergers will actually take the firm forward. Can it keep growing so quickly? And can it keep moving upmarket, given its notoriously tight equity partnership? Perhaps more pressing is that a firm built on robust growth is facing a period of tough trading as the recession weighs down on commercial law firms. As such DLA Piper has already gone through a series of substantial job cuts, both in the UK and US, and while many peer firms have made similar cuts, the firm is felt by some to have handled the process poorly. There will be much attention now on if DLA Piper can quickly regain its assured handling of recent years.
"DLA Piper's origins lie in Yorkshire," recalls one contributor, whose memory clearly stretches all the way back into the 1990s - before Dibb Lupton Alsop was just an acronym in the branding of a sprawling transatlantic monster. "Sheffield to be precise." From tiny acorns and all that...
Having been forged by a series of mergers from the legacy Alsop Stevens, Wilkinson Kimbers, Dibb Lupton and Broomhead, the firm created one of the first 'national' legal practices, under the name Dibb Lupton Alsop. Particularly significant was the tie-up with Alsop Wilkinson, a respected London firm with a solid banking practice, which handed the then-Dibb Lupton Broomhead a coveted presence in the City. The well-executed union was to provide a bedrock for Dibbs, as it was known, to build upon in the City, slowly morphing the firm from its roots as a no-nonsense northern litigation outfit into credible mid-market commercial player.
Also significant was the 1996 appointment of Nigel Knowles as the firm's managing partner, taking over from the high-profile Paul Rhodes. Despite facing internal wrangling and partner departures at the time of his appointment, Knowles was to become one of the longest-serving and most successful law firm leaders. Early evidence of that ambition was seen in 1998, when Dibbs announced a plan to be "top 10 in the City, predominant in the regions and with a credible practice in Europe" within three years. In 1999 the firm launched its European and Asian alliance under the brand DLA & Partners, pulling together a network of firms. The firm grew swiftly over the following years, rebranding itself as DLA in 2001 and turning its alliance into its own network through mergers and a series of local launches.
The really big deal came in 2005, when DLA merged with two US firms - top 50 US practice Piper Rudnick and Californian firm Gray Cary Ware & Freidenrich. Though the merged practice remains financially split into two profit centres - a state that has led some rivals to claim that they are little more than formal allies - the deal appears to have been successful. The combined revenue of DLA now makes it the third-largest legal practice in the world, with more than 60 offices globally and around 3,400 lawyers as of 2007.
US adventures aside, DLA has lost none of its drive in Europe, in 2004 securing an 11-partner TMT team from Denton Wilde Sapte, one of the largest team hires ever seen in the City. The same year the firm also acquired Squire Sanders & Dempsey's respected 25-lawyer Spanish arm.
Recent years have seen the firm maintain its robust growth rate, with European and Asian revenues rising to £536.4m in 2007. Average partners profits for the few lucky enough to make equity currently stand at £728,000.
However, in 2008 DLA felt the effects of the post-crunch market downturn, with the firm forced to enter a consultation on a number of possible redundancies in its London office. February 2009 saw the firm launch its second redundancy consultation in just three months with up to 140 jobs under threat, with 80 associates also laid off in the US and 54 jobs cut in Asia.
"Though the firm has expanded rapidly on an international basis, it should not be forgotten that the firm's UK culture is more akin to an Addleshaws/Pinsents than a Clifford Chance," says one DLA Piper contributor, who has evidently not forgotten that the firm was lowly Dibb Lipton Alsop not so very long ago. "Many of the firm's employees are down-to-earth and sociable (even in the corporate department!) rather than the more driven types that work for the magic circle or New York firms based in London. This may change as the firm's future fee earners and trainees may be more attracted to the translantic profile and increasingly high-profile work rather than the regional offices that cater for the respective local market."
He continues: "The firm's eight UK offices make DLA Piper unique in that the type of people employed differ in the respective offices. For example, the people that do well in the Leeds office are those that have local contacts and are committed to the local market. In London, the atmosphere is less collegial, given that there are over 300 lawyers. Further, the London office is increasingly populated with Aussi/Saffa types that you would not find in the Liverpool office!"
Another points to a lack of cohesion that you might say is inevitable in a sprawling enterprise that has grown so quickly. "DLA Piper Rudnick doesn't appear to be much of a merger," says 'Grinder'. "They (openly) report different profit centres, which hardly goes to 'one firm' and is more like 'many franchise-holders'. On a very painful deal I worked on recently, the annoying banking lawyer at DLA London did things totally his own way, unlike his colleagues in NY and Germany. The reason for not following his American and German colleagues? 'They actually belong to a different firm.' Brilliant stuff."
