Geek Chic – Bristows

Home to more well-mannered boffins in its all-equity partnership than you can shake a stick at and with no international offices, Bristows is an unconventional LB100 hero. LB meets the co-managing partners of the firm that has outclassed many in the last five years.

You know you’re at a different kind of law firm when you discover that every meeting room in Bristows’ offices is named after a famous scientist. On a miserable, wet December morning, co-managing partners Iain Redford (left) and Mark Watts (right) are sitting in a room named after Michael Faraday, who discovered how magnetic forces could affect the flow of an electrical current. It’s appropriate because there’s no denying that the forces at play at Bristows these days are compelling.

Bristows turned 175 years old in 2012 and has evolved from a highly regarded IP boutique to a full-service, 122-lawyer technology specialist. Since 2008 it has stormed up the LB100 rankings, achieving fantastic organic growth.

But despite this success, Redford and Watts both embody Bristows’ spirit: mild-mannered and unassuming. There are no flesh-eating egomaniacs here. ‘We don’t have people here strutting up and down the corridors, wearing red braces, because if we did they would just have the mickey taken out of them,’ says Watts.

The pair assumed their roles five months apart in 2010 and are a relatively young management team. Watts qualified in 1995 after taking a doctorate in semiconductor physics at Oxford and joined Bristows in 2003 after six years as a lawyer at IBM. Redford qualified around the same time, joining Slaughter and May as a trainee straight from Oxford and joined Bristows in 1997. When they were handpicked for management just 15 years after qualification, there was no election, no hustings, no manifesto. Both were simply asked by the other 32 all-equity partners if they would like to run the firm, and they agreed. The co-managing partner role has been in situ at Bristows time out of mind and both, as is tradition, have full fee-earning roles in additional to management duties. Both are modest, polite and erudite. They do not make bold statements of intent or tubthump about their own achievements. If Bristows were a clichéd character in a movie, it would be the quiet nerd in glasses that no-one takes notice of until they surprise you in spectacular fashion at the end. The firm belies its cosy persona. And how.

Given that Bristows has completed no mergers, has hired laterals rarely and prudently and has acquired no overseas offices, its financial performance in the last five years has been nothing short of impressive. Turnover was up 27% this year to £32.9m. The firm’s five-year compound annual growth rate (CAGR) is 10%, bettered only by Mishcon de Reya in the City Domestic peer group of the LB100 and almost double the CAGR of any of the UK Global Elite firms managed during the same period (Allen & Overy’s CAGR is 6%). Profit per lawyer (PPL) is up 40% this year to £113,000. It’s a small, parochial firm but one that works. Compared to Travers Smith, the sums of money shared around are small but the rate of growth of the firm relative to its peers is outstanding. Perhaps the geeks can inherit the earth.

Firm focus

Watts only allows tough talk to slip in once during the interview and even then the line is said with tongue planted firmly in cheek. ‘We consider ourselves the Slaughter and May of our sectors,’ he says, before laughing it off. But if Burges Salmon can take quiet pride in the ‘Slaughter and May of Bristol’ tag, then Bristows, as the high-functioning, tightly focused expert advising clients in the TMT sector, can also associate its name with Slaughters without fear of ridicule.

The firm began life in 1837 with a young solicitor, Robert Wilson, drafting the patent agreement for the first practical electrical telegraph (see timeline, below). Since then, the firm has been synonymous with IP, particularly high-end patent litigation for the world’s major pharmaceuticals and trade mark work for some of the world’s most famous brands, such as BBC, Diageo, Google and Novartis. Over the years little changed until the firm moved into new offices and beefed up its IT practice in 2008 and 2009. The firm has always been a full-equity partnership and, even rarer, operates a pure, ten-year lockstep.

The firm’s real success has happened over the last four years, bucking the trend as the majority of London-based firms have struggled. During that period firms with a technology and IP focus, such as Olswang, have certainly fared better than firms synonymous with other areas but there’s more to Bristows’ outstanding performance than that. There is luck in being closely aligned to a practice area that has flourished amid the economic turbulence, but judgement in moving the brand beyond being just known for superb IP advice has been key.

