Sponsored briefing: Punching above weight

You’ve both been at the firm for more than 25 years. What have been your highlights?

Richard King (RK), managing partner, Stevens & Bolton: I’m in my third year as managing partner and speaking as a manager, rather than a litigator, the highlight is our ongoing evolution. There’s a real sense that we’ve never stood still, and yet, for all that we’ve evolved, the foundations have been there from the beginning.

Richard Baxter (RB), senior partner, Stevens & Bolton: For me, it is what we did at the time of the banking crisis. We swam against the tide; we resisted massive headcount cuts. We invested in our people and stayed focused on the culture of the firm. That period set us up for the growth we’ve enjoyed in subsequent years.

With PEP up by 11% this year, there must be a few people at City firms wondering about a move to Guildford?

RB: So many of the regional firms spread their resources among different offices but we feel that our single-office approach – close to London, but not in London – is a positive differentiator. We’re not saying it’s easy, but it seems to be working.

Which standout matter best demonstrates S&B’s ambitions?

RB: We’re proud of our work on the £250m Stackhouse Poland deal in the past year, led by our head of corporate James Waddell. Stackhouse, a large specialist insurance broker, was sold to Arthur J Gallagher, a US firm. We’ve acted for Stackhouse for nearly 20 years, from the initial management buyout in 2001 to many funding rounds and a successful buy-and-build strategy – it’s a good example of our relationship approach. The exit is also a good example of our ability to marshal resources very effectively, because of our single-office approach, and shows how we can put large teams together quickly, delivering high service levels.

‘The idea is to align all of our staff with our financial success. We’ve got a very strong partner bench here, but the hurdle of promotion to senior status was clearly demotivating for some.’
Richard King

You’ve just moved to an all-equity model. How hard a sell was this?

RK: We decided a couple of years ago to go through a major review of motivation and reward for all our people and began the consultation with non-partners. That resulted in one important change, which was the introduction of an all-staff profit share bonus scheme alongside our existing discretionary bonuses. The idea is to align all of our staff with our financial success. We then moved on to partners and what quickly came through from the feedback was that the distinction between senior equity members, who had fully-variable profit shares, and junior members, who had a much greater fixed-share element to their profit shares, was becoming an unhelpful distraction. We’ve got a very strong partner bench here, but the hurdle of promotion to senior status – and indeed, the very existence of that status – was clearly demotivating for some. We concluded that, particularly with our meritocratic reward approach, we didn’t need that distinction.

The move will dilute PEP. How is this going to affect your efforts to hire big names?

RK: It’s to be expected that PEP is going to take a bit of a hit with a full equity partnership. But we take the view – and Legal Business is very switched on to this – that PEP is a blunt instrument, really, in seeing how a firm is doing. There are other measures to assess the health of the business. As long as we’re performing well, on those other measures, PEP itself shouldn’t be a deterrent to lateral hires. In the latest Legal Business 100, we are ranked at 54 for profit per lawyer and 48 for overall firm profit margin.

Obviously, it can be a challenge to attract major names from the City. We’ve had plenty of partners approach us; and we’ve also gone out and found people. Our highest-profile hire in recent years is David Steinberg, who was joint head of restructuring at Clifford Chance. But it’s not all about the big names. We’ve had a number of younger partners who have joined us in the past two to three years from other firms as well. We are an attractive alternative for those who are looking for that different firm.

There’s a real sense that we’ve never stood still, and yet, for all that we’ve evolved, the foundations have been there from the beginning.
Richard King

What about promotions? How do you sell a career at S&B to those that will drive the firm in the future?

RK: About 20% of our current partners have been promoted internally over the past three years, across nine different practice areas. Healthy internal promotion is critical for us; we must deliver careers for our people. If it’s all about laterals, then it starts to be seen as a potential block for the juniors. Our junior people are coming through, but with the enhancements of laterals as well.

Thirty-eight percent of your partnership is female – comfortably above the LB100 average – what steps have you taken to encourage women to take on leadership roles?

