Author: Legal Week |
21 Aug 2009 | 09:11
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A firm that divides opinion like few others, upper-mid market City practice SJ Berwin is famed for its robust, entrepreneurial style. SJs' admirers celebrate the relatively young outfit as a firm built along similar lines to the classic US model - including a partnership and culture many would define as 'eat what you kill'. However, some are turned off by a culture once memorably described by one of its own senior partners, perhaps as a joke, as being built on "sharp elbows and insecurities".
Whatever your view, the firm's growth has been rapid until recently, when in common with many of its peer group it has been hard-hit by the slowdown in property and private equity. As such the firm saw a 49% fall in profits per equity partner in 2008-09, down from £801,000 to £410,000, while turnover fell from £215m to £184m. It will be interesting to see if the financial challenges facing the firm will impact on its recent efforts to soften its image after a period several years back when it is accepted that it suffered from poor internal morale.
The other main challenge will be moving beyond the European stage, which will require a move into key emerging markets, no mean feat. There has also been much talk that SJB will one day hook up with a like-minded US practice, though the firm has always denied that this is its strategy.
One of the youngest firms in the UK's top 25 by revenue, SJ Berwin was founded by the legendary Stanley Berwin along with a handful of like-minded lawyers in 1982. The firm was once often compared to its partial namesake Berwin Leighton Paisner, a firm that SJs has as many similarities to as it now does sharp contrasts. SJs was driven forward by Berwin through the 1980s before he was succeeded by Christopher Haan. In 1992, leadership of the firm was handed over to the much-admired David Harrel, a diplomat with a healthy sense of irony. Harrel led the firm for 13 years, along the way winning plaudits for managing a firm packed with strong personalities.
It was on Harrel's watch that the firm in 2000 dramatically hiked its pay-rates for assistants, which contributed to a series of dramatic rises across the City that arguably became the UK's first-ever legal 'pay war'. The move was, however, partly a response to poor assistant morale, a weakness the firm's critics would argue that SJs still has yet to entirely overcome. Harrel also oversaw SJ Berwin's daring but risky strategy of European expansion; at the time the firm was the only mid-tier City practice to commit to sustained international growth.
The management of the firm passed to heavyweight fund formation partner Jonathan Blake in 2005, who took on the senior partner role alongside existing managing partner Ralph Cohen. The firm has continued to divide opinion in the City, in late 2006 becoming embroiled in controversy over its bonus system (see salaries, below).
In January 2009 SJs launched a redundancy consultation putting up to 40 jobs at risk, with the firm also closing its four-partner media team entirely. The firm also in 2009 announced one of the sharpest falls in profitability seen from a major UK law firm, and in September it emerged that the firm had not paid out any quarterly profit distributions to partners since November 2008.
A pragmatic view is offered by one lawyer at the firm, describing the atmosphere as "very intense" but recognises that "this is to be expected".
"You get pushed and get your opportunity to succeed," offers another pragmatist. "Those that don't manage to do that or aren't driven are usually the ones that moan."
Partner Stephen Kon, meanwhile, in his Dealmaker interview describes the firm thus: "While I know this may contrast with the way the firm has been characterised in the press, the firm has never been 'hard-nosed'. We work hard and are driven as a firm and as individuals; but at the same time, we look out for each other and try to be as caring as possible towards each other, while having fun."
A positive sign was the firm's move in spring 2008 to introduce a new appraisal system for partners, handing associates the scope to provide feedback on criteria including leadership skills and people management.
There were further signs of progress in Legal Week Intelligence's 2009 Employee Satisfaction Report, which polled more than 4,000 UK-based assistants. The firm managed a considerable improvement on its previous ranking from the 55 associates that responded to the research with the firm receiving particularly strong ratings for client interaction and quality of work.
Essentially a full-service outfit, SJ Berwin was in previous years associated with several sectors, notably property, technology and media and private equity. The property influence is as strong as ever on the firm, which acts for some of the top names in real estate. Private equity is also a key area, especially fund formation work, where until recently SJs would have been considered the unassailable leader.
However, competition in the sector has dramatically increased in recent years, partly due to a sustained push from magic circle giant Clifford Chance and a wave of new US entrants into the City market. One of those entrants, Kirkland & Ellis, in early 2007 landed a major blow to SJs' fund team with the recruitment of a respected three-partner team. Opinions are split between those who feel that the firm has such a strong funds brand that it will not struggle to rebound and those who argue it has suffered serious damage. SJs counters by saying that the funds team has had a "phenomenal year" since the K&E departures, arguing that the critics will be proved very wrong in the near future.
There is also the issue for SJ Berwin that property and private equity are two of the areas that have been worst impacted by the recession, leading some to predict the firm will seek to further diversify.
Elsewhere SJ Berwin's practice has continued to mature, particularly its M&A and banking teams. The firm is also a respected player in competition.
The firm has an expansive European network. While many were initially sceptical of the firm's European strategy, SJ Berwin is now widely regarded to have made a success of its international network. The firm's full list of offices is: Berlin, Brussels, Dubai, Frankfurt, Hong Kong, London, Madrid, Milan, Munich, Paris and Turin.
In April 2008 it emerged that the firm was narrowing its relationships with its US referral partners - including Boston private equity shop Goodwin Procter. For an analysis of where next for SJB, see Editor's Blog: SJs - thinking beyond Europe
In property, the firm acts for major names such as British Land, Prestbury, Brixton Estates, Schroders Property Investment and Morley Fund Management. In corporate the firm acts for a host of private equity houses including Apax, Bridgepoint Capital, Macquarie, Lion Capital, Morgan Grenfell Private Equity and MidOcean Partners. Banking clients include Royal Bank of Scotland, Barclays and Standard Chartered.