What is clear is that DLA Piper's UK redundancies have taken a toll on the firm's morale. This was underlined when leaked minutes of an internal meeting contained criticism of the severance terms the firm was offering redundant staff. Likewise, Legal Week Intelligence's 2009 Employee Satisfaction Report, which contained responses from 160 UK assistants at the firm, found some staff felt undervalued and general unhappiness over the handling of job losses. The firm, which has built a reputation for fostering a can-do, energetic approach among staff, will want to put this episode firmly behind it.
"The key departments are banking, corporate and real estate," says one contributor, reflecting a model that has served the expansionist national firm well in the last decade.
Very much a full service practice, DLA has been particularly effective in banking in recent years, where the firm has built a highly-efficient acquisition finance practice. As you would expect, property is a sizeable team. Commercial has also been an area of focus, as demonstrated by its audacious 2005 recruitment of a large TMT team from Dentons. This focus was also shown in its headline role alongside Allen & Overy on the NHS's ground-breaking but highly controversial national programme for IT. Outsourcing is another strength.
Rivals would say the firm's corporate practice still fails to live up to the shiny DLA hype.
Even in an era when any firm with a postal address in Tashkent claims to be a global player, there is little doubting the reach of the DLA Piper tentacles.
"Though the number of DLA Piper offices has increased the firm's public profile, there are doubts as to whether the expansion will work in the long term," argues one contributor. "The problem is that DLA Piper's transactional/litigation services is still mainly located in the low mid-market sector. DLA Piper is known more for volume than value, although this is something the firm is trying to change. This type of mid-market work does not require much cross-border involvement and because many of the global offices do not work together on cross-border litigation or transactional matters on a regular basis, it may be that Nigel may decide to get rid of the offices in the future. The firm needs to change focus and start recruiting big lateral hires that can take DLA Piper to the next level rather than acquiring teams (servicing local clients) in jurisdictions that serve no cross-border purpose. "
Banking clients are of particular importance to the firm, including Barclays, HBOS and Royal Bank of Scotland. Quality mid-market clients the firm has acted for include Collins Stewart, KBC Peel Hunt and Lazard Brothers.
Frequently advises Whitehall thanks to its links with the Office of Government Commerce. Is on the projects and commercial sub panels of the Legal Services Catalist Framework, a centralised super panel set up by Government in its current form in 2007.
In April 2008 the firm won a mandate to advise mobile phione giant Motorola on much of its real estate across more than 50 countries in Europe, the Middle East and Africa.
"The firm's image is definitely driven by the corporate management team, led by the uber-impressive Nigel Knowles," says one contributor. "However, it's generally accepted that there are some other very influential people that are not so well known - such as former Knowles trainee Andrew Darwin. His annual speech to the UK offices makes you think that he is the real brains behind the DLA Piper operation."
Other vital figures in the UK operation include Manchester finance "demigod" Simon Woolley - "a key banking partner in the UK" who reportedly still beats his City colleagues for deal value.
"Given that the firm's equity is tightly held, this makes it easier to become a partner than at a firm such as Slaughter and May," says one contributor. "However, the amount of salaried partners makes you wonder whether the junior partners have much say (or strong future prospects) in the management, strategic direction or financial rewards of the firm."
Certainly the numbers seem to support that view, with the 2009 Legal Week Top 50 showing DLA Piper's UK arm had 176 full equity partners from a total partnership of 593 in its non-US practice (the US arm operates as a separate limited liability partnership). This is, however, an expansive firm renowned for offering opportunities to ambitious young lawyers.
The firm pays very near top City rates in London, with starting pay for lawyers set at £63,000 as of June 2008. However, DLA has been on the receiving end of some flak from its regional lawyers, who are irritated by the widening pay gap between the City and its main regional offices.
In June 2008, pay for NQs in DLA's English regional offices saw the base rate jump by just under 7% to £39,000. There will be a second rise in January 2009, taking pay to a minimum of £41,500. Similarly, NQ rates in Scotland moved up to £34,000 in June 2008 with a second increase to £36,000 set for January.
The firm's bonus scheme is not regarded as being particularly generous.
"DLA Piper seems to find it difficult to recruit and retain its fee earners," argues one contributor, who argues that many of the firm's fee earners "feel they are not adequately remunerated". Yet retention is a problem for many UK firms and DLA Piper is hardly shy of splashing the cash to bring in senior people.
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Somewhere in the middle - neither sweatshop nor lifestyle firm. Has a reputation in London for putting in fairly long hours for a national firm but avoids the worst of City excesses. Annual billing target of 1,500. Recent Legal Week research found the firm's own assistants weren't that happy about work/life balance or billable hours expectations.
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