Can Clyde & Co cast aside its macho culture and achieve the global domination it seeks?
Clydes has expanded rapidly off the back of unfashionable insurance work; now it wants a more inclusive culture without sacrificing its entrepreneurial spirit
March 29, 2016 at 08:34 PM
32 minute read
The original version of this story was published on Law.com
"We aim to be the largest, most pre-eminent insurance-focused law firm in the world," says Clyde & Co's senior partner, James Burns.
At face value it looks like Burns, and Clydes, are well on track to achieve this. The UK firm had already achieved huge growth under its previous leaders, increasing in size by more than a third through its 2011 combination with legacy Barlow Lyde & Gilbert in the UK and, since Burns took up his post some two years ago, the pace of international expansion has been dizzying.
In 2010, the year before the merger, Clydes' revenue stood at £212m; by last year that figure had almost doubled to £393.3m. Profits per equity partner meanwhile now sit ahead of the 2010-11 figure of £605,000 in 2010-11 at £660,000 in 2014-15, after dipping following the merger.
Since 2013 the firm has added international offices across the US, South Africa, Asia and the Middle East, with launches in cities including Atlanta, Madrid, Beijing, Melbourne, Chongqing, Dar es Salaam, Brisbane, Johannesburg, Cape Town, Riyadh and Newport Beach. Closer to home, its 2015 merger with Scottish firm Simpson & Marwick gave it bases in Edinburgh, Glasgow, Aberdeen, Dundee, Newcastle upon Tyne and Leeds.
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.
Insurance lawyers tend not to be the sexiest practice group but we think insurance is fantastic, we love insurance
"We don't want to bring people in that say ‘where is the work and how can you manage me?' We want people to come in here and do it themselves," he says.
The firm has expanded rapidly in Australia, most recently adding a 30-strong team, including five partners, from Sydney insurance boutique Lee & Lyons who joined in February.
Edmond says Melbourne will now "grow significantly over the next six months".
Its well-established Middle East practice meanwhile now has offices in Abu Dhabi, Dubai, Riyadh, Doha and Tripoli, with an opening in Iran also on the agenda. In contrast to some UK firms, the strategy is not to focus on global clients but to win clients locally.
"If you look at our client base and spread in the Middle East it would be very different to our client spread in London because we are looking to win work from businesses looking to expand in emerging markets," explains Burns [pictured right].
Macho culture
While the firm's relentlessly international outlook and its tough individualistic culture have given it a degree of oversees success that continues to elude some UK peers, these same traits can cause tensions within the partnership.
Former partners suggest the competitive culture is "anti-intellectual", with "entrepreneurship valued above technical skills or intellect".
As one former partner who came over as part of the Barlows union comments: "There is a competitive culture between the partners and there is a direct link between billing performance and how you are regarded within the firm."
Another adds: "Everyone has to adapt to the Clydes system or find an alternative."
While this intensely competitive approach and strong focus on financial performance has been one of the prime ingredients in its success, some say it is out of step with the need for firms to be more diverse, something Burns himself acknowledges the firm needs to be.
Prior to the firm's September 2015 merger with Scottish firm Simpson & Marwick 19% of the firm's partners were female (58 out of 303); of the full equity partners that proportion dropped to 13% (21 of 165).
This compares to an average of 25% female partners across the 36 firms surveyed by the Black Solicitors Network for its 2015 diversity league table.
A former partner describes the firm as "a perfectly decent bunch of people", but goes on to say: "It was a white male middle class firm which didn't pretend to be anything other than that, but it did mean it was slightly cliquey."
Changing of the guard
Former partners believe Burns could fix these issues. In contrast to Payton's "paternalistic" approach, Burns is described as a "very approachable" leader who "really gets to know the partners personally".
They believe his relative youth will be a modernising influence. As one former partner says: "Payton became a partner in the early 1980s and possibly the culture didn't change as quickly as other firms in the market. With fresh blood that will hopefully change."
The firm does appear to be moving to address the problem. Nearly a third of partners (31%) made up over the last three years have been women and it has also introduced an apprenticeship scheme for school leavers in its Manchester office. Internationally, there appears to be less of a problem, for example 48% of partners recruited to its nascent Australian practice are female.
Possibly the culture didn't change as quickly as other firms in the market. With fresh blood that will hopefully change
Burns concedes that "[diversity] probably has been something we have made more progress in the last couple of years than in previous years".
Burns has the challenge of keeping the firm's entrepreneurial spirit alive, while trying to make the firm more reflective of the modern word.
"We have made significant progress and it's something I am absolutely committed to," he says.
Changing organisations takes time, but Burns says he is committed to ending Clydes' boys' club culture, concluding that it is an issue that he wants to "define my leadership".