RK: It’s a reflection of those steps we’ve taken over recent years in providing a supportive, flexible working environment. Our location helps. We offer an attractive alternative to a City firm for talented female lawyers who may be looking to return to work after career breaks, wanting to avoid the London commute, and some of the pressures that we all know can go with City working. We’ve also recently got involved with the Reignite Academy, which is an initiative to help those returning to the profession after, in some cases, quite extended career breaks.

How do your overheads in Guildford compare to London? How much of your pitch to clients is cost related?

RB: There is blue water between the standard rates of Guildford compared to a major London law firm. But there are also service-level benefits associated with a lower overhead. We can offer more experienced people at rates that compare favourably with the rates of the more junior lawyers that typically will be put on the same piece of work in the larger firm. The pricing differential might not be as great as the differential between standard charge-out rates but clients get better service levels, with the work done by more experienced lawyers – and a price advantage to boot.

You’ve remained independent. Is relying on organic growth going to be enough in the current market?

RB: We’ve been approached by quite a few firms over the years, ranging from US players to City and national firms, but we’re far from convinced that the benefits are there for us in a merger. We intend to concentrate on organic growth, but the door is also open to lateral and team hires in legal and even non-legal areas – if the fit’s good.

How do you think the S&B brand is perceived?

RB: Like all good law firms, we assess our brand and different aspects of it regularly. But any law firm that thinks that brand in itself is going to bring lots of work through the door needs to be very large and have a very impressive brand. There are probably only a handful of law firms that can truly say that. And that’s why we tend to focus more on the everyday notion that brand is about the way our people behave and whether everyone who deals with us has a consistently good experience.

‘There is blue water between Guildford rates compared to London law firms. We can offer more experienced people at favourable rates.’
Richard Baxter

How important are the firm’s culture and values? How do you make these live internally?

RB: Very important. We aim to be positive and supportive, working to defined business goals. We try to create a relaxed and flexible, but professional and challenging, work environment. And we encourage everyone to have a balanced and varied life both at work and beyond. And if we combine that with fair reward and motivation strategies, then hopefully it’s a package many lawyers will find attractive. How do you live it? Well, I guess it’s up to everyone to make it work. All that management can really do is engage with everyone about the importance of culture, and provide the internal support to allow everyone to contribute, to create an environment in which people want to come to work and contribute to the team.

US firms in London are competing hard with the Magic Circle, making the mid-market ultra-competitive. How does that affect you?

RK: We are seeing some competition, but it’s not causing us major challenges and certainly not informing our strategies. We’re not intending to respond with short-term pricing reductions or anything like that. We compete as we are and it helps that we are a strong partner-led service. Clients appreciate that. It’s a distinguishing factor, compared to many City firms.

How effective is your international network?

RK: Over the past three years 10-15% of our turnover is attributable to international work. We don’t have any formal alliances with overseas firms but instead build relationships individually, in different jurisdictions. We find that we’re a good fit with a lot of independent law firms overseas who are looking for alternatives to the big City firms. The focus has mainly been on Europe and the US, but we’re also seeing work come in from other countries around the world, too.

‘It’s about building a flexible client-facing team, with strong business as well as technical skills, supported by a very high quality business service platform.’
Richard Baxter

Where next for the firm? What about the impact of alternative delivery models and external capital?

RB: We’re just starting work on our next strategic plan, which we do every three years. Emerging themes are growth while remaining independent, being an authentic, client-centred business, and focusing on our talent, which is crucial to build and sustain our business. We’ll be investing in those sorts of things going forward.

More specifically, there are many developments across the profession, whether in technology, new market entrants, other delivery models, low-cost centres, contract lawyering and flexible law firm models. Areas of investment for us include artificial intelligence, client relationship management, client collaboration, project management and process improvements – all areas we are investing in and bringing specialists into. It’s about building a flexible client-facing team of lawyers and non-lawyers, with strong business as well as technical skills, supported by a very high quality business service platform. We’re also looking at broadening our offering to invest in complementary non-legal areas.

RK: As for external investment, it’s an option if it supports your strategic objectives, but we don’t see the need for us for the foreseeable future.