SJs has many partners with a real client following. Senior partner Jonathan Blake is still regarded as Europe's top private equity funds lawyer. Corporate partner Steve Davis is credited with doing much to invigorate SJ Berwin's corporate practice in recent years, alongside fellow partner Rob Day.
Competition partner Stephen Kon and property partners David Ryland and Jon Vivian are respected names, while other notable performers include finance head Gillian Smith and head of litigation Craig Pollack.
Good in the sense that this is a very expansive, ambitious firm that has promoted aggressively over recent years, as could be seen in 2007 when the firm made up 16 partners. In common with many firms, promotions were sharply down in 2009, when SJ Berwin made up six partners, including three in London. Set against that, recent research from Legal Week Intelligence found the firm had above average rating from its own assistants for partnership prospects.
Still, not everyone is happy.
"Unfortunately, SJB has not had the foresight to develop an alternative career path to partnership," one contributor laments. "Instead, the old-fashioned carrot of partnership is used to try and 'motivate' associates." This could be changing, with SJs currently looking at flexible working arrangements - perhaps a sign of new career paths to come - although readers commenting on Legal Week's report on the move do not seem particularly optimistic. One Aussie contributor at the firm warns compatriots they are likely to end up in the 'cannon fodder' category.
"For other [Aussie and NZ lawyers] thinking of coming to work at SJB, they should do so with their eyes open," he says. "You will get a pay cheque for your time but if you are interested in developing your career in London, look at joining a different City firm." This Australasian flavour is apparently not reflected at partner level.
"At my count, there is one Austalian who might fall into that category," says one poster. "Nathan Briner in banking. Apart from him there are two others who, at a stretch, might class themselves as Antipodean. The first, Stephen Maffey, has lived and worked in the UK for over 20 years. The second, Michael Bywell, has lived and worked in the UK for over 15 years and was a lateral partner hire from DLA Piper about two years ago."
"My view is that [Aussie and Kiwi fee earners] are mostly well-trained lawyers who provide a good floating resource in a booming market," observes one contributor.
The firm pays newly-qualified lawyers £59,000, rising to £64,000 at one year PQE. Past that, the firm operates a more variable model.
The much-discussed bonus scheme is in theory very generous, being worth up to 75% of salary, but the firm has faced some criticism as a considerable proportion of the award is based on assistants billing more than 2,000 hours a year.
Trainees receive £31,500 in their first year and £41,500 in their second.
Key contacts are Sharon Doberer in graduate recruitment and Karen Chalmers in general recruitment.
Work-life balance simply "doesn't exist" according to one corporate fee earner, who presumably (hopefully) is exaggerating a touch. Either way, the contributor's commitment to getting the job done is admirable. Perhaps they'll let him out of the office eventually. The poster adds that the "primary focus is on hours billed" - but surely that's true of every firm in the top 50.
For its part, SJ Berwin strongly rejects the 'sweatshop' tag, pointing to a fairly civilised - by City standards - annual billing target of 1,575 hours. The firm also says that it is now moving to raise its game as part of a strategic initiative championed by senior partner Blake dubbed Phase 2, which the firm says includes: developing a statement of values; winning the war for talent; growth models; international strategy; working together and CSR; as well as the development of core business areas. Part of that initiative will involve talking to the firm's Assistant Solicitors' Forum to help draw up its firm-wide strategy.
SJs promises that flexible working and learning and development will be top of the agenda, so the firm will get a chance to show if it can walk the talk. SJs also thinks it has a secret weapon in the 'quality of life' battle with its genuinely impressive new Queen Street Place City HQ. Aside from attracting headlines for its revealing elevators, the hyper-slick office (pictured right) boasts the latest in design and a not-half-bad rooftop terrace that overlooks the Thames.
As mentioned above, there are plenty of Aussie and New Zealand lawyers at the firm, perhaps reflecting a more general trend in the City to recruit from far and wide with homegrown talent in such high demand. But, again as mentioned above, this is apparently yet to translate into many Aussie/NZ partners.
Pro bono/corporate social responsibility
SJ Berwin's CSR policy is split into five strands, outlined by the firm below:
"Pro bono - An active programme covering debt counseling; housing advice at a local community centre; receiving referrals from the Environmental Law Foundation; acting as 'Honorary Legal Advisers' for the Law Courts Citizens Advice Bureau at the Royal Courts of Justice and playing a leading role among City solicitors who act on death row appeals to the Privy Council.
Community involvement - we are in partnership with a local primary school and provide over 60 volunteers a week who read to school children. We also offer careers advisory work. We have been involved with the local community centre by funding their school holiday activity programmes; 'team' days where a group of SJ Berwin employees spend time making a physical difference to the centre's environment (examples include laying turf and clearing the ground to make way for a children's play area). We also donate presents for their Christmas party.
Environment - SJ Berwin was the first UK law firm to become carbon neutral and we have been off-setting our emissions for six years now. We have an established and active environment committee which ensures the firm maintains its environmental commitment as set out in our policy and manages initiatives which seek to reduce our emissions; this committee is confident of achieving an ambitious target this year to reduce our energy use significantly.
Charity - Each year we appoint an official charity and match funds raised by our partners and staff pound for pound. This year's charity is the Cystic Fibrosis Trust, for whom we have raised over £90,000. These funds will provide a training grant for a cystic fibrosis specialist at the Royal Brompton Hospital.
Developing our People - The firm is undertaking initiatives to ensure that we offer equal opportunities for all. Our diversity working group is managing our policies regarding age, sexual orientation, religion and ethnic backgrounds and has introduced a number of initiatives recently including a flexible working policy and a sabbatical policy."
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