Taking over from someone who has led a firm for nearly three decades is never going to be easy but if Burns can survive in the job for even a third as long as his mentor and displays the same commitment to diversity as to expansion, the odds are high that the firm he passes onto his successor will be very different in culture from the Clyde & Co of today.
"We aim to be the largest, most pre-eminent insurance-focused law firm in the world," says
At face value it looks like Burns, and Clydes, are well on track to achieve this. The UK firm had already achieved huge growth under its previous leaders, increasing in size by more than a third through its 2011 combination with legacy
In 2010, the year before the merger, Clydes' revenue stood at £212m; by last year that figure had almost doubled to £393.3m. Profits per equity partner meanwhile now sit ahead of the 2010-11 figure of £605,000 in 2010-11 at £660,000 in 2014-15, after dipping following the merger.
Since 2013 the firm has added international offices across the US, South Africa, Asia and the Middle East, with launches in cities including Atlanta, Madrid, Beijing, Melbourne, Chongqing, Dar es Salaam, Brisbane, Johannesburg, Cape Town, Riyadh and Newport Beach. Closer to home, its 2015 merger with Scottish firm Simpson & Marwick gave it bases in Edinburgh, Glasgow, Aberdeen, Dundee, Newcastle upon Tyne and Leeds.
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
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
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
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
The firm has US offices in
Australian managing partner John Edmond, who launched
Insurance lawyers tend not to be the sexiest practice group but we think insurance is fantastic, we love insurance
"We don't want to bring people in that say ‘where is the work and how can you manage me?' We want people to come in here and do it themselves," he says.
The firm has expanded rapidly in Australia, most recently adding a 30-strong team, including five partners, from Sydney insurance boutique Lee & Lyons who joined in February.
Edmond says Melbourne will now "grow significantly over the next six months".
Its well-established Middle East practice meanwhile now has offices in Abu Dhabi, Dubai, Riyadh, Doha and Tripoli, with an opening in Iran also on the agenda. In contrast to some UK firms, the strategy is not to focus on global clients but to win clients locally.
"If you look at our client base and spread in the Middle East it would be very different to our client spread in London because we are looking to win work from businesses looking to expand in emerging markets," explains Burns [pictured right].
Macho culture
While the firm's relentlessly international outlook and its tough individualistic culture have given it a degree of oversees success that continues to elude some UK peers, these same traits can cause tensions within the partnership.
Former partners suggest the competitive culture is "anti-intellectual", with "entrepreneurship valued above technical skills or intellect".
As one former partner who came over as part of the Barlows union comments: "There is a competitive culture between the partners and there is a direct link between billing performance and how you are regarded within the firm."
Another adds: "Everyone has to adapt to the Clydes system or find an alternative."
While this intensely competitive approach and strong focus on financial performance has been one of the prime ingredients in its success, some say it is out of step with the need for firms to be more diverse, something Burns himself acknowledges the firm needs to be.
Prior to the firm's September 2015 merger with Scottish firm Simpson & Marwick 19% of the firm's partners were female (58 out of 303); of the full equity partners that proportion dropped to 13% (21 of 165).
This compares to an average of 25% female partners across the 36 firms surveyed by the Black Solicitors Network for its 2015 diversity league table.
A former partner describes the firm as "a perfectly decent bunch of people", but goes on to say: "It was a white male middle class firm which didn't pretend to be anything other than that, but it did mean it was slightly cliquey."
Changing of the guard
Former partners believe Burns could fix these issues. In contrast to Payton's "paternalistic" approach, Burns is described as a "very approachable" leader who "really gets to know the partners personally".
They believe his relative youth will be a modernising influence. As one former partner says: "Payton became a partner in the early 1980s and possibly the culture didn't change as quickly as other firms in the market. With fresh blood that will hopefully change."
The firm does appear to be moving to address the problem. Nearly a third of partners (31%) made up over the last three years have been women and it has also introduced an apprenticeship scheme for school leavers in its Manchester office. Internationally, there appears to be less of a problem, for example 48% of partners recruited to its nascent Australian practice are female.
Possibly the culture didn't change as quickly as other firms in the market. With fresh blood that will hopefully change
Burns concedes that "[diversity] probably has been something we have made more progress in the last couple of years than in previous years".
Burns has the challenge of keeping the firm's entrepreneurial spirit alive, while trying to make the firm more reflective of the modern word.
"We have made significant progress and it's something I am absolutely committed to," he says.
Changing organisations takes time, but Burns says he is committed to ending Clydes' boys' club culture, concluding that it is an issue that he wants to "define my leadership".
Taking over from someone who has led a firm for nearly three decades is never going to be easy but if Burns can survive in the job for even a third as long as his mentor and displays the same commitment to diversity as to expansion, the odds are high that the firm he passes onto his successor will be very different in culture from the
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