Profile: DWF

The Legal 500 recently ranked top-100 law firm DWF as one of the North West’s ‘regional heavyweights’. In January Andrew Leaitherland became its first ever managing partner as part of a firm-wide strategic review. Now almost one year into the role, he outlines changes already seen and options for future growth.

By Richard Brent

DWF is a firm likely to be feeling particularly festive as another year at Managing Partner draws to a close. The North West based lawyers announced record fee income of ₤33.9m in May this year. DWF’s lawyers don’t just have their sights set on the welcome Christmas break though. There is other cause for celebration, as 2007 will be the firm’s 30th anniversary year, as well as the first for the new man in charge – managing partner Andrew Leaitherland.

A new management structure

Leaitherland is actually DWF’s first managing partner and was elected in January as part of a series of structural changes to enhance the firm’s overall performance and grow its presence in the UK. Working with the firm’s auditors and advisors Deloitte, a wide-ranging review was undertaken to evaluate a number of potentially appropriate structures for a new management board.

“I think the view of the equity partners was that the previous management board was too operationally based,” says Leaitherland. “The decision-making forum wasn’t as streamlined as it might be, meaning sometimes things were taking longer than we wanted them to.” The firm had an executive chairman who could take a supporting role in terms of management, but it was felt that partners could, and should, take more responsibility themselves.

Leaitherland continues: “We looked at a variety of competitor models and determined that the best model would be to have a combination of managing partner, with full operational responsibility for running the business, and an operational head for each practice area. The managing partner is accountable to the strategic board as well as the partners overall – and the strategic board is responsible for the overall direction of the business.”

Although obviously still early days for the new set up, it is a strategy that certainly appears to be bearing fruit. In addition to the ₤33.9m fee income, seven new partners were appointed in June, two in Manchester and five in Liverpool. The promotions, four in the core insurance group, are seen as symptomatic of the solid growth curve being experienced by a firm that claims to have doubled in size in the last six years and is just as ambitious for its future.

Leaitherland is understandably pleased with the part he has personally played in that growth. “It’s around ten-and-a-half months in now, and we’ve seen a lot of changes already. There’s also a good pace behind that change programme and lots of support from partners in making it happen,” he says.

A platform for growth

Some of Leaitherland’s changes reflect a speech he made to a partners’ conference after only half a year in his new role. He identified the ‘three Ps’ as being fundamental to growth: ‘people, profile and performance’. Accordingly, one of the first changes was to bring in former HR director at SJ Berwin, Catherine Williams. “Catherine brought a wealth of experience of operational as well as people management,” he says. “She has been instrumental in terms of the project groups we’ve been running to secure change throughout the partnership.”

“All heads of support areas also get together with me every two weeks and we discuss how we are supporting the business and how we could do it better. It’s a joined up approach that was missing previously,” he explains.

Effective people management is also about meeting expectations though. Alert to the need for the right incentives, this year DWF is introducing new remuneration structures and performance criteria that reflect the marketplace and a modern firm’s need to create strong relationships with clients. There is a firm-wide bonus soon to come into force, while assessments and targets have been redesigned to reflect the role an individual actually performs. Leaitherland says: “It’s important that we’re measuring the return we get from people, not just from a chargeable hours perspective, but from an investment time perspective. We’ve moved to a more flexible target-setting system with target hours broken down into those two areas and different targets for different tiers of people.” The concept of investment time recognises hours spent on activities such as business development or recruitment and retention, incentivising people to take a greater interest in these areas, which are, after all, essential to the future growth of the business.

It is envisaged that investment in ‘people’ will raise the ‘profile’ of the business – as indeed will the third of Leaitherland’s priorities: ‘performance’. Technology is a big area for future investment in this regard, with a number of significant IT changes in store over the coming months. These include the introduction of electronic event marketing and a brand new Thomson Elite 3E product that will be implemented by the firm by the middle of next year. Part of a wider plan to invest in a product called Hubbard One, another Thomson Elite business, it is hoped this will boost business development with a revamp of the firm’s website and an upgrade to the client-relationship-management (CRM) package. “Ideally, we would have done these things before,” Leaitherland admits, “but we’re doing them now”.

Expansion opportunities

They are also changes that suggest Leaitherland is sticking to his manifesto pledge to re-examine the business closely over a three-year period. “Year one was focused on making sure there was a support structure and infrastructure in place to enable a platform for growth,” he explains. Year two has now nearly arrived, which will look at the growth of the business through three different alternatives: organic growth, lateral hire and merger.

The driver for any future merger will be to improve the quality of the firm’s client base in the key areas of corporate, banking and finance, litigation, and real estate. However, a programme of aggressive lateral hires is already underway to support these areas, including new planning, construction and tax specialists. In the litigation group, there are environmental and certain other niche areas being explored and the strong asset finance team (“one of the largest outside London”) will continue to be a focus for investment, built up through a combination of organic growth and continuing lateral hires.

“These are the four areas of growth for us, which doesn’t mean we will leave the rest of the business behind. We will look at other areas in terms of sustainable growth, but from a viewpoint of profit rather than turnover,” Leaitherland explains.

“We’re committed to organic growth and lateral hire,” he adds, accounting for two of the options outlined in his manifesto’s three-year plan. “We’ve considered a merger with a larger firm as a partnership and feel it’s inappropriate. There’s a lot we can do by ourselves, which we intend to do. This leaves us with acquisition.”

The four options were all considered in the firm-wide strategy Leaitherland spent his first six months as managing partner working on with the new strategic board. The aim is to double the recent record turnover to around ₤60m by 2009 with 22 per cent profit. It was rolled out in October and he now confirms the firm will consider acquisitions that support the strategy, its position as a leading regional player and the plans to invest in the four key practice areas outlined. “We will look at acquisitions that meet those criteria and it will be a relatively short list. And in so far as we do something we’ll probably do something quickly,” he says.

Clementi caution

The strategy conveys a momentum in line with the firm’s highly-charged ambitions for the future. As a new managing partner, Leaitherland is understandably enthusiastic about the potential to drive the business forwards at a fast pace. In other respects he is more cautious, however, including the impact of the new legal services legislation.

“We have considered Clementi as part of our strategy, but I’m not sure the external investor element is going to have that much of an effect on the profession overall. They may look at a few volume operators, but we would be surprised to see private-equity houses making investments in general-services firms,” he says.

“I don’t think we’re going to see as many external investments as people are saying or that many firms will want to go down the flotation route. It certainly isn’t something we would consider at this stage. We will be converting to LLP at the end of January, but beyond that I’m not sure we will adopt any alternative business structures, even in the light of Clementi.”

Nor are there any aspirations to have a DWF worldwide or even European wide, he continues. “There is a network of firms with a referral mechanism in place and that works well for us. It means the client has the consistency and assurance of a high level of service and we don’t have the investment cost of going into international markets.” Instead, approaching its 30th anniversary year, the firm is rooted in the reality of being a leading regional player. In 2007, it will be looking to consolidate that position in the North West, expecting substantial growth while also exploring possibilities for expanding outside the region.