Barlows' recent history has been dominated by senior departures, strategic shifts and a struggle to grow. Suzanna Ring asks if an increasingly robust management team can prove the doubters wrong

"We're focusing on stability," says Barlow Lyde & Gilbert senior partner Simon Konsta (pictured above).

And who could query those sentiments? Despite having built a reputation as one of the City's top insurance and litigation firms, Barlows has had an unhappy recent history. The last 15 years have been marked by a series of strategic shifts, while over the last five years financial performance has increasingly lagged behind its peer group.

Since 2007 the firm has made repeated efforts to update its management and reshape its practice, with Barlows moving to refocus its business around its insurance core. The result has been a series of partner departures and a firm still searching for the stability Konsta cites.

"We are focusing on our insurance core and take the view that we can grow the business internationally and nationally leading with strong insurance lawyers and a strong insurance offering," says Konsta.

Unsurprisingly, given the internal discord that has been unleashed by the firm's attempts to modernise and reshape a practice historically dominated by a handful of powerful partners, this process has seen many critics deride the firm and write off its chances of restoring its reputation as the City's pace-setter for insurance.

But while there is no shortage of those criticising the firm for years of missed opportunities, the last 12 months have demonstrated an increasingly proactive approach from a firm once derided for drift and inertia. In particular, the firm last summer made a high-stakes commitment to its stated ambition to build a stronger volume insurance practice to complement its high-end City practice with the acquisition of Halliwells' Manchester insurance arm.

And, with chief executive David Jabbari established alongside Konsta, the firm is now pressing ahead with plans to rapidly take Barlows' practice international. Professional and financial disputes partner Richard Harrison comments: "We feel a sense of urgency for change and we're acting on that."

But no-one doubts that the challenge facing Barlows is considerable. From its peak a decade ago as a top 25 firm, by 2009-10 the firm was barely scraping into the top 40 in revenue terms, with fee income shrinking by 6.2% to £81.5m – a worrying performance at a period when many insurance and litigation shops were in growth mode. Likewise, the firm's profit per equity partner of £300,000 is well behind the top 50 average of £524,500.

Even if there is relatively little dispute regarding the firm's current tactics and gameplan, the question for many is whether this new-found proactive mood has come soon enough to turn around this City institution.

So many blind allies

By common consent, many of Barlows' woes have been related to the thorny problem of how to position the firm after the legal services market expanded dramatically in the 1990s. In this, the firm had plenty of company as many insurance-heavy law firms were uncertain where to stand in a market that seemed geared towards driving law firms with large M&A and securities practices.

Barlows attempted in the late 1990s and early 2000s to expand its corporate and technology, media and telecommunications groups. In practice this proved hard going, though for a time Barlows was regarded to have had some success in the tech/outsourcing space.

"There has been a lot of distraction over the past 10-15 years with attempts to invest in a corporate commercial capability, which was not aligned to our core sectors. This had been a major topic of debate for 15 years," says Konsta.

However, when it became evident that a lack of ground had been made in the transactional sector, the firm in 2005 reviewed its entire non-contentious capability and overhauled its corporate practice, splitting its commercial department into three standalone practices: commercial and technology; corporate; and employment.

The move marked a shift away from its policy of attempting to build a finance group and a response to the recent departures of banking partner Neil James and department head Graham Wedlake to the City arm of Chicago's Winston & Strawn.

After this period, Barlows made attempts to expand its practice into a broader commercial litigation franchise with the hope of securing more banking and regulatory work. In reality, progress was slow in coming, which some attribute to a lack of cross-referrals from its small corporate finance team, though it remains debatable the extent to which that particular strategy was executed.

In 2006, Barlows earned the unfortunate accolade of having the most disappointing results in the Legal Week top 50 after fee income fell marginally while the group as a whole averaged a 13% rise, which the firm blamed on the dearth of big-ticket cases.

This period also illustrated the extent to which Barlows had come to rely on its core insurance market, which exposed the firm to a number of tensions. For one, the insurance market was increasingly splitting into volumes business – typically handed to firms outside London on low rates – and the kind of high-end London-driven work that made the firm's name.

