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Law firm combinations are on a spectrum. On one side, you’ve got alliances (Linklaters and Allens) and best friend networks (Slaughters) where firms refer work, clients and marketing initiatives. In the middle, you’ve got Swiss vereins and companies limited by guarantee, where firms operate under one united brand, but they keep their businesses financially separate. Finally, on the other end, you’ve got full financial integration. That’s what BLP did with Bryan Cave in 2018 and what Hogan Lovells did in 2010. It’s a full integration because the firms share one profit pool and have a single system to divide up the profits.
Full financial integration doesn’t happen very often. It’s not easy for firms to work out profit sharing and partner remuneration. That’s especially true when trying to merge with a US firm because they often pay partners using a different system (by performance rather than seniority). That was one of the reasons legacy BLP’s previous merger attempt failed: the potential merger partner, US firm Greenberg Taurig, had a black box compensation system (as does Jones Day ), which means partners don’t know how much others get paid, and that’s a hard thing to integrate into your firm culture. You also need a firm with similar levels of profitability – often that’s a problem for top UK firms because the NY elite tend to be much more profitable. BLP ‘s profits per equity partner (“PEP”) is not far from Bryan Cave so that’s not much of an issue. That was not the case with Greenberg Taurig who had higher PEP. If they went for the full financial merger then BLP would have had to restructure – probably remove equity partners or put more of them on a fixed salary.
The decision to opt for a merger rather than a Swiss verein (NRF/DLA Piper) or a company limited by guarantee (Eversheds/Wragge) is also a big move. A lot of firms have recently gone for the latter two models because you get to tell clients you’re a united firm, but you don’t have to worry about sharing revenue or liabilities. It’s easier to gloss over issues of integration because you’re not sharing the same profit pool. And you’re not as vulnerable to currency fluctuations or big tax fees.
But BLP and Bryan Cave went for the fully financially integrated merger and that’s a big thing to pull off. It shows they fundamentally believed that they shared the same ambitions, culture and values. It means fee earners are encouraged to share work because if the whole firm does well then everyone benefits. The compensation system was also unified (Bryan Cave’s lockstep is being phased out and a new set of performance principles was introduced), which limits tension about partner remuneration and shows they’re really treating the firm as one. For clients, they now have the benefit of a seamless service on both sides of the Atlantic. Swiss vereins don’t have that level of integration; you’ve got to work hard to incentivise partners to refer work and clients because they’re not sharing all the rewards.
So how has the merger panned out? It’s early days yet, but the firm seems confident; in its first set of promotions since the merger, the combined firm made up 23 lawyers. Likewise, there were positive results at the junior level. In Autumn 2019, BCLP saw trainee retention surpass 75% (the first time in over four years for legacy BLP), which was up 15% from Spring.
Bryan Cave and Berwin Leighton Paisner were both keen to highlight their unique cultural fit. In an interview with The Lawyer, they highlighted how they share ‘a strong commitment to innovation’ and the desire to form ‘deep and lasting client relationships’. An example of the former has been demonstrated by BCLP’s combination of their own consulting units, which has now been incorporated into a new legal operations consultancy arm called Cantilever.
The two firms also made special efforts to ease the integration process. After the merger, BCLP launched an internal app to allow its lawyers to quickly read up on lawyer profiles across the combined firm, as well as demystify particular English and American slang. This was spearheaded by BCLP’s new integration group and supported by four partners from each firm. In addition to the app, one of their early initiatives included the introduction of a system that buddies up partners and associates across the two firms.
Before the merger, Bryan Cave’s revenues was almost double BLP’s, so you’d be forgiven for thinking it’s an odd combination. But BLP’s main selling point was its premium real estate practice. At the time of the merger, it has the 14th largest real estate practice in the world and was the UK’s seventh largest real estate firm by turnover in 2016-17 (with real estate contributing 30% of overall turnover). The firm also had more real estate partners than any other firm in the UK, according to The Lawyer.
This came from an early adopted strategy by BLP. The firm realised it could win big mandates for real estate and then cross-sell to other departments. It did also invest heavily in private equity, finance and tax, back when it was trying to become a full-service firm, but they became more of a support for the real estate department. This focus helped the firm score highly for improvement to its profits per equity partner over a three-year period before the merger, a figure which rose by 64%
Thanks to the merger, BLP gained access to a huge US real estate market. It was a big win for the real estate team, although that didn’t stop some partners from leaving. As an applicant, you may want to discuss how the merger is exciting for lawyers because they’ll gain access to top tier work and a new market. They’ll also be opposite many of the big firms in the practice areas and there will be plenty of opportunities for career development.
