'We were unlucky, but we learned a lot' - DLA Piper's Levine on that cyber attack, Brexit and office closures
DLA Piper co-CEO Simon Levine talks to Legal Week about the firm's cyber attack earlier this year, Brexit, Trump and the UK merger market
September 20, 2017 at 05:04 AM
5 minute read
For this year's UK top 50, Legal Week has spoken to law firm leaders across the market for their take on the key trends from 2016-17, as well as their plans for the year ahead. In this Q&A, DLA Piper co-CEO Simon Levine discusses the firm's ransomware cyber attack earlier this year, office closures and the prospect of further transatlantic mergers.
What effect did the June cyber attack have on the business? "At the time, for a few days, it certainly had an effect, but thankfully not a long-term significant effect. The deals we were on completed, litigation continued and where we needed help other firms were very helpful, suggesting we do deals at their offices rather than ours. It was contained to a short period of time. Can I say it has had no effect? That's hard to say, but looking at our current trading, we have caught up, we are billing, collecting, and we are still on course for budget."
What have you learned from the incident? "We instructed external leading industry professionals to help us with managing the incident and the recovery and we had all the latest patches already in place. Those who followed this particular cyber attack will have read that if you were in a certain jurisdiction, using a certain programme, even if you had a secure system with all the up-to-date patches, you couldn't prevent this. To be blunt, we were unlucky, but we also learned a lot – we have commissioned an independent post-incident review and are committed to implementing any learnings identified as a result."
Cyber attacks aside, what was 2016-17 like for DLA Piper outside the US? "We had a very good financial year and a large amount of that growth was fuelled outside the UK. The UK is growing but its growing steadily, it's a pretty mature market and a mature business. All regions grew for us, which is good news. Continental Europe was very buoyant, particularly in the major economies like Germany, France and the Netherlands. I think the other big turnaround for us has been in the Middle East, Asia and Australia, all of which have got much better in terms of profitability over the last couple of years."
What impact are macroeconomic factors having on the firm? "When you look beyond the UK, there are a number of economies that are growing. If, like us, you are a firm that is full service across the key commercial disciplines and widely geographically spread, then you are well hedged. If one area is down something else is typically up. I suspect the firms that are across all the major geographies and practice groups are doing well.
"If you put all your eggs in the basket of, say, real estate, or you are a heavily UK real estate business for example, you are probably having a harder time. We are making our money because we have a strong practice across groups, sectors and geographies."
DLA closed three offices earlier this year – in Berlin, Tbilisi and Canberra. What impact has this had on the firm? "We closed three offices that were no longer profitable or relevant to our business and only had a very small number of people working in them. The only impact it has had, to be honest, is to increase our profitability – with every office comes overheads and a time cost in management, so when you take out offices no longer relevant to our business you tend to save money."
What do you think are the biggest issues affecting law firms right now? "The big issues out there for a global firm like ours are macroeconomic and political – Brexit, Trump, countries embargoed in relation to the Middle East, issues in North Korea. The things you read about in the news clearly affect you as a law firm because they affect our clients, and things that affect our clients affect us.
"Brexit hasn't yet had an effect on us as a business per se but of course there will be if it leads to less client work. We haven't seen that happen yet and, if there were going to be fewer deals in the UK, the chances are the same clients would be doing more deals in Germany or the Netherlands, which plays to our strengths as a business."
Do you think there will be more UK mergers? "If you are very UK-centric and not particularly broad in your service offering I suspect that in such a competitive environment, where the UK economy is not as buoyant, you will see firms struggling. Inevitably that will lead to firms merging, particularly at the mid-market level."
What about transatlantic mergers? "The question is: with who? There are lots of American firms out there who haven't merged but none of them are really major players in the US market. The major players are already here, have already merged or are doing their own thing. I am sure there will be some but I don't think there will be mergers of major significance."
Given the firm's scale now, does DLA have any imminent international expansion plans? "Not really. Last year we completed our offering in the Nordics and continued to grow in both Africa and Latin America. If we are going to expand anywhere it will be further in Latin America or Africa. However there are very few places in Latin America you could look at next, and in Africa we need to consolidate what we already have. I think this year is much more likely to be a period of consolidation than expansion – we have expanded a lot and we need to make sure it works well.
"We have not made any decisions about Ireland – it is possible we could do something there, but it's not at the top of our agenda at the moment."
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