But because many of these insurance clients expected their advisers to handle both types of work, Barlows did not have the simple option of merely focusing on advising on high-end insurance disputes. The relentless commoditisation of the insurance market also meant that areas in which Barlows was an acknowledged market leader, like reinsurance, had been experiencing a remorseless clampdown on rates.

Unlike its close rivals, including Clyde & Co and Ince & Co, Barlows had failed to make an early move to go international – surprising, given the international nature of insurance disputes – which would have given it a means of developing its practice. The firm also remained too large to be an easy fit into rigorously defined litigation niches.

With the firm being led by the low-key pairing of long-time managing partner Kennan Michel and senior partner Richard Dedman, there was no strong force to help the firm address these issues or overcome the influence of a handful of powerful partners.

Following the loss of a number of big-name litigators in 2007, including moves by litigation partner Clare Canning to Mayer Brown and Chris Warren-Smith to Fulbright & Jaworski, there was half-hearted discussion of building up the firm's transactional practice again. In truth, many now saw Barlows as drifting, and it was not apparent to those who knew the firm that it was ready to take any action. But action of a sort was coming.

Grasping the nettle

The appointment of non-lawyer Clint Evans as Barlows' first chief executive was an effort by Dedman to address the problems facing the firm. Indeed, the appointment of the former director of Henley Management School and head of branding at Clifford Chance marked the start of a near four-year period of upheaval and restructuring.

Despite facing some internal criticism, Evans (pictured) helped to usher in the creation of a new partnership council, which was regarded as bringing greater transparency to the firm and also helped to start the debate about where Barlows should be positioned.

"There were a number of big hitters rather than management running the firm. There were people who had very successful practices, which led to an attitude of the individual first, Barlows second, which of course is not right," remembers one ex-partner.

Following Evans' appointment, a number of high-profile partners known to have strong influence over the firm's management resigned over the next two years, including insurance heavyweights Colin Croly and Roger Doulton, whose departures were announced in March 2009, with Doulton moving to Clydes.

The management team then went through more changes, with Konsta in 2008 winning an election to replace Dedman and chief operating officer David Jabbari taking over from Evans after he stepped down in December 2009.

But while some interpreted Evans' short stint as evidence that the firm was pulling back from a more centrally-managed style, the reality proved quite different. Konsta and Jabbari were to take an increasingly robust role in the firm's direction.

Throughout 2009 and 2010, a total of 12 partners were asked or advised to leave the firm, the most recent in November 2010 when the firm cut three partners from its commercial practice and a handful of associates were offered voluntary redundancy. At least one of the partners in this round had only been recruited in the last two years. The partner pay system was also last year moved from a modified lockstep to a merit-based remuneration system to give the firm more flexibility over recruitment and promotion and the firm ditched its associate lockstep.

Insurance dispute resolution partner Tim Taylor (pictured) says: "There's been a determined attempt to break down silos in the firm, which has been important. There has also been a much, much sharper focus on performance. The old management was not as willing to confront performance issues as the current management is."

Partners are now provided with a performance plan that is regularly reviewed and monitored, and they are remunerated accordingly. The restructuring has been followed by a raft of departures in recent months, once again giving rise to doubts surrounding Barlows' strategy. In the last six months alone, the firm has seen eight partners depart separately to the 12 asked to consider their positions.

While the firm maintains that none of the exits have had a dramatic impact on the firm, the loss of well-regarded practitioners like commercial disputes head Julian Randall and litigation partner Andrew Howell are acknowledged to have been a setback. The departure last year of partner Ian Mason for Baker & McKenzie also looks to be a reversal for Barlows' financial services practice. Overall, however, the impact of the recent run of partner departures at Barlows has arguably been overstated. "People have a natural lifespan at firms and that's just how the industry is," says Manchester professional indemnity head James Preece.

Target market

It was in September 2009 that Barlows gave the clearest indication that it was betting its future on a renewed focus on insurance. That month, the firm launched a Manchester arm with the hire of DLA Piper duo Rob Muttock and Mark Hemsted in a move aimed at allowing Barlows to use regionally-priced services to strengthen its hand with volume insurance clients.

