Lovells

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Overview

On 15 December 2009 Lovells' partners agreed to take the most ambitious and complex step their firm had ever taken by voting through a merger with US firm Hogan & Hartson to create Hogan Lovells. The new firm, which will come into being on 1 May 2010, will be a top 10 global practice with 2,500 lawyers and revenues of around $1.8bn (£1.1bn).

For several years Lovells has been a member of a group of firms that is loosely referred to as the 'chasing pack', alongside Herbert Smith, Ashurst, Norton Rose and Simmons & Simmons.  These firms have struggled to close the gap on the magic circle firms positioned above them in the UK top 50. The merger with Hogan & Hartson represents the boldest attempt yet by one of their number to change the terms of the debate, although 2009 also witnessed Norton Rose's ambitious tie-up with Australia's Deacons and a US launch by Ashurst.

These stragic moves did not come out of the blue. Like most of the firms in its class, the last couple of years have seen Lovells regain its form after a turbulent period several years back which was dominated by a partnership restructuring, lack of growth in London and a series of significant partner departures. As such, the firm emerged as one of the stronger financial performers in the UK top 25 in 2009 when many of its rivals had been hard-hit by the recession.

In particular, the firm's diversified practice, which includes a large and well-regarded litigation team and a strong international network that now generates more than half of its revenue, appears to be paying dividends. In 2008 managing partner David Harris secured a second term after a closely-fought and somewhat divisive leadership election. "Lovells could be set to challenge the critics who contend it lacks the ambition to really excel at the top level of global law," the Legal Week Wiki stated at the time. In 2009 the firm set out the extent of its ambitiouns. The year 2010 looks set to be even more crucial for Lovells.

History

The firm was largely formed in the UK in its current guise via the 1988 merger between Lovell White & King and Durrant Piesse, uniting under the banner Lovell White Durrant. After protracted post-merger integration, Lovells surprised many in the City in the late 1990s when it committed to aggressive international expansion despite being regarded as less focused on M&A and banking work than some of its rivals. The firm, after all, had sizeable litigation practices and commercial teams covering IP, employment and media work. Likewise, Lovells had a reputation as a laid-back, 'friendly' firm.

However, under the influence of partners like then-international head John Pheasant and managing partner Lesley MacDonagh, the firm went on to secure a string of mergers between 1999 and 2002, including sizeable deals in Germany, France and the Netherlands. The strategic imperative was then - as it largely is now - to make Lovells fit to operate in the more competitive world that was emerging in the rapidly-changing legal market and tilt the firm's culture towards a more energetic style.

Bedding down its largest merger in Germany with relatively little fuss, Lovells was to go on to have more success than many predicted, continuing to be a solid financial performer even as larger rivals were badly affected by the downturn in deal activity in 2002-2003. However, by late 2004, it became clear that Lovells was struggling to maintain its momentum. In December of that year the firm announced a radical restructuring aimed at exiting 25 of its equity partners, part of a move to get its business back on track.

Following that decision, which was taken by managing partner David Harris (pictured) and senior partner John Young, the firm struggled to hit its stride. Despite an international practice that was still expanding, the firm faced a lack of growth in its London heartland. At the same time the firm lost a number of partners, probably the most significant being tax partner Daniel Friel to Latham & Watkins and a respected private equity team led by Marco Compagnoni that left for Weil Gotshal & Manges in early 2006.

In 2005 the firm also saw the end of the long-running BCCI/Bank of England litigation, which had generated a lucrative stream of contentious work that had helped to hedge the firm. A long-running review of its partnership structure, which confusingly was conducted twice before ending in early 2007 with only minor changes, also raised eyebrows.

However, there has been more positive news over the last two years with the firm in 2008 and 2009 managing a strong relative financial performance. In its 2008-09 year, Lovells emerged as one of the strongest performers in the UK top 50, even after accounting for the impact of the strong euro on its sterling-denominated revenues.

Despite a relatively strong financial showing, in common with many of its peers, Lovells in 2009 announced a redundancy consultation that claimed 79 jobs.

The firm could also boast a stable and experienced management team with David Harris winning a second term in 2008 after beating continental Europe managing partner Harald Seisler in a closely-fought election. The contest was taken as evidence of competing power bases between the firm's London office and its fast-growing Continental practice. However, the merger with Hogan & Hartson suggests the firm has put any such tensions behind it.

