Last week’s news that DLA Piper senior partner and co-chair Juan Picon is leaving to join Latham & Watkins means the firm is losing arguably its highest-profile partner in continental Europe.
Picon’s surprise resignation means DLA Piper’s operations outside of the U.S. are currently being led by London-based co-CEO Simon Levine and disputes partner Janet Legrand, who has stepped in as interim co-chair.
When it comes to finding a permanent replacement for Picon though, former partners say that it would be politically desirable for his successor to also come from the firm’s continental European offices, where the civil law system predominates.
“Levine and Picon were a strong team—having the axis of a UK partner and a European partner was important,” said one former partner. “There has been a concerted effort from DLA to make sure the management team was representative, so you would want someone from the European practice to step forward and keep that balance.”
Another former partner said Picon’s resignation could be seen as a bad sign.
“You have to look at the fact [that former DLA Italy managing partner] Federico Sutti, who was the big civil law practitioner before Juan, left to join Dentons in Milan,” the former partner said. “It is not a great track record of big-name civil lawyers in the firm leaving for rivals.”
Sutti left in 2015 with a 21-strong team to set up a Milan base for Dentons, having lost out on the DLA co-CEO job to Levine.
Speaking to Legal Week, ALM’s London-based publication, following Picon’s departure, Sutti was critical of DLA Piper’s approach in Europe under its current management.
“When I had my last conversation with Simon Levine in May 2015, before resigning from the firm, I said: ‘You are going to destroy what Nigel Knowles has created in 20 years in three years.’”
“DLA was a combination of very good offices with people working together—that was the vision. The idea of empowering the group heads, verticalizing the practices, centralizing everything in London—this was a disaster. It has killed the local initiative.
“If you are a Linklaters or Freshfields, you benefit from a strong brand and client base—even if you are in Italy or Spain there are advantages. But if you are at DLA, you have very little of this, so every day you have to fight for clients. That is the challenge.”
The firm has also closed two European offices this year—in Berlin and Tbilisi—as well as its base in the Australian capital of Canberra, as part of its attempts to boost profitability in the post-Nigel Knowles era.
“A lot of the European offices were put together by Nigel; he had a charismatic relationship with a lot of those offices—they liked and trusted him, and when he left that link disappeared,” said one former partner. “Berlin and Tbilisi have shut—those are small offices, but the fact is Simon was closing European offices and not closing places like Liverpool. In the grand firmament, is Liverpool more important than Berlin?”
Levine says that the decision to close offices was taken at a local level and demonstrated that the firm’s management is responsive to local concerns.
“The suggestion to close Berlin came from the German managing partners, and the idea of closing the Canberra office came from the Australian managing partners,” he said. “Closing those offices actually proves that we listen to what local management want to do.”
DLA Piper’s joint managing director of Europe, Olaf Schmidt, maintains that the firm is not centralized in London and that the management of the firm by practice group is a more effective method than through a network of almost independent offices.
“We run our business through the practice groups and not through autonomous offices,” he said. “I know for some other international firms this is different, and we respect other business models, but it is not our business model.”
Schmidt also said DLA Piper’s management believes that a global law firm has to have internationally operating groups that need to be cohesive and run vertically.
“[This] can sometimes conflict with local decision makers, but we have managed to harmonize the system pretty well,” he said. “These verticals are not run out of the U.K.—we have group heads from Paris, from Amsterdam, they are run by the best people. That is the business model which we follow.”
Schmidt also said that the firm has expanded its continental European offices in recent years, and that the departure of Picon was unrelated to the current direction of the firm. The firm said his decision to leave was motivated in part by family considerations.
“Juan was clear on why it happened and his reasons have to be respected. We are disappointed, but if you knew him, he was tired, he was finding the traveling hard, he couldn’t do the job anymore. It wasn’t that he got frustrated because the firm was run from the U.K,” Schmidt said.
The trend, he said, is actually the opposite.
“Jan [Geert Meents] and I are on the executive—the board is composed of mainly Europeans. The trend is moving towards the mainland European business in terms of people and also in terms of revenue, and moving away from dominance by the U.K., which is no longer the majority of our revenue,” he continued. “From a business perspective, mainland Europe counts more and will count more in the future.”
In the last five years, DLA Piper’s mainland European business has seen revenues rise 34 percent from £256.9 million ($337.5 million) to £344.8 million ($452.96 million.) The region accounted for 40 percent of Europe, the Middle East and Africa (EMEA) & Asia Pacific revenue in 2016-17, up from 33.9 percent in 2012-13, with the U.K. accounting for 32.8 percent of the 2016-17 total.
Fee earner head count in mainland Europe accounts for 42 percent of the EMEA & Asia Pacific group, with the U.K. standing at 33 percent.
Levine echoed Schmidt’s comments.
“As a matter of pure fact, if you look at the senior management and governance team, it is an equal split between U.K. and people from civil law jurisdictions who all have big practices and are leaders in their fields,” he said.
While Picon’s appointment as senior partner was unopposed, it is not clear that this will be the case with his successor. The election, which according to Levine is likely to take place in the new year, is open to any partner that chooses to step forward.
“If you look at our partnership agreement, it is a job which is up for election, said Meents, managing director of sectors and clients.
If anyone in the partnership decides they want to run for the job, nobody will stop them, he said.
“It was different last time, as it was the first time after Nigel and it was very important for us to show continuity and to make the transition as smooth as possible,” he said. “There was an agreement among the partnership that Simon and Juan were a good couple; there was no imposed non-election—it was a decision of the partnership to go for one candidate.”
One former partner floated London-based DLA board member Jon Hayes and London managing partner Tom Heylen as possible candidates for the role. Neither Meents nor Schmidt would comment on whether they are planning to run.
“There isn’t an obvious replacement from the civil law world, and that itself is something of a problem,” another former partner said. “What happens? Do you have a contest where the fact the civil law part of the world will never win a ballot means you get another Brit? Or an Australian? And if so, how does that leave the European part of the firm?”
However, Meents said that DLA Piper has moved on from a stage where it is necessary to have a geographically representative leadership. The quality of the candidate is the most important consideration, he said.
“The firm has grown to the stage of maturity where quality comes first,” he said. “We need to find the right people who are happy with those roles and drive the firm forward. If that person came from continental Europe, fine; if we found a preferred candidate in the U.K., that is also fine. I wouldn’t put too much emphasis on their nationality, as long as they were in the position to take the firm forward and fill the space Juan left.”