Success is a mysterious beast. Hard to define, built up over years and often the result of a formula even its creators struggle to understand. But failure, well, that’s simple. When a law firm runs into difficulties you can point to bickering partners, problem offices, a weak client-base or an unworkable strategy. Whatever it is, there’s usually a clear narrative to explain the situation.
When BLP announced in May that it was consulting on deep redundancies, by many accounts even a number of senior partners at the firm were caught unawares. After all, this is one of the most upwardly mobile firms of the last decade, having in 2001 secured probably the most successful UK merger since Clifford Turner hooked up with Coward Chance. BLP then substantially delayed announcing its financial performance – and still appears unsure on the exact profitability picture for 2012/13. It is clear that profits have fallen sharply and revenues are down 5% – by some margin the worst performance this year in the top 25.
Obviously, trading conditions are dire but, given BLP’s enviable long-term performance, the economy hardly explains it. Recent years have seen successful expansion at BLP in high-end litigation and tax – two classic hedge product lines – while the firm’s core real estate business was until now widely viewed as having had a sensational recession, colonising the top of the market as large City firms scaled back in property.
Corporate and finance are more of a mixed bag. Some felt its lucrative real estate finance team never recovered from an unpopular decision to move the team into its property practice, or the related departure of a five-partner team led by Mark Waghorn to Simmons & Simmons. Likewise, the promiscuous lateral recruitment maintained since the early 2000s ushered in too many questionable CVs alongside the genuine talent (though there is nothing remotely new about junior equity partners at BLP moaning about laterals and income guarantees).
As best as can be worked out, what is at play is a combination of some softening in its property practice, a few key clients reducing the work going to the firm and the expense of its belated international push, and that guarantee-backed lateral programme.
Yet BLP still struggles to articulate the situation or the steps taken to remedy it. Aside from its excessive affection for partner recruitment, BLP has been one of the most distinctive and impressive performers of recent years, a track record that its recent difficulties shouldn’t obscure. BLP also asserts that its 2012/13 performance was a ‘blip’ with the firm posting a strong first quarter in the current financial year. But it should acknowledge what has caused this current reverse, draw the line and concentrate on regaining its entrepreneurial form without delay. The ‘nothing to see’ mantra is not only unconvincing, it just leaves the mystery to unhelpfully linger.