Legal Business Blogs

Comment: Looking forward to Ashurst’s decline – The outlook worsens for a proud City institution

You cannot change the past. Move forward. Be constructive. Focus on making things better. Pick your cliché. And, like most clichés, they are built on the basis of common sense… and can still sometimes be beside the point.

Take Ashurst, which, having delivered a very poor 2015/16 trading period, is arguing once again that things will come good tomorrow. What else can leadership say? With Ashurst having been probably the worst-performing major City player since the banking crisis, such appeals are the only option.

But let us look back for a moment. The firm made a series of bold steps that have yet to demonstrably deliver, starting with the US launch back in 2009, including the Glasgow back-office move in 2013, but by far the most significant was the 2011 agreement to tie up with Australian practice Blake Dawson.

Five years since the Blake deal was announced to a bemused partnership, and three years since the pair moved to full integration, it has yet to prove its worth. In a wider sense, evidence is piling up that the many sceptics about City firms securing large Australia tie-ups have been proved right. The critics said Australia mergers came at the top of the cycle, that Asia-Pacific is a region beset by margin pressure and protectionist Bar rules, one in which Australia only has a limited integration with and that the national market is competitive and over-lawyered. That has all proved so.

The biggest advantage of an Australian union – that it bolsters income enough to help fund global expansion – has also been borne out, but comes at the cost of making the US a more difficult market for City firms to tackle, either organically or via mergers. This is particularly relevant in the case of Ashurst, which considered and rejected pushing for a deal with Sidley Austin around the time of the Blake deal.

Ashurst’s other issues have been just as clear. A continuing series of damaging partner losses over the last two years and clear indications that its corporate practice, the firm’s cultural heartland, is losing ground are also ominous. Equally as unsettling has been a sense that, after the election defeat of senior partner Charlie Geffen in 2013, Ashurst didn’t know what kind of firm it wanted to be. Geffen – a bold leader too fond of strategic handbrake turns – had clocked up a few missteps of his own, not least trying to push through Blake Dawson, Glasgow and a US merger in the same period.

Was Bain likely to solve that identity crisis? Such consultants have had a poor track record in the legal industry over the last 20 years. While you can see a case for a tightly-briefed £500,000-£1m consulting job, the supposed £4m price is an extraordinary, credibility-sapping figure for a firm of this size to commit for a debatable return.

The firm is now looking to trim costs and shake up the partnership yet again (Ashurst’s partnership has been through a destabilising amount of prodding and poking since 2008, so there will be much doubt about the prospects for that).The firm is also still poorly hedged in its practice mix.

There are those talking up new managing partner Paul Jenkins (pictured) but it’s hard to see the current leadership – including chair Ben Tidswell – having the capital to galvanise this business. Most likely Ashurst faces years more of gradual (or not so gradual) decline. For a firm with this much history, who wants to look forward to that?

(£) LB100 Focus: Don’t look back in anger: Ashurst leadership tries to rally partners but the drift continues