Reaching hire

While many businesses may have been tempted to cut back on recruitment through the downturn, some have seen opportunities to strengthen their offerings by taking on new senior talent. In 2009 regional UK law firm SAS Daniels LLP boosted fee-earner numbers by ten per cent with its first ever team lateral hires.

By Nigel Haddon, managing partner, SAS Daniels LLP

When the recently merged firm that is now SAS Daniels LLP launched its first business plan in August 2006, a medium to long-term objective was to increase the proportion of the firm’s fee income derived from its business clients to 50 per cent from what was then a figure of 33 per cent. That goal had been part of the reasoning behind the merger of Daniels and SASlawyers in the first place. It was felt that greater critical mass would enable the merged firm to win work from larger clients and allow the firm to compete better for talent. In May 2009 the business plan approved at the LLP’s AGM repeated that 50 per cent objective, and recorded that the firm had, in fact, derived 41 per cent of its fee income from its business clients in the year to April 2009. The aim now was to achieve the 50 per cent goal by April 2012. We were not to know then that within a couple of weeks we were to embark upon a process that may well see us achieve that goal ahead of target.

Our plans for growth in our region are well known, and we have had a number of approaches from individuals and firms alike over the past 18 months. Some of those opportunities could have added to the bottom line, and one or two were worth exploratory meetings, but none were fully aligned with our vision of where we are going, what we are trying to achieve and how we intend to get there. That was, until we met the partners leading the corporate and commercial and employment teams then at Slater Heelis Collier Littler (SHCL). This article is partly about the importance of being faithful to strategy and partly about the processes involved in the hiring of such teams.

Where we were…

sas daniels LLP is a five-office firm based in Cheshire, with three full-service offices in secondary commercial centres (Stockport, Macclesfield and Chester) and two smaller, largely private-client or high-street offices (Congleton and Bramhall). We have 22 partners, 60 fee-earners and a head count of around 130. As you would perhaps expect, the firm is strong in private-client work (family and probate, wills and trusts) and in residential and commercial property. Less predictable perhaps would be the firm’s strength in employment law, where the client base is national rather than merely regional. The firm had found the growth of corporate and commercial work difficult, both before its formation in 2006 and thereafter. Indeed, until a 2008 merger with a niche Chester-based commercial practice, the firm’s then 50-odd fee-earners included only one that could properly be labelled a corporate and commercial specialist. The 2008 merger saw us double that figure!

Nevertheless, our experience of professional life outside our local city centres (Manchester and Liverpool) was such that we saw a real appetite from accountants and others for locally delivered corporate and commercial services. We were convinced that there was market demand we could satisfy, but we recognised that we would need to strengthen our offering not only in terms of size, but also in credibility and profile if we were to be serious about reaching out to referrers and those existing clients of the firm who were tempted to travel to the region’s cities for these legal services.

Our goal this year was not only to weather the storm, but to put ourselves in the best possible position for when the wider economy emerges from recession. And of course, to complete the background picture, our short-term priorities were highly focused on cash flow, on working towards lifting temporary pay restrictions and maintaining staff morale. In short, we weren’t in an ideal position to contemplate investing in our futures.

Early stages

At the end of May 2009 I received a telephone call from a partner at SHCL who indicated to me that both he and some colleagues were looking to join a firm with a similar strategy to their own. That very day the initial meeting took place, beginning a process which, within two months, had seen us reach an agreement to bring on board a corporate and commercial team of two and an employment team of three, each led by partners who became the firm’s first ever lateral hires.

None of this would have been possible had we not shared a vision, namely that it was not only possible, but also hugely desirable to offer a broad range of corporate and commercial and other business legal services from locations based outside the region’s major city centres. We established at the outset that we had that shared vision: a desire to offer city centre levels of expertise backed with a genuinely friendly approach and a ‘can do’ attitude, at the same time offering clients and introducers better value for money than larger, city centre-based rivals would be able to.

Plans and issues

That initial meeting would not have taken place had our future colleagues not been aware of our broad strategic position. In those very early stages we were advised by Jeremy Orrell, head of corporate and commercial at SHCL, that he had agreed exit terms with his partners at SHCL, with whom he remained on amicable terms. Those exit terms defined the colleagues and clients Jeremy could potentially bring with him.

