From bellwether to perfect storm: can Travers pull through choppy waters?

‘It keeps me fully occupied, 24 hours a day. I do sleep, obviously, but I’m dreaming about stuff that I might want to do the next day.’

Edmund Reed, Travers Smith’s recently reappointed managing partner, describes the all-encompassing nature of his role with a smile. He is on a mission to demonstrate that his zest for the job remains undiminished after three and a half years navigating a challenging period for Travers, punctuated by some indifferent financial results and large swathes of partner departures.

The firm’s most recent financials will have provided welcome succour: Travers broke through the £200m barrier for the first time – with revenue rising from £197.5m to £215m, while PEP grew 18% from £1.07m to £1.3m.

Reed (pictured) describes the results – which came after he was re-elected to a second three-year stint as managing partner in July last year – as pleasing.

‘There was quite a lot of external noise, but it’s calmed down now. The partners are aligned and pushing together, and that’s what’s driven the results,’ he says of the firm’s most recent financial year.

But Reed is more aware than most that it wouldn’t take too much for things to get loud again. Partner departures may have slowed from 2023, but they haven’t stopped – as evidenced by the recent departure of former head of technology and commercial transactions Dan Reavill to White & Case.

From stability to volatility

Any conversation about Travers these days inevitably begins with the recent volatility at the firm.

For years, the firm enjoyed a reputation as a bellwether of the City legal market, sitting alongside Macfarlanes and Slaughter and May as profitable but isolated examples of independent City firms, largely untroubled by inward or outward lateral movement.

That all changed in 2023, when the firm saw 10 partners leave for other firms – roughly 12% of the firm’s partnership. To put the scale of the departures into context, according to data from legal recruitment consultancy Edwards Gibson, in the nine years between 2014 and 2022 combined, Travers only saw 11 lateral departures —  just one more than in 2023.

A further seven partners left to join other firms in 2024, as well as senior counsel Andrew Ross, who led the real estate disputes practice, and private equity and financial sponsors head Lucie Cawood.

Cawood and Ross were not the only practice heads to leave over the two years. Six of those going between 2023 and the time of writing were practice heads at the time of their exit:

– Ian Shawyer, head of private equity and financial sponsors (to Cleary)
– Jessica Kemp, head of M&A tax (to White & Case)
– Sam Kay, head of investment funds (to Dechert)
– Douglas Bryden, head of environment and operational regulatory (to Freshfields)
– Lucie Cawood, head of private equity and financial sponsors
– Mahesh Varia, head of incentives and remuneration (to A&O Shearman)

Why the dam burst

‘There are three reasons why a partner stays at a firm: quality of work, quality of life, and profitability – and I just think Travers got that mix wrong,’ suggests a corporate partner at a rival firm.

While Travers’ 2023-24 results were strong, a five-year view paints a different picture. Revenue has climbed by 35% from £162.5m to £215m, but PEP, however, has stayed more or less flat – rising just 5% from £1.25m to £1.3m over the same period.

In comparison, the average five-year revenue growth for all LB100 firms is 49%, with PEP up by an average of 35% across the group. A even starker comparison can be drawn with Macfarlanes, the firm traditionally viewed as Travers’ most comparable peer, where PEP has climbed by 68% over five years and revenue up 55%.

Crucially, this arguably lacklustre profitability performance has come at a time when US firms have been increasingly ambitious in their recruitment efforts, driving partner pay available elsewhere to new heights.

As one former partner comments : ‘The transactional teams in particular were being asked to work hard in the same way as other firms demand, but the remuneration wasn’t necessarily flowing through.’

Reed is reluctant to explain exactly how the firm’s remuneration works, saying only that it is a modified lockstep, with bonuses allocated from a pool made up of an undisclosed percentage of the firm’s profits.

However, for a firm of Travers’ size and profitability the challenges are clear. As legal recruiter Scott Gibson points out, simply tinkering with the structure wouldn’t be a panacea: ‘There’s only so much you can do. You’ve got around £80m of profit to play with, and you have to keep the five-star rainmakers happy while paying everyone else as well.’

This perhaps explains why Reed maintains that the firm has made no drastic changes to its compensation structure, with no changes made to the percentage of profits paid into the bonus pool during Reed’s tenure and no plans to change it: ‘We’ve added more financial transparency, and we constantly look at things. But we haven’t done anything super aggressive,’ he says.

US firms on the attack

For a firm with a reputation for producing a dependable supply of top-class corporate lawyers, this inability to be super aggressive on PEP inevitably creates challenges – effectively putting a target on the firm’s back.

As one former partner puts it: ‘Travers has been attacked by the US law firms, because the training there is excellent. It really generates very good lawyers.’

Ropes & Gray set the tone in 2014, with the hire of Travers’ then head of private equity Phil Sanderson, returning the following year for Helen Croke (pictured) – and with her a chunk of work for Bridgepoint, the PE house that was for many years considered a jewel in Travers’ crown.

The run on private equity has continued, with practice head Paul Dolman leaving for Latham in 2021 and the stream of PE exits since including James Renahan, Ian Shawyer, Ian Keefe and George Weavil.

‘They’ve lost the old guard and the new old guard,’ is one peer partner’s assessment. A former Travers partner is blunter, saying: ‘It’s a real concern – there are not many market-leading partners left at the firm.’ And with PEP lagging, there’s no way to recruit from outside to rebuild.