"The approach to legal services in the insurance market had changed significantly. This applied to international business, work in the London market and also in respect to an increased volume of business which key clients were looking to have serviced out of the regions," comments Konsta.

However, many argued that the regional move would struggle, given Barlows' mixed track record with its Oxford branch and the challenge of going up against the established regional insurance players like Weightmans and Beachcroft. On this front, at least, Barlows had a compelling answer when in July 2010 it sealed a complex transaction to acquire Halliwells' insurance practice after committing to pay up to £2.5m in four tranches. The deal, agreed in the chaotic firesale of Halliwells last summer, saw Barlows gain 17 partners and over 230 staff in Manchester, including more than 60 fee earners. (Two partners joined in London.)

The deal at a stroke gave Barlows real regional bulk, access to Halliwells' well-polished infrastructure and IT systems and a strong client roster that included Chartis, AXA and NFU Mutual. The acquisition is expected to bring in an extra £17m of revenue. Given that Halliwells' insurance practice remained largely unaffected by the turmoil that contributed to Halliwells' collapse and, despite speculation to the contrary, managed to retain key panel places after the transfer, the deal has huge potential. It could yet mark a turning point for the firm, demonstrating the willingness of Konsta and Jabbari to push a conservative firm to make bold moves when necessary.

It also plays well to Jabbari's passion for operational polish and efficiency and gives the firm a chance to execute its broad-church insurance practice model covering both volume and high-end work. As one ex-partner says: "Halliwells happened by pure chance, but it is the best thing the firm has done."

However, criticism over combining the volume and value ends of the market remains, with competitors speculating over the success of this model. "My concern would be that they are trying to do volume, value and international all together, which I fear may not work," says a partner at a rival firm.

Taylor has a pragmatic response: "Quite frankly, the kind of clients that we deal with are top-end insurers and, as well as doing the big deals, they also offer £25 holiday insurance, so they need us to do both."

Next stop, the world

But if regional growth has come far easier than expected, such quick solutions seem unlikely in its other core aim: to take its business global. The foundation of this strategy was laid out in November at a partnership meeting when Konsta and Jabbari presented a substantive overhaul of the firm's international strategy. In essence, the plan is simple: to dramatically increase the firm's small international network over the next three years to give it a credible foothold in the US, continental Europe and the Middle East.

"We realised that we had not made headway into the international arena like we should have done," says Jabbari. "There have been various opportunities over the years to grow internationally – 15 years ago in New York, five years ago in the Middle East – but the firm has not gone for it which has been to its detriment and we now want to change this and stop the conservative approach that's been maintained."

Obviously this will be no easy feat given how little progress Barlows has made so far. The firm's offices outside the UK comprise of Hong Kong, Singapore, Shanghai and Sao Paulo and in recent years it has often been chastised for not moving internationally as quickly as its rivals. Kennedys senior partner Nick Thomas says: "International expansion is a long game and, while I don't think Barlows has left it too late, it is likely to have a while to wait before they see any return on investment."

Perhaps the big question for the firm in this regard remains whether to pursue a major international merger. Barlows' management is certainly open to the idea, and the lure of securing a transformational deal with a similar practice in the US is obvious to a firm that is entering the international arena late in the day.

However, the City also remains a strong focus for Barlows, and the firm has implemented a lateral hiring programme headed up by Harrison to be reviewed every quarter to ensure it stays on top of growth. The firm also looks set to be aided by a robust financial performance – always a helpful way of drawing a line after a period of upheaval. Barlows is currently forecasting that like-for-like revenues in 2010-11 will be up around 9% before accounting for the boost from Halliwells – a performance that would comfortably push the firm through the £100m barrier and into the UK top 25.

Such growth would also be one of the best relative performances from a firm that has in recent years struggled to increase its top line. Despite the understandable scepticism regarding a firm that has had plenty of false dawns, on closer inspection the years of turbulence and increasingly robust executive action appear to be showing some results. Indeed, while the firm's restructuring and the level of partner departures have had more than their share of acrimony, it is striking the extent to which even the firm's critics grudgingly back the strategic direction and handling of the firm's leadership.

