The firm is managed by an accountant, it’s very much a quantitative assessment rather than a qualitative assessment that drives the culture
And this expansion doesn’t look set to draw to a close any time soon, with Burns articulating a hope for the firm to double in size again over the next 10 years (a target which would take its revenue to around £800m). Additional offices across the US, Latin America, Africa and Europe, as well as Iran, are already being discussed at an embryonic stage.
But while Clydes’ relentless expansion programme may make the firm appear unstoppable, outperforming as it is the bulk of its insurance peers, it isn’t just ambition that Burns has inherited from his predecessors.
Culturally, the firm has a reputation for being a bit of a boys’ club, with a focus on individual entrepreneurism that is arguably out of step with today’s more inclusive legal profession.
The question then is can the firm shift this culture while retaining the ambition that has taken the firm as far as it has?
Setting the scene
The modern Clydes is very much the baby of erstwhile senior partner Michael Payton [pictured below], who held the job for 30 years before stepping into the chairman position two years ago. During this time he transformed the firm from a 20-partner shipping firm to a global player with 365 partners and more than 3,000 staff.
While Payton may have been succeeded by Burns he remains active in the firm. Partners describe him as a “force of nature”, who is still “one of the first on the floor in the morning and one of the last to leave”.
Chief executive Peter Hasson, who joined in 1997 from accounting firm RSM Plus, is also a key driver of the firm’s expansion and its tight focus on financial performance. “The firm is managed by an accountant, it’s very much a quantitative assessment rather than a qualitative assessment that drives the culture,” one partner says.
Burns is clear about Hasson’s role in the firm’s success. “He has kept the partnership and the firm honest,” he says, adding that with a focus on “delivering sound financial performance he has been the absolute root of all the success Clyde & Co has had in the last 15 years”.
Burns himself has long been groomed for a leadership role at the firm and has played a key role in much of the firm’s expansion both internationally and in the UK in recent years, getting involved long before he took up the senior partner post.
The domestic play
Law firm mergers do not always create a combined firm equal to the sum total of its parts. And, even when they do on the revenue front, profitability increases are far from guaranteed.
For Clydes though, the Barlows deal was the firm’s game changer move – in one swoop it took out a rival and added 83 partners and £75m in revenue, raising it from 17th place by revenue in the Legal Week UK Top 50, to 12th.
“The effect of the merger has been more pronounced and successful than its aim,” says one former partner.
For Clydes the union was driven in large part by Barlows’ professional indemnity practice.
As Clint Evans [pictured left], Barlows’ former chief executive and now RPC’s director of brand and talent, comments: “Professional indemnity was the prize for them, they didn’t have any presence in that.”
In practice, the union has strengthened Clydes’ hand in far more than professional indemnity. As another former partner comments: “It was a significant jump forward, they raised the profile of the firm, increased its market share and gave it a level of scale that the other insurance/litigation firms didn’t have.”
Significantly, the deal also gave Clydes a decent-sized presence outside London, which has helped reshape its business.
From Barlows, Clydes inherited offices in Oxford and Manchester, gifting it a large volume insurance capacity that is particularly active in the defendant personal injury space.
The 100-strong Manchester volume business was acquired by Barlows from failed firm Halliwells in 2010, coming across as part of the 2011 deal.
The addition of these volume businesses has played a crucial part in helping the firm meet its target of providing its clients with a complete offering for all of their insurance work. As Burns puts it: “To service our clients within that industry on a global basis and provide them a top to bottom service.”
Former Barlows partner Simon Konsta, now head of insurance at Clydes, adds: “We do that work to support and service our key clients and it has proven to be a strong basis to partner with those clients. They are grateful for the support and we are grateful for the work.”
Manchester insurance partner Chris Murray says the office was able to bring many of its key client relationships with it to Clydes. Almost immediately after the merger it was able to secure a place on Aviva’s panel and is still on the roster today.
“We could demonstrate to to some of the UK’s largest insurers that what was traditionally seen as a City and marine-based firm now had the capability to run its hand to volume work,” Murray says of the deal, adding that the firm has been able to expand its relationships since this point.
The importance of its regional network has continued to grow, and the October 2015 merger with Scottish insurance firm Simpson & Marwick gave Clydes five Scottish offices in addition to bases in Leeds and Newcastle. It counts Swiss Re, QBE, Zurich, MetLife and ACE, commodities giant Glencore, oil major Chevron and engineering company Skanska among its UK and international client base and is now leveraging this regional network to drive down costs for work that would have previously been run exclusively from London.
While its UK practice may have helped transform Clydes’ business, and still accounts for the bulk of the firm’s revenue, the firm is an old hand at international expansion.
Konsta says “the genie is out of the bottle” on northshoring, and the firm is looking to recruit regionally into multiple practice areas and is also moving people from London to the UK regions.
The upshot of Clydes’ transformation into a volume and high-value adviser is that its practice outside London is the envy of many of its peers.
“I get the slight feeling that the size of their provincial operations in the UK is one of the world’s best kept secrets; their Manchester office is enormous,” says one insurance partner at a rival firm.
International success
But while its UK practice may have helped transform Clydes’ business and still accounts for the bulk of the firm’s revenue (at the 2014-15 financial half year point 57% of its revenue came from the UK, with Middle East and North Africa providing 13%, North America 12% and Asia Pacific 11%), the firm is an old hand at international expansion.
The firm has been in Hong Kong for 35 years and Dubai for more than 20. More recently the pace of international expansion – often via small mergers or bolt-ons of teams – has picked up. Since 2010 it has entered Canada, Australia, Libya, Tanzania, Saudi Arabia, South Africa and Scotland, as well as launching a number of new bases in countries in which it already had a presence.
One former partner describes the rapid openings as “like the crest of a wave – one after the other”.
By sticking to its practice roots and picking up teams that come complete with books of business Clydes has managed to achieve more in tricky locations like the US than many of its UK peers.
The firm’s strategy is to dominate the insurance sector, expand into emerging markets and then build out its strength in its other key sectors – transportation, energy, commodities and infrastructure.
Clydes New York office head Michael Knoerzer explains: “Insurance lawyers tend not to be the sexiest practice group but we think insurance is fantastic, we love insurance.”
Knoerzer says that the firm has grown to 110 lawyers in the US in the last 10 years by “offering a home to quality insurance lawyers where they are the beloved practice”.
Burns and Knoerzer sat down together before the firm opened in the States to try to work out why the history of British firms in the US was, in Knoerzer’s words, “unblemished by success”.
They concluded that to accommodate the American approach there needed to be a light touch and an eat what you kill “flavour” to the practice. If the US offices produced the goods financially, they would be given a lot of autonomy.
Knoerzer says as “an American sitting here in New York, I don’t feel the heavy hand of John Bull on my shoulder”.
The firm has US offices in New York, New Jersey, Atlanta, Newport Beach and San Francisco, and plans to add more. Knoerzer hints heavily at Chicago and Miami, and says he is talking to potential laterals “every damn day”.
Australian managing partner John Edmond, who launched Clyde’s local practice in 2012 as part of an eight-strong team from Linklaters’ ally Allens, also notes the firm’s entrepreneurial culture and relatively hands-off management style.
