Conflict concerns or a planned refocus? Mayer Brown London exits prompt strategy questions
Former partner cites 'horrendous' conflicts as firm aims to refocus on high end insurance work after string of partner departures
January 19, 2018 at 08:49 AM
4 minute read
The original version of this story was published on Law.com International
The London office of US firm Mayer Brown has seen no fewer than eight partners leave for other firms in recent months. With six of those that quit sitting within the firm's insurance practice – a four-partner team left for Kennedys and two partners this week joined Clyde & Co – the impact on the office is clear.
Less clear, though, are the reasons behind the exits. So why the defections?
One former Mayer Brown insurance partner cites "horrendous" conflict issues as a long-term problem at the firm and a driving factor in his own exit.
"There were horrendous conflict problems," he says. "We could act adversely to virtually no banks and that had been the case for a number of years."
A partner at an insurance-focused firm agrees that this can be a recurring issue at full-service firms. He says: "All insurance departments in full-service firms are feeling the squeeze regarding conflicts. If you're aiming at the higher-end insurance work, then that will more likely end up with a conflict with a bank or financial institution."
A Clydes partner adds: "It's difficult for firms which don't have insurance as their focus, as you're more likely to end up with conflict issues. While insurers' rates are historically a bit lower, the pipeline of work is usually stable and gives you a lot of business. These days you don't get the bigger work if you're not doing the other stuff."
Mayer Brown London senior partner Sally Davies (pictured above), who is eight months into her first term in the role, insists that the firm has made a deliberate plan to refocus on high-end work and maintains that the exits, which include former London insurance head David Chadwick, will not hurt the practice in the long term.
She says: "Six partners leaving a practice is a change, but we'll continue to have a really solid core insurance practice. Our strategy has developed to focus on the high end of the market. We're also aiming to win more off-panel work.
"Our finance and insurance practices in London and around the world have collaborated successfully for decades and the conflicts we face are no different from any other law firm of our size."
The latest limited liability partnership (LLP) accounts for the firm's London office, filed today (19 January) at Companies House, reveal turnover increased by 6% during 2016-17 from £105m to £111m. Operating profit increased by 25% from £36m to £45m, while profit per equity partner also rose 25% to £527,000.
However, the LLP's highest paid member received £1.2m – a drop of 19% from the previous year's equivalent figure of £1.5m.
William Glassey, who has replaced Chadwick as London insurance head after his move to Kennedys, acknowledges that one "niche" practice – political risk and trade credit – will go as a result of the partner departures, but stresses that the firm would reinvest in that practice if clients wanted.
The London insurance practice also has more than 20 associates, and Davies maintains that relationships with key clients such as QBE and AIG will not be affected by the partner losses.
Of the exiting insurance partners – who include Ingrid Hobbs, Andrew Westlake and Andrew McGahey alongside Chadwick at Kennedys and Mandip Sagoo and Angus Duncan to Clydes – it is understood that only two were in the equity at Mayer Brown. And the firm maintains that only one associate is likely to follow the partners to their new firms, in addition to senior associate Tim McCaw, who is joining Kennedys as a partner.
Glassey argues that the senior exits therefore free up opportunities for junior lawyers.
"If some partners leave the pitch and the bulk of the associates stay, you're immediately left with a much better leveraged group. This gives associates and other partners the chance to step into relationships they didn't have," he explains.
However, some of those leaving in recent years argue that they were unable to promote and build teams to the size and seniority they wanted to.
One says: "Any idea that any deadwood is being cleared and there will be opportunity for others is total cobblers."
Within the firm, however, it is clear that Davies has support from her partners. One concludes: "Sally's been a really good force; very collaborative and visible. People at all different levels in the office have responded well to that. It was time for some renewed energy."
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