From a business perspective, the merger offers legacy BLP opportunities to cross-sell its real estate expertise to Bryan Cave’s corporate clients. This strategy of cross-selling real estate work is something BLP has been doing internally in 2014.
Bryan Cave did a fair amount of real estate work too, and combined, they were predicted to have the fourth=largest practice in the world. In addition, Bryan Cave did a lot of high-volume M&A work, which now complements BLP’s corporate team. Its biggest practice is litigation and again that’s an area BLP has invested heavily in – litigation and corporate risk, in particular. Applicants might want to raise the opportunities to work in new departments and sectors, and the firm’s ambitious growth prospects, as a reason why they are applying.
Moreover, since the merger, BCLP has secured many interesting deals, such as the £350m financing of Regent’s Crescent, a residential project in London’s Marylebone and the largest Shariah-compliant financing in the UK for several years. For this mandate, the firm pooled together a team across its real estate finance and tax practices and oversaw work undertaken by a variety of law firms.
When House of Fraser was threatened with collapse and concern grew over the use of CVA’s to rescue troubled companies, BCLP was proactive in advised landlords and the firm led workshops to facilitate discussions for various interested parties.
BCLP was also selected to replace KWM as sole adviser to The Crown Estate to its £7bn London portfolio. This has led the firm to recently advise the prestigious client on its first new build office development in St James for three years.
The merger between Bryan Cave and Berwin Leighton Paisner created a 1600 lawyer-strong firm, with 32 offices across 11 countries. The firm is now looking to Paris and Germany for expansion as part of its post-merger international strategy (Paris, for example, has become a hotspot for real-estate rivals in recent years). BCLP is also looking to consolidate its US strength, with a particular interest on the West Coast, which is the “primary real estate market in the country” according to The Lawyer Global Real Estate 50.
In Asia, legacy BLP previously cemented its presence through its “One Asia” strategy, which involved consolidating the firm around sectors rather than practice areas or geographies. The firm also acquired a five-lawyer-strong firm in Hong Kong in 2016, boosting its asset finance expertise in the region. Real estate, private equity and mergers and acquisitions form the core expertise in BCLP’s Asia practice, with the combined firm ranking as the 37th largest international firm in the region by partner size, according to The Lawyer.
Bryan Cave had a substantial presence in the US — with just 27 partners across its overseas offices before the merger – but it had made little progress in the UK or the rest of Europe. It only had a small presence in Asia with offices in Shanghai and Hong Kong. By comparison BLP was quite sizeable in the UK, had a few offices in Europe, and a solid foundation in Asia – after 2007, the firm invested a lot to make its real estate practice international.
BLP hadn’t made much progress in the US, which is why the merger with Bryan Cave was a useful shortcut to building an effective transatlantic presence. It was an expansion strategy that was quicker and significantly cheaper than opening up offices, and far more integrated than an alliance. After the combination, Bryan Cave received a strong European base and some extra Asian offices to complement its US presence. BLP was able to tap into Bryan Cave’s 19 domestic offices in the US. The firms were also able to share valuable knowledge about the markets they operate in and the clients they work with. Candidates might want to raise these new opportunities for international secondments and global cross-border deals in their applications.
Legacy BLP is responsible for the very successful growth of Lawyers on Demand, which was built internally and launched in 2008, and then spun off in 2012. LoD was early in providing flexible lawyering services compared to rival law firms, and back in 2012, served a range of clients including Orange, the Financial Times and Cisco. BCLP recently sold its stake in LoD, which now serves over 25 law firms, to private equity house Bowmark Capital.
Legacy BLP also opened up into Manchester in 2014 as part of its strategy to reduce costs for clients. The firm had swift ambitions and heavily invested in the office to grow to 100 towards the end of the 2015/16 financial year. By 2016, the Manchester hub had served over 75 partners across a variety of practice areas, according to The Lawyer. While its aim was to attract clients looking for low-cost legal services, legacy BLP had a particular aim to differentiate its Manchester office from rivals by providing value beyond simply lower fees.
Legacy BLP embraced diversity early. In 2014, the firm announced its aims for women to represent 30% of its partnership by 2018. In June 2015, the firm launched its new Inclusivity Strategy, which was led by Lisa Mayhew, who had been elected as managing partner of BCLP. BCLP’s success in this area comes down to several factors, according to Mayhew, including having inclusivity form a core part of its business strategy, leading the initiatives at senior level, having individual gender targets set by each managing partner in a department, and having diversity and inclusivity as a core principle of the firm, which is then considered during performance reviews.