'The US merger made people take us more seriously' - Kennedys' Thomas on transforming the firm
After a quick-fire series of merger deals, has Kennedys resolved its "five years out of date" market perception?
November 07, 2017 at 04:00 AM
5 minute read
"The perception of the firm is changing – the Carroll McNulty & Kull (CMK) merger certainly made people take us much more seriously. With that merger we are no longer at risk of being considered a London firm with a few overseas offices," says Kennedys senior partner Nick Thomas.
Just six months ago, Thomas (pictured) told Legal Week that the view of Kennedys from outside the firm was "about five years out of date". However, emboldened by a year of international expansion – headlined by May's transatlantic merger with the 100-lawyer US firm CMK – Thomas says that he feels that this is shifting.
In little more than six months, the firm's US headcount has grown from just 14 to 193 though the merger with insurance firm CMK and a spate of hires from beleaguered US firm Sedgwick. This North American growth followed openings across Latin America in 2016 including Sao Paulo, Lima, Santiago and Bogota.
And while the US growth rate may be the most impressive, Kennedys' international expansion hasn't stopped there. So far this year, the firm has opened in Bermuda, Melbourne, Paris and Bangkok and announced a formal association with Italian firm Studio Legale Rinaldi Associati. It has also expanded its domestic offering, merging with Manchester banking and financial regulatory firm Berg this summer.
"It has certainly felt like a success – everybody who has joined us has been able to hit the ground running," Thomas says. "We don't plan these things by throwing darts at a map of the world; it is all being driven by what we are being told by our clients," he adds.
"Bangkok perhaps looks slightly off the wall, but our major insurance clients all have big operations in Bangkok and people were telling us that we need to be there. Likewise, in the US we have UK clients who are now using Kennedys CMK [the name Kennedys operates under in the US] and, vice versa, there are US clients of Kennedys CMK who are now using us in London."
You've been to the movies, you've brought them dinner, and then eventually you are able to say we are very simpatico
While the Bangkok launch saw the firm open a brand new office with the hire of two DLA Piper partners, Thomas says he often prefers to establish an initial presence through associated offices before taking the plunge into a new country.
"I always describe the deal with associate offices as being like: you've been to the movies, you've brought them dinner, and then eventually you are able to say we are very simpatico; we have the same culture," Thomas explains. "If you look back at our Latin American expansion, a lot of openings were already associated offices that we thought should be a part of Kennedys."
While the cost of headcount growth has not come cheap (profit per equity partner fell by more than 10% in 2016-17), the firm's revenue increased by 8% from £138.8m to £149.9m, with a 118% increase in combined turnover from continental Europe from £6.5m to £14.2m.
And Thomas's expansion plans do not end there.
In the US, the firm is targeting the west coast as a site for further expansion, though has nothing imminent planned.
Thomas says: "There is no iron in that fire at the moment, but it is something that we and our colleagues in the US have agreed is the next dot on the map. I suspect that in terms of finding the right firm to merge with or the right team to join us, it is likely to be in Los Angeles.
"It is not so common to have lots of boutique insurance firms in the US; they are usually a department in another firm. That gives us opportunities, because a lot of law firms treat their insurance lawyers as a poor relation. If it was the whole of somebody's insurance department, a bolt-on would be easier."
Other than planting a Kennedys flag on the US west coast, Thomas says he does not see further US expansion as a priority. He is still interested in further Latin American expansion though, and also says that Canada offers opportunities due to the oil and gas industry off the country's east coast. Australia's federal legal system also means that Thomas is keen to grow the firm's newly opened Melbourne practice.
He also mentions Africa as an area that interests him, but confesses that the push from clients for a presence in the region has not yet come, and that perhaps his interest is sparked by being "a child of the 60s and 70s", who would like to be part of a project that helps grow the African economy.
"If you look at our associate offices, you can see the places we think are important and that we might try to target in in the future," Thomas says, "We are still looking to reel in insurance lawyers that are in full-service firms. There are lawyers who, particularly after the American merger, told me that despite me trying to tap them up for years, they now see why they should listen."
Looking to further expansion plans, Thomas stresses that the firm is not tied to revenue or headcount figures, saying that those goals invariably drive the wrong type of behaviour.
"We have never had a five-year plan that says: we shall look like this and be this much bigger," Thomas says. "The plan has always been to grow, but to grow in a structured and client-driven fashion."
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