Others point to the influx of US capital into the broader market – according to PitchBook, US-based investors accounted for over half of UK PE deal value in 2024 – as challenges for Travers.

‘Trying to be a juggernaut in London without a US presence has become increasingly difficult’, one says.

Reed maintains that Travers’ PE practice remains strong, with a large bench of ‘excellent’ partners and institutional relationships: ‘Most of our clients have relationships with at least two, if not three of our private equity partners. While we may have lost some individual partners we have, by and large, kept the client relationships.’

He points to the firm’s repeat work for longstanding client Inflexion, such as advising the PE house on its £434m investment in GlobalData healthcare business – a carveout that valued the business at £1.1bn.

Alongside PE-backed transactions, Reed points to the firm’s strength in private and public M&A, and says that transactional work remains a core element of the firm.

He highlights the firm’s investigations practice and its cross-practice asset management group as further areas of strength. Of the latter he says: ‘We’ve got great regulatory and M&A capabilities there — as well as fundraising, secondary transactions, pensions and more.’

Chalk and cheese

‘Who do Travers compare themselves to now? Because it’s not Macfarlanes,’ a former partner asks. And it is a good question.

While the two firms have traditionally been talked about in the same breath despite clear differences in their practices (Travers lacks the private client practice of Macfarlanes, for example), it’s a comparison that no longer holds.

For starters, the gap between the two firms’ PEP has risen from a bridgeable £470,000 to a yawning £1.59m in the last five years.

A corporate partner at a peer firm tells LB that similarities in international strategy between Macfarlanes and Travers are a ‘red herring’ and that while the firms were comparable 15 years ago, they are now ‘chalk and cheese’.

Looking to profitability as a peer identifier, the three closest firms to Travers’ PEP of £1.3m are: Eversheds Sutherland (£1.3m); Herbert Smith Freehills (£1.315m); and Ashurst (£1.336m).

Better organised, better focused

‘Partners have been better at going out and finding work as a team. I think we are better organised and better focused on where we’re going and what we’re doing,’ is Reed’s explanation for last year’s uptick in financial results.

This tallies with the views of some peers and former Travers lawyers who have spoken of a period of transition under Reed, in which he has attempted to focus on efficiencies and bring the firm in line with modern business practices.

In terms of the areas driving the business, Reed says: ‘Our asset management business, including the regulatory business, did well. The M&A business was operating pretty well in a depressed market and then disputes and investigations had some high-profile mandates. Our financial services and regulatory teams also had a good year, but it’s hard to pull them out because they have a spectacular year every year.’

Travers has also been, by its standards, active in the lateral market recently, bringing in two funds laterals – Tosin Adeyeri from Proskauer Rose and Joel Grossmark, who was European legal counsel at Blackstone’s credit and insurance unit, alongside infrastructure debt partner Ryan Ayrton from Watson Farley & Williams.

Reed praises Adeyeri’s contribution, alongside existing partner Victoria Bramall, to the firm’s funds work on the secondary market, while singling out Grossmark’s contribution to the retailisation team that sits within funds. He picks out the firm’s funds offering as having had a standout year, describing it as ‘carving out a niche in the market’.

What the future holds

Reed believes there are four, equally important, factors that underpin success at the firm. These are: a strong brand; financial success; a workplace that brings personal and professional satisfaction; and culture.

On culture, he states that: ‘We want to be adaptable, to be accountable, and we want to be brave and bold about what we do.’

As for future strategy – the firm’s focus is on transactions, disputes and investigations, and complex advisory mandates. Bringing in external talent remains on the agenda with Reed telling LB that lateral recruitment will continue.

The firm’s international network is also a core part of the firm’s strategy. Reed tells LB that 10%-15% of its work comes from international referrals, and highlights acting for Zegona Communications on its €5bn acquisition of Vodafone in Spain in late 2023 -the largest reverse takeover in the European telecoms sector at the time- as an example of a high-profile matter that came to the firm through referral. ‘We have a really strong network of firms that both refer work into us and where we refer work out. We’re very happy with that network and I think we’re in the process of getting more referral work.’

Addressing the ever-swirling talk of potential mergers with US firms, Reed states that the strength of Travers’ brand means it will always be a target, but denies there is any fire behind the smoke: ‘We have it on our agenda, and we look at it regularly because we need to be alive to market changes. But we do not regard a merger as Plan A, and we are not in merger talks with anyone.’

While much remains uncertain about the firm’s future, one certainty is the firm’s impending move to Stonecutter Court, slated for early 2026. There is excitement about the move at the firm, and Reed believes the high-quality environment will better reflect Travers’ brand.

He remains bullish on the firm’s trajectory under his leadership: ‘I am someone with a plan, with energy, with drive, who makes decisions. I will lead this firm as best as I possibly can. I love my firm – it’s great. I love the partners in it, and I love the culture. We’ve done a great job. It’s a very choppy market, I’m not going to lie. But it’s a choppy market for everyone, and we’re going to be successful.’

It doesn’t seem like an exaggeration to say that 2025 will be crucial in determining whether Reed’s legacy will align with his ambition.

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Travers Smith: notable departures since 2023

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2024

2023