When Redford and Watts took over from Paul Walsh and Pat Treacy over two years ago, their task was to continue with a strategy that had been agreed by the firm’s partners for some time – leveraging off a traditional strength in IP to diversify into other areas, providing a complete service to clients in the technology and life sciences industries. This meant bolstering existing practice areas such as corporate and litigation and developing new ones, such as IT and life sciences regulatory. It is a strategy that has clearly paid off.

Watts played a key role in that strategy. As an IT and outsourcing specialist and co-head of the IT practice at the time, he was instrumental in securing the hire of the former head of Linklaters’ global privacy practice Christopher Millard in 2008, followed by the former head of Maclay Murray & Spens’ IP/IT team Fiona Nicolson and Bird & Bird partner and data protection specialist Hazel Grant in 2009.

The firm’s increased capability in areas beyond IP litigation has manifested itself in instructions. It has advised WPP and Smith & Nephew on corporate acquisitions, whereas big pharmaceutical companies like Smith & Nephew used to be exclusively IP clients. Other highlights include the major Google Streetview data protection case and acting for Capgemini UK on a range of non-contentious and contentious IT matters, including representing the client in a dispute with Cable & Wireless concerning data back-up charges. One interesting aspect is that despite international firms such as Baker & McKenzie and Bird & Bird being called in to advise Google on certain aspects of the case, Bristows, a London-only firm, was chosen to co-ordinate Google’s European response to one of the biggest data protection and privacy cases ever.

‘The vast majority of our clients are in TMT or life sciences, so they are in sectors where they care about IP and they need to think about technology,’ says Watts. ‘What we’re doing in diversifying beyond IP is recognising services that clients in those sectors will want. IT, advertising, life sciences regulatory. All of these are going great guns actually.’

Key clients
AstraZeneca
BBC
Cadbury/Kraft
Capgemini UK
Diageo
Google
Novartis
Samsung
Smith & Nephew
Sony Computer Entertainment
WPP

Yell/Hibu

Jane Bevan, UK general counsel and ethics and compliance officer at Capgemini UK, says she uses Bristows for ‘all types of work’, ranging from IT regulatory to corporate deals. ‘I like working with Bristows’ lawyers: they are very diligent, very professional and their team is highly motivated,’ she says. ‘We predominantly use the firm for our bread and butter business deals and I definitely don’t see it as only strong in IP. The work is of the highest standard and I also have a lot of faith in the quality of the research if it’s something the firm hasn’t done before.’

‘If you look at the totality of the firm now, all the practice areas – the ones that are doing well and the ones where there’s a significant market reputation – have come a long way since those days when people might have said “Oh, they’re just an IP boutique”,’ adds Watts. ‘There may be some perception of that still in the marketplace but we think it’s outdated – probably about ten years out of date actually. But these things are hard to shrug off. Plus, there are worse things to be called.’

But there’s no denying that the firm has rolled with punches well. ‘The macroeconomic perspective shows that we’ve been lucky in the sectors that we excel in,’ says Redford. ‘A lot of the firms of our size in the LB100, particularly West End firms, have a much more domestic client base. Our client base means we’re actually well hedged across the globe.’

The firm is also lean and well managed. Being all-equity helps, as does the pure lockstep, according to the co-managing partners. There are no billing targets either, at any level. Redford and Watts suggest that not having a modified lockstep or billing targets means that everyone simply focuses on the task in hand, rather than getting caught up in what the endgame might mean for them. ‘It drives sharing work as opposed to hanging on to work,’ says Watts. ‘It also means that there’s no concern about passing a matter on where a colleague may be in a better position to handle the work,’ says Redford.

All of this means that Bristows is lean and efficient, particularly when it comes to billing. The firm focuses on high-end, high stakes work. ‘One of the partners in my group puts it well,’ says Watts. ‘He says a lot of our clients come to us for the hard stuff, ie the specialist stuff, the stuff they don’t do day in, day out.’

