'Shillito speaks for the disgruntled litigators' - why is James Palmer being challenged for the HSF senior partner role?
Is Mark Shillito's senior partner run indicative of long-running resentments at HSF?
March 15, 2018 at 11:25 AM
5 minute read
Contested management elections at law firms do not happen all that often. But, just three years after seeing off competition from three other partners to take the senior partner post at Herbert Smith Freehills (HSF), James Palmer is facing a challenge.
That the gauntlet has been thrown down by litigator Mark Shillito is particularly significant, given the history between disputes and corporate at legacy Herbert Smith.
Following a spate of exits by litigators in the months shortly before and after the UK firm's 2012 merger with Australia's Freehills, some suggest that divisions between the practices are once again rising to the surface.
Under the leadership of CEO Mark Rigotti, the merged firm looks increasingly removed from legacy Herbert Smith, both in practice split and partnership model, with Rigotti overseeing an ever-more corporate approach and a more tightly managed lockstep.
Though setting the strategy has largely been the remit of Rigotti and his former co-CEO Sonya Leydecker, some suggest Palmer is being challenged over the direction that the firm has taken in recent years and his complicity in that.
There are suggestions that some litigators believe Palmer has not given them enough of a voice, or done enough to fight the changes, with Leydecker's retirement last year exacerbating their sense of detachment.
One former London litigator comments: "Palmer is like smooth jelly. He presents well, says all the right things and is a good speaker, but he's been pretty ineffectual at representing the part of partnership that were unhappy with the merger and direction of firm since then.
"Shillito speaks for the disgruntled litigation partners who don't want that rebranding. Those people are not jelly because of the nature of who they are – they are contentious lawyers with opinions, who don't give in."
Another adds: "We're the ones who end up having seven marriages and dying young, so we should get some say in how the business is run. Historically, nothing happened to me unless I consented to it personally. That has gone off a cliff."
Rigotti himself has openly acknowledged that the changes have not been popular with all, with multiple partners leaving the firm in the wake of the shift in approach.
I don't see a possibility of the firm going back to just focusing on its litigation strengths – that horse has well and truly bolted
Other issues with Palmer's management style raised by those inside and outside the firm include the fact he has taken a more 'involved' approach to what has traditionally been an ambassadorial role.
Comparing him to his predecessor, one former London partner says: "Jonathan Scott was someone you went to if you had a fight with someone, or had clients you wanted to take somewhere. He was the lubricant of the machine, which is the proper role of the senior partner. James wanted more of an executive chairman role and stuck his nose into lots of things."
Another adds: "He [Palmer] gets a bit more involved. The senior partner is meant to be a bit more ambassadorial and pastoral."
Palmer was one of the architects of HSF's far-reaching pay overhaul last year, which saw the top of lockstep extended by 30 points and a heavier focus on performance introduced, with more emphasis placed on what partners are bringing into the business as opposed to their length of service.
One current London corporate partner at the firm – who intends to vote for Palmer – suggests that Shillito may be attempting to counter that approach as hustings continue .
He says: "Law firm partnerships are strange beasts; people are reluctant to be openly critical of each other, and you have to read between the lines. Mark's vision is to have more of a clear distinction between management and senior partner. Less interventionist would be how he sees it."
With this two-horse race thrusting historical disagreements over HSF's direction to the forefront of the conversation, those inside the firm suggest it is unclear how the partnership will respond.
One London partner argues Shillito has an advantage as a "change candidate", while others cite his decade tenure as US and UK litigation head as a tick in his favour.
Others, however, do not believe he will have the support to beat Palmer, who is seen as popular with other factions of the firm in London and to have widespread support in Australia.
One City litigation partner comments: "Shillito has done a very good job [as UK and US litigation head]. He is very impressive and will have a lot of support – whether it will be enough to beat James though, I don't know."
A former litigator argues that the firm has moved too far for any strategy turnaround to be a realistic proposition now, therefore reducing Shillito's appeal.
He says: "Palmer is a corporate lawyer corporatising what was quite a traditional firm. I don't see any possibility of the firm going back to just focusing on its litigation strengths – that horse has well and truly bolted. If Shillito is looking to recreate the Herbert Smith from five or 10 years ago, it won't happen."
As the firm prepares to close the vote later this month, what is clear is that whoever wins will need to add reconciling sections of the partnership with the firm's current direction to their agenda.
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