"A lot of departures happened because people were uncomfortable with the new strategy – for example, the refocus on insurance has left some people unhappy with a more minor role. Obviously there are some people who we would rather had stayed, but I would hope that this phase is more or less over. It is more likely that you will see people coming in than leaving now," argues Taylor.

It is also acknowledged that the firm's partnership has become more united as management has moved to provide a clearer direction. While the challenges facing the firm are considerable, there is a renewed optimism among many partners. "One of the significant changes that we've seen is that the partnership is now all behind the strategy and see this as where the firm is going," says Jabbari. "We are going to stop being nostalgic and start pushing things onwards."

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Konsta and Jabbari – tough at the top

"If anybody thinks this firm does not need to change, then they should leave now," said Simon Konsta in his first speech as senior partner at Barlow Lyde & Gilbert. The comment has certainly set the tone for his leadership.

When Konsta took up the reigns from Richard Dedman in autumn 2008 after Dedman decided to step down two years into his second five-year term, he was under no illusion that something had to give.

The firm had tried to usher in change in 2007 with the appointment of non-lawyer Clint Evans to the new role of chief executive, axing the position of managing partner, which had been held by Kennan Michel since 1991.

Dedman and Michel were regarded as having left the firm's direction to be determined by a small clutch of influential partners. While this may have worked for individual teams for a time, the overall result meant that Barlows was either moving in directions that proved fruitless or simply muddling along.

Professional and financial disputes partner Richard Harrison says: "Having been here for so long I have seen a lot of management changes, but when Simon put himself forward for senior partner, he won by a landslide. Richard Dedman had been one of the cabal of partners that had run the firm for a long time and it was time to move away from all that."

By all accounts, Konsta brought a number of strengths to the senior partner role. For one, he had plenty of credibility within the partnership, having carved a career as a well-regarded practitioner in Barlows' much-vaunted professional negligence practice. And even his critics concede Konsta brought charm and a renewed sense of energy to the firm's leadership – even if the same doubters argue that his vision for Barlows is broadly defined rather than conceived in great detail.

Overall, the combination of Konsta and Evans as two forward-thinking figures with complementary skills looked promising. However, there was a feeling that Evans – despite possessing strong analytical skills – struggled to push through change or win enough support from partners (his background was in branding and marketing as much as management). Just over two years into the role, Evans resigned in December 2009.

Evans' replacement, David Jabbari (pictured above), had a different skillset. Jabbari had already been hired as Barlows' chief operating officer (COO) in October 2008, joining the firm in spring 2009, from his role as global head of knowledge management at Allen & Overy.

The COO position was new to Barlows' management and was created to develop the firm's operational infrastructure and business support workforce and, ironically, was an appointment pushed for by Evans. When Evans stepped down from his role, Jabbari was appointed as chief executive and the COO position was abandoned.

In contrast to Evans, Jabbari has focused on the nitty-gritty of infrastructure and operational issues. He is also cited as being more politically astute than his predecessor. In a little over a year as chief executive, Jabbari has already been heavily involved in an internal restructuring that saw the culling of a number of partners, three redundancies from its business development (BD) team in a shake-up of its BD function and the outsourcing of its 25-strong facilities service to third party Mitie. However, Jabbari has also so far been able to maintain an approachable reputation rather than being written off as a process-driven technocrat – typically a death sentence for law firm chief executives.

"Bringing in Clint was the right move and he was a brilliant strategist but not a very good executioner, and it is difficult to see what he really achieved. He got rid of a few bad partners, but I think Jabbari has been much more effective in getting stuff done," reflects one ex-partner. Another comments: "Jabbari has approached the firm from a different viewpoint. Barlows had a lot of costs and he has done a lot to reduce these and move the business forward as well as seizing opportunities when he sees them."

Further evidence that Konsta and Jabbari were willing to commit to and achieve large steps came last summer when Barlows acquired Halliwells' Manchester insurance arm ahead of the firm's collapse.