Because it’s rocket science work, hourly rates aren’t far behind the Magic Circle. ‘The firm is good value,’ says Bevan. ‘It doesn’t have the cheapest hourly rates but the value is always good.’

But there are fewer mouths to feed, which means the work is handled efficiently. ‘Are we cheaper than the Magic Circle? If you compare us on hourly rates, we will be a bit less. If you look at it in terms of the final bill for the same piece of work, our bill will be significantly lower,’ says Redford. ‘We’ve got one client where we’re on their panel and they tell us: “Your rates are the second highest on the panel. Your bills are the second lowest”. We don’t make a meal of it; we just get on with it.’

Scott Davis, head of legal for AstraZeneca in the UK, uses Bristows for IP and pharmaceutical regulatory advice because he finds its lawyers to be extremely able, professional and – most importantly – available.

Tough times

But it hasn’t all been a continual upward trajectory. In the years that followed the bursting of the dotcom bubble, chargeable hours were pretty flat. And while many other firms made hay during 2005 and 2006, Bristows started to slip, culminating in a terrible year in 2007/08. The firm fell out of the LB100 in 2008, following an 8% drop in turnover on the back of no growth the year before. The profit margin fell to 25% and PEP bottomed out at £209,000. On top of that, the firm was hit by what can only be described, given the size of Bristows’ partnership, as an exodus of partners the year before.

Five partners – Tim Powell, Penny Gilbert, Simon Ayrton, Zoë Butler and Alex Wilson – all respected IP specialists, left in late 2006 and formed IP litigation boutique Powell Gilbert in early 2007, along with five Bristows associates. This followed the move by David Wilkinson, another seasoned IP specialist, who upped sticks and moved to Guildford-based Stevens & Bolton in 2006.

The Powell Gilbert partners have consistently said that the reason for their departure was differing views on strategic direction, with Gilbert, Powell et al preferring to stick resolutely to IP litigation, a practice area that lends itself to the boutique model. Clearly Bristows had more expansive views in mind but both firms have seen their respective strategies pay off: Powell Gilbert was named TMT Firm of the Year in 2012. Speaking to LB in 2008 about the decision to form a boutique, Powell said: ‘We felt there was a need to concentrate on what we saw as the core of the business. When it came to it the only way to achieve that was to split off and form a new firm that wouldn’t be diluted in any way.’ He says this ethos still holds today.

For Wilkinson, the move away from Bristows was a mixture of professional and lifestyle choice. Speaking to LB in 2009 he said that Stevens & Bolton gave him the opportunity to head up his own IP practice, something that may not have happened at a more established IP firm. Plus he was a personal friend of existing Stevens & Bolton partners and working in Guildford meant he could avoid commuting.

But despite the seemingly amicable nature of their departures and the fact that former partners remain friends of Bristows today, there’s no denying that losing roughly a quarter of the partnership in a year took its toll.

‘Inevitably there was some emotional disruption because some of those partners had been with the firm since trainees, so a period of reflection was inevitable,’ says Redford. ‘This was the first and only time a group of partners has left and we’re still friends with them. They had a clear idea of what they wanted to do and have done that; it’s different from the strategic plan that we had, which was to diversify. We were still left with more patent lawyers than any other firm.’

This has proven to be true: only seven partners have left the firm in the last six years and none since 2007.

On the struggling financials up to 2008, Redford feels that the firm’s strategy of diversifying its practice areas had yet to pay off.

‘We had lean years because we weren’t as broad, so if you look at the balance of the firm we were much more at the mercy of whatever litigation cases were around,’ he says. ‘What we were known for and how we helped our clients was narrowly focused even within litigation and within sector groups.’