Jeremy, it was immediately clear, had more experience of corporate transactional work than any member of our existing team. For several years he had been a partner at the Manchester office of Cobbetts, and before that at the Manchester office of Slater Heelis. He also had experience as a team leader at his last firm. Our talented but relatively inexperienced commercial team could only benefit from Jeremy’s leadership and experience, and in our judgment, his joining us would achieve the credibility and profile we were aiming to achieve in corporate and commercial work. There were a number of issues to address and resolve in the early stages of our discussions, however, including:

If our discussions were to be fruitful, would we be in a position to hive off a corporate and commercial department away from our commercial property lawyers, who at that stage made up the majority of our commercial department?
Would Jeremy accept an invitation to lead and manage that new department? If so, would his vision for that department and his style of management be aligned with the firm’s objectives and values?
How would the existing corporate and commercial partner and associate feel about this?
As a firm, could we afford to invest in acquiring a corporate and commercial partner and his assistant in the teeth of the recession?
If we answered that in the affirmative, how would we bring colleagues and staff with us? If we answered in the negative, would that say more about our goals or about our finances?

On the employment side there were similar, but slightly different issues to address on both sides. Louise Tobin, partner and head of employment at SHCL, presented quite a different proposition for us (as we did for her). Our existing employment team was already three partners and five other lawyers strong, making it one of the larger teams in that field in the North West. Louise had a classic ‘big fish/small pond or small fish/big pond?’ question to answer for herself, which, fortunately for us, she answered positively. Louise and her team (an about-to-qualify solicitor and a very experienced trainee) would be bringing both skills and new clients to our employment department. A large percentage of Louise’s clients were public sector, and she had developed a specialism in equal pay disputes that we, in spite of our size, did not have.

Again, there were a number of issues requiring speedy resolution:

Would Louise and her team buy into the plans we had for our employment department and complement them?
Again, could we afford to invest in acquiring an employment partner and her assistants and, if we felt we could, how would we bring along colleagues and staff and how would their concerns be addressed?
To accommodate the new arrivals with the existing employment team at Stockport, we would need to change from a part-office/part open-plan layout to fully open plan. Could we get buy-in for that from all concerned?

With both teams discussions took place under very high levels of confidentiality. Equity members were given regular briefing notes. A detailed cashflow forecast and draft P&L for both potential teams was prepared. Even on a very conservative view, we established that we would need very little capital to make the deals viable, and our bank was as supportive as we could have wished. The financial hurdles, in fact, were the easiest to overcome. At the first decision-making meeting of our equity members, there was great enthusiasm for pressing ahead on both fronts. Moreover, those at the sharp end of negotiations were given clear mandates to proceed. As we got closer to agreement with both teams, we began consulting internally (and confidentially) with colleagues in commercial and employment, and began preparing our internal communications. The firm has a determination to be open, honest and timely in our communications with staff, and it didn’t come naturally to withhold news of these confidential talks. But that policy came to our aid when we did come to announce the outcome of our discussions. Our staff saw that the firm was simply pursuing goals they were already aware of, and the implications for staff in terms of jobs and pay (all positive) were explained and readily accepted.

Integration

The comparatively recent formation of the firm and the subsequent acquisition of our Chester office had taught us a reasonable amount about integration. Our first draft integration plan for our lateral hires ran to 50 numbered paragraphs covering such wide-ranging issues as business goals; internal moves; re-arrangement of the layout of our enlarged employment department; new furniture, equipment and IT; data transfer; mobile phones; internal communications; recruitment of support staff; notifications to clients and referrers; marketing and press releases; amendments to the website; arranging informal meetings; inductions and training; impact on the firm’s management structure and ownership; and the regulatory issues. Contributions to this were obtained from Jeremy and Louise, and the plan became a work in progress, from its initial incarnation, through to the arrivals, and of course beyond!

It is too early to say whether our integration plan has achieved all it aimed to do. But failing to plan for integration only dooms integration plans to fail.

Lessons learned

Many opportunities for growth present themselves in a recession. The firm’s finances first dictated the need to be satisfied of the business case in favour of this venture. Having satisfied ourselves of this, however, we needed more. We needed to be reasonably certain that the opportunity was aligned completely with our objectives. It could not have been a better fit strategically.

There are two principal indicators of a law firm’s health and standing in the marketplace. One, the much-criticised profits per equity partner (PEP) figure, has taken a bit of a battering here, as with most firms over the past 18 months. The other, and the harder to define and measure, is a firm’s reputation. Jeremy and Louise and their teams could have chosen to work in Manchester or Liverpool, or to approach one of the handful of full-service firms in competition with SAS Daniels LLP in the Cheshire or Greater Manchester areas. That they approached us would suggest that in this area we are also performing creditably.

To many readers there will be little, or no, apparent significance in a firm adding five lawyers to its numbers. To put that in context however, we were proposing to increase our fee-earner numbers by almost 10 per cent. Without the support of internal and external stakeholders, it would not have been possible to agree terms with our new teams, nor to make their early days with our firm the success they have been. That support is never taken for granted. It is hard won, and maintained by constant communication.

Nigel Haddon is the managing partner of SAS Daniels LLP and chair of the Law Management Section of the Law Society. He can be contacted at: nigel.haddon@sasdaniels.co.uk