African expansion, near-shoring and artificial intelligence – Hogan Lovells' Immelt unveils new strategy
Five years on from groundbreaking transatlantic merger, chief executive Steve Immelt outlines his plans for the next five years
May 06, 2015 at 08:11 PM
4 minute read
Last week (1 May) marked the five-year anniversary of the merger between legacy US firm Hogan & Hartson and UK counterpart Lovells that shot the combined transatlantic firm Hogan Lovells into the global top 10 by revenue.
Over the last five years the firm's financial performance has been solid – if underwhelming – with revenue hovering around $1.8bn (£1.1bn) and profits per equity partner (PEP) edging up from $1.1m (£693,000) in 2010 to $1.2m (£726,000) by 2014.
In terms of international footprint, its performance has been more impressive, with the firm opening in locations including Mexico, South Africa, Australia and Brazil to take its coverage to nearly 50 offices.
Now Hogan Lovells is planning for the next five years, with a refreshed strategy penned by global chief executive Steve Immelt after he took up the role last July.
The former litigation head tells Legal Week that before he put pen to paper he spent a significant amount of time meeting clients to understand how they see the legal market.
"Businesses say all they get from law firms is market push rather than pull from the client," he says. "We have to develop that pull mindset globally and get people working together as teams."
The result will be single, cross-practice and cross-region client teams focused around key relationships across seven core sectors: energy, financial institutions, life sciences, insurance, automotive, technology, and media and telecoms.
"We have refined our focus onto a fixed core of sectors where we are putting most of our efforts," Immelt explains.
The firm has already started rolling out changes over the last six months as part of this strategy, including a real-time cost management scheme and a price-tracking tool introduced in London and Washington.
In addition, Immelt plans to expand the firm's legal services centre in Birmingham – another cost-cutting measure. The base currently has 14 fee earners but this is set to grow to 20 by the end of the year, and to 40 over the next 18 months. He explains the rapid expansion by saying it is not designed to be an "overflow outpost" but integral to its work on "any complex matter".
He is also eyeing further expansion abroad. Most pressingly the firm plans to establish a network of referral partners in sub-Saharan Africa and it is actively looking to develop relationships in Ghana, Kenya and Tanzania.
Immelt adds that the network will "probably not be exclusive" because there are "so many opportunities for firms that it is very hard [for them] to say I am going to tie up with a single firm".
Further expansion may necessitate big-name lateral partner hires – an approach that Immelt points out the firm has not favoured in the past but acknowledges may be an option in future. He believes the merit-based pay structure that Hogan Lovells adopted at the time of its merger has been a success but that further changes may still be necessary over the next five years.
"The system continues to evolve," he says. "Our approach allows us the flexibility that we think is critical."
Looking further ahead, the firm is investing in technology research to better understand how it could help clients, and it currently has a team actively looking at developments such as IBM's advances in artificial intelligence.
"We are still a way away from a level where technology makes a material difference, but we need to understand what is happening so that we are prepared for when it is ready to use," Immelt notes.
The acid test of his strategy, however, will be whether clients respond to his approach. If he is right and clients like it, then he and Hogan Lovells will be hoping it puts the firm on the path towards delivering the revenue and PEP growth that has eluded it over the last five years.
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