Perhaps the pair's most impressive achievement is that they have managed to steer Barlows through a turbulent period in which a number of difficult decisions have been taken without attracting much ire. With many challenges still facing Barlows' management team, that goodwill will certainly come in handy.

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Barlow Lyde & Gilbert – practice and clients

2009-10 practice area split

- Non-contentious and employment – 20.3%

- Professional and commercial disputes – 38.6%

- Market and speciality – 27.7%

- Casualty and health – 13.4%

The firm's practice is built heavily around the insurance sector. Its largest clients are currently ACE, Allianz, Catlin, Zurich, QBE, Brit Insurance, Chartis, Axa, NFU Mutual, Novae, Munich Re, Travelers, RSA, Talbot Underwriting and Mitsui Sumitomo Insurance Group.

Aside from its core insurance disputes practice, the firm is well represented in related areas like aviation, thanks to a number of high-profile partners on the insurance side like Giles Kavanagh and Richard Gimblett for the regulatory work.

The firm's marine and trade practice includes highly-regarded partners like Patrick Foss, though Barlows has failed to build in the area with anything like the success of Clyde & Co.

Professional negligence remains one of Barlows' crown jewels, boasting a range of highly-regarded partners like Sarah Clover (pictured), James Preece and Andrew Blair. In general insurance, Tim Taylor remains a key name for contentious disputes work, with Stephen Browning cited on the commercial side.

The firm's Halliwells acquisition has also expanded its defendant personal injury practice considerably, bringing in well-established names like Kevin Finnigan and James Dadge.

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Governance and partnership – all change

An outdated governance model has often been cited as one of Barlow Lyde & Gilbert's weaknesses in recent years, creating a lack of transparency and allowing a small group of partners to drive the firm.

The firm has recently taken steps to correct this and open up its decision-making structure. In November 2007, Barlows elected its first-ever supervisory partnership council, replacing the eight-partner management board that consisted of un-elected department heads.

The six-strong council is currently chaired by insurance dispute resolution partner Tim Taylor with the remaining five members comprising aviation partner Richard Gimblett (pictured), real estate partner Malcolm Rogerson, head of professional and financial disputes Sarah Clover, casualty and healthcare head Kevin Bitmead and professional and financial disputes partner Richard Harrison.

Each member is elected for either a two or four-year term to ensure continuity and is responsible for overseeing management, helping to decide partner profit shares and acting as a sounding board for the partnership. Employment head Rob Hill says: "The introduction of a partnership council brought the firm together. When we had a management board it was run by the heads of department and, as is often the case, the larger personalities tended to outshine the others."

The change to the body was implemented by then chief executive Clint Evans, who was brought into the first-time role in July 2007 in place of a managing partner. The role of senior partner was retained, with Simon Konsta taking over the helm from Richard Dedman in autumn 2008. David Jabbari replaced Evans in January 2010.

Governance changes were echoed by moves to shake up Barlows' partnership, largely to reflect the fact that the firm was carrying too many partners with relatively low billings. At the end of 2009, Barlows introduced fixed-share partners for the first time, in a move that the firm said offered more flexibility for partner promotion and recruitment. The firm expects new promotions to move to the fixed-share rank before gaining full equity.

Given that the firm's current profit per equity partner of £300,000 badly lags its peer group and that it is running one of the lowest leverages among the top 50 – with only 2.9 fee earners for each equity partner in 2009-10 – there is widespread acceptance of the move. This was followed by the overhaul of Barlows' partner pay system, moving from a modified lockstep to a merit-based pay system at the start of the current financial year.

Under the merit-based model, partners are remunerated on a point system ranging from three to 12 points. Points for the firm's equity partners are assessed annually. The firm's latest limited liability partnership (LLP) accounts show that the highest earning partner was paid £425,043 for 2009-10 – up 4% from £410,244 in 2008-09. The 19 Halliwells partners who joined Barlows in July last year have been placed into a separate LLP in order to limit exposure to future claims. The deal includes a lock-in for partners.

• For more analysis, see The executioner's song – getting on with turning Barlows around