The drop in financial performance and the departure of a number of partners also coincided with a significant development in Bristows’ recent history: the move to its current offices, on Victoria Embankment, which finally completed in 2008. Previously, the firm had occupied a quaint collection of townhouses in Lincoln’s Inn Fields. The move to state of the art offices inside the impressive Unilever House (a Bristows client), was part of redefining the firm in line with its chosen strategy and was simultaneous with a complete rebranding of the firm. Bristows wanted to move away from scruffy brilliance into corporate sleekness. Signing the lease would have a financial effect on the firm, naturally, and also called for a real commitment from each of the partners. With a new era at the firm just around the corner, it was the ideal time for anyone with different ambitions to bow out.

‘The move here signified a new era for the firm,’ says Redford. ‘Since the departures a few things have come together which have contributed to our growth: the new building and our rebrand. We had 25 partners then all wanting to go in the same direction and we haven’t looked back.’

Different paths

Back in the days when Bristows was simply an IP boutique ten to 15 years ago, the firm was readily compared to Bird & Bird and Taylor Joynson Garrett (now Taylor Wessing). The firms are still regarded as among the three premier IP litigation firms in the UK but their strategies have been so divergent since then that there are few comparison points today. Bristows has not stepped outside London and has chosen to develop competencies that service its client base from the UK. Bird & Bird and Taylor Wessing have fully embraced the ethos of globalisation that has dictated law firm strategy in recent times, becoming full-service, multinational giants that challenge the Global Elite for mandates in many practice areas and jurisdictions. Each firm turns over in the region of £200m a year more than Bristows and has fee-earner ranks around eight times larger.

But despite the gulf in revenues, comparison between the three firms in terms of profitability makes interesting viewing (see graph, ‘Profit for sanity’, page 50). While Bird & Bird and Taylor Wessing have been off chasing the international dream, Bristows has focused on profitable growth. Today Bird & Bird’s PPL is £52,000 and its profit margin is 20%, while Taylor Wessing’s figures are £99,000 and 36% respectively. Bristows’ PPL is £113,000 and its profit margin is 42%.

Bristows might see the relative profitability as a vindication of its stay-at-home strategy. But the question begs as to whether that strategy is sustainable long term. Bird & Bird and Taylor Wessing both responded to client demand to offer global legal services. If Bristows is going to win mandates beyond IP litigation for big name global clients, surely an international offering will be a pre-requisite? These days many IP and technology clients are headquartered outside the UK. Suggesting to global clients that a law firm can service all their needs from a single UK office is seen as a hard sell in the modern era.

Watts is quite clear that Bristows’ strategy suits the firm and tackles the international question in much the same way as Slaughter and May. ‘Our strategy is very similar – we think we have identified the lawyers (not the firms) who work the way we do, are the right level of quality in a number of different practice areas in each of the countries where our clients need help,’ he says. ‘Sometimes it will take us to a very big firm – we’re very friendly with De Brauw Blackstone Westbroek in the Netherlands for example – and sometimes to a one-woman band – it doesn’t really matter as long as they are the best. We give the client a single bill and something that is consistent in terms of quality. The power of that is that it gives us complete flexibility to work with the best people in each country – we’re not obliged to use the Slovak office of our particular brand.’

While Watts and Redford concede that this strategy means that the firm is unlikely to win spots on global legal panels any time soon, it is clear that clients do not see the single-site approach as a barrier to instructing the firm on major matters. The lack of a Brussels office has not prevented the firm from representing clients on pharmaceutical regulatory matters before the European Commission and in landmark cases before the Court of Justice of the European Union (see box, ‘Recent highlight work’, above). AstraZeneca’s Davis, although chiefly concerned with UK legal issues at the company, cannot see why his colleagues in Europe wouldn’t use Bristows on particular matters. ‘I specifically focus on the UK so from my perspective there’s no issue but I don’t think the site of the firm is much of an issue and shouldn’t be to its detriment. It’s the quality of work that’s more important,’ he says.

Bevan at Capgemini UK says that most of her needs are UK based but knows that in the past her company has instructed Bristows to provide European legal advice in a regulatory area despite the lack of presence outside London. ‘I would rather use Bristows and its network of law firms than a firm that has offices all over the place where I would perhaps not have as much faith in the quality or value,’ she says.