Culture

Despite moves to sharpen up its culture stretching back a decade, the firm is still regarded as a 'friendly' partnership. Lovells has traditionally faced some tension between its older guard and more impatient, younger crowd wanting shifts in direction. None of which should obscure the fact that the firm has a reputation for treating its assistants well.

Legal Week research in 2009 confirmed that Lovells' own assistants still give it solid marks relative to peers for culture and the extent to which they feel valued. However, despite being less hard-nosed than some City rivals, the same research found dissatisfaction among assistants regarding billable hours expectations and work/life balance, which probably reflects its drive to institute a more performance-driven culture.

In early 2008 the firm pushed ahead with plans to give extended voting rights to salaried partners, whom account for around a third of the firm's 300-plus partners.

Key departments/leading partners

When discussing the strengths of the City giant, Lovells' formidable dispute resolution practice seems as an obvious a place to start as any, despite what continues to be a tough market for litigators everywhere. "Litigation is starting to mature well," observes one contributor. "A lot of mid-level partners are now coming to fruition to replace the older heavyweights." (Who are the rising stars? Time to name names. - Wiki Ed.)

In property, high-profile practice head Bob Kidby is also singled out as a key figure. "Competition is strong," notes the reader, highlighting Susan Bright as an obvious top performer. However, departures have had an inevitable impact.

"Tax has taken a big hit," he suggests, citing the loss of international tax head Daniel Friel and partner Sean Finn to Latham & Watkins at the start of 2006 as a setback for the practice.

National/international coverage

A strength. The firm has a large and successful German practice thanks to its tie-up with Boesebeck Droste, despite the closure in 2006 of its less profitable Berlin branch. Likewise, the firm has won plaudits for growing energetic practices in Spain and Italy, two markets where larger rivals have floundered. The firm also has a solid Asian network and a US practice that has - unusually - targeted contentious work, so far more successfully than many give credit for. The firm offers many opportunities to the internationally-minded lawyer.

In early 2007 the firm made its long-awaited Dubai launch. In 2009 Lovells scored a tie-up in the much-touted Indian legal market after signing a referral deal with local practice Phoenix Legal.

The forthcoming US merger will dramatically increase Lovells' international reach, especially in the US where Washington DC-based Hogan & Hartson has built a national network of offices that include three in California - in San Francisco, Los Angeles and Silicon Valley. Outside the US and the UK the two firms share offices in no fewer than nine locations, including Munich, Warsaw, Moscow, Tokyo and Shanghai. In all the joint firm will boast a network of 40 offices spanning the US, Europe and Asia. The firm will be structured as a US-based limited liability partnership (LLP) and a UK/international LLP, with a Swiss Verein acting as an umbrella body for firmwide governance and cost-sharing. Click here for an analysis of the merger by Legal Week and here for a view from The American Lawyer.

Key clients

The firm acts for a string of major bluechips, even if rivals have made in-roads with some of Lovells' major clients in recent years. Top clients include SAB Miller, ITV, Barclays, the BBC, Royal Mail and JP Morgan. The firm is also particularly well represented in the insurance sector, thanks in part to the practice of senior partner John Young, having handled work for clients like Prudential and Swiss Re.

Career prospects

Good, in the sense that the firm has made little secret of its hopes to reposition itself to attract more young talent. With a substantial number of exits due to its restructuring in 2004-05 and several partner departures, the firm has plenty of space to promote. In 2009 the firm made up 19 partners, including six in London, which made it one of the few major UK law firms not to substantially cut back promotions in response to the recession. Legal Week research in 2009 found the firm's own assistants considered partnership prospects at Lovells to be above the average for top 50 law firms.

Salaries

According to one contributor, the salaries Lovells pays out don't quite tally up with its long-held ambitions of challenging the magic circle. "To be a top 10 European firm and a top five UK firm, salaries are well below market, especially in continental Europe," the poster says.

Recruitment

Takes around 90 trainees a year. However, it was noticed in 2007 when a number of trainees were not taken on due to the firm offering most of its positions in corporate and banking (see story). In common with many major firms, Lovells has been trimming back on its intake in response to the global recession, with the firm retaining 69% of its September qualifying associates in 2009, down on previous years.

Work-life balance

Lovells operates a pretty standard 1,700 hours annual billing target. Does not have a reputation as a sweatshop. Whether that is changing given the firm's stated ambitions to be more transactionally-focused, however, remains to be seen.

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