Optimists beware: there are still risks on the horizon

In this issue we look at two very different approaches to the new environment: the transformative merger ideal being pursued by David Harris, the managing partner at Lovells; and the ambitious reshaping underway at Birmingham giant Wragge & Co. Both plans exhibit optimism in spades, with Harris talking up the creation of a new member of the Global Elite by way of his firm’s merger with Washington DC’s Hogan & Hartson, and Wragge & Co’s senior partner Quentin Poole hoping to grow revenues by no less than 93% over four years.

Our news pages are similarly chock-full of expansionism gone wild – as SJ Berwin talks transatlantic tie-ups, Allen & Overy heads to Australia and DLA Piper continues its quest for global domination. You could be forgiven for thinking that these law firm leaders know something the rest of us don’t about an impending economic upturn. There is undoubtedly merit to be found in Poole’s theory of capitalising on a down-market to grab your investment opportunities, but with a clear divide emerging between the reticent and the outright brave, it is similarly obvious that some wrong moves are inevitable.

And so a welcome note of caution comes in the form of our annual risk survey. As firms enter a new decade, the focus of risk management has shifted away from fears about client bankruptcy and cashflow issues to prepare for a glut of new regulation and fundamental changes to law firm models, whether brought about by consolidation, alternative business structures or outsourcing. The message that emerges is clear: whatever else is going on, make proper risk management a priority now, as it will be too late when the work starts flowing again.