One area that could affect the firm in the long term is the potential shift of some patent litigation away from London once plans for a Unified Patent Court in Europe take effect. The current proposals would see Paris as the seat of the Central Division and it would also hold the office of the President of the Court of First Instance. London would handle areas such as chemistry, including pharmaceuticals, while Munich would deal with mechanical engineering, among other areas. If a large chunk of major patent cases go to Paris and Munich, could a major source of Bristows’ revenues be in jeopardy?

‘Some of the work we do will change – there will probably be a greater volume of lower-value cases,’ says Redford. ‘The fact that the branch of the Central Division that’s in London will be handling pharmaceuticals could mean there’s more at stake because that court will be making decisions that will affect all of Europe as opposed to just the UK. So we’re seeing it as an opportunity. It could be a number of years before we see cases reach the Unified Patent Court anyway and the ability of our experts will always be in demand regardless of jurisdiction – we just cannot afford to be complacent about it.’

Stick or twist

Bristows does not follow the conventional route but it appears to be working. And it’s not just with regard to international strategy that the firm is a throw back. An all-equity partnership with a full lockstep and no billing targets is very rare indeed among LB100 firms. But again the firm persists in defying convention here too. Watts says that the lockstep is a feature of the firm and something that the partnership periodically revisits but consensus has always been that the model is right for the firm. Certainly it helps make the firm easier to manage, which enables both Redford and Watts to maintain their fee-earning roles in addition to management duties.

‘One of the advantages of the lockstep is that it is very simple, which frees people up to do what they should be doing,’ says Redford. ‘It allows partners to be more outward-facing, getting to know clients more and really thinking about cross-selling in a very straightforward way.’

‘Having a model that encourages the right behaviour, that drives the sharing of work as opposed to hanging on to work, reflects who we are as people and how we go about things,’ says Watts.

The absence of billing targets is a fundamental cultural issue for the firm too. Time is recorded, naturally, but no-one is under pressure to meet certain thresholds. ‘The absence of billing targets can’t help but affect the culture in a positive way,’ says Watts. ‘The people we hire are motivated by more than money; they are really into their fields.’

‘The macroeconomic perspective shows that we’ve been lucky in the sectors that we excel in.’
Iain Redford, Bristows

‘I see the effects of Bristows’ model and ethos as benefits to us,’ says Bevan. ‘I do see a very collaborative way of working between the partners. I never see any competition between them or reluctance from one partner to refer work to another. None of the partners are possessive of their relationship with Capgemini UK.’

While this is all very laudable and Bristows is a profitable firm, partner drawings are relatively modest. PEP at the firm is £406,000. Not bad, but the lack of a meritocratic remuneration system could tempt some high-performing partners to the riches on offer by some of the US firms in London, many of which have made no secret of their desire to hire quality IP litigators in the City. But if US firms have approached any Bristows partners, then they’ve been unsuccessful – no partner has left the firm for reasons other than retirement since the Powell Gilbert breakaway. Whether that’s because the collegiality of the firm remains attractive or because client relationships are so enmeshed in the firm that they are not portable is unclear. But management had better hope that the partnership continues to be motivated by more than money.

Unconventional and highly specialised – these are the cornerstones of Bristows’ success. Whether that strategy holds firm in the face of the irresistible tide of globalisation is unclear but the firm has done well to date. Perhaps the biggest mistake Bristows could make would be making a tentative step towards the mid-market and follow the legion of firms that have tried to jump on the coattails of the global pioneers. The middle ground will increasingly be unsustainable, so niche firms that have identified a core area of focus are going to end up in a stronger position.

Bristows is no longer just the niche IP player it was but it remains a tightly focused, smaller firm and one that is outperforming many bigger rivals. Service lines have been expanded to offer a more complete service and to avoid over reliance on one source of income. In this high-stakes game of legal strategy poker, it seems prudent for Bristows to stick with its pretty strong hand. LB

mark.mcateer@legalease.co.uk