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‘People were ready’ – Immelt to become sole Hogan Lovells CEO as Harris and Gorrell to stand down

The sensitive issue of governance has hung over Hogan Lovells since the 2010 merger that created the Anglo-American giant but the firm is to finally resolve the point in favour of a streamlined leadership model.

The dual UK-US leadership of Hogan Lovells is to come to an end with joint chief executives Warren Gorrell and David Harris set to stand down from their respective roles in June 2014. Harris is to retire from the firm, while Gorrell will return to full-time fee-earning.

In a move away from the UK/US joint leadership that has been in place since Hogan & Hartson and Lovells merged in 2010, Washington DC-based partner Stephen Immelt (pictured) has been chosen take the reins as sole CEO, while London-based partner David Hudd will become deputy CEO.

Legacy Hogan & Hartson partner Immelt is currently global co-head of the firm’s litigation and arbitration practice and a member of the international management committee while legacy Lovells Hudd is currently head of the finance practice group.

The pair will officially take up their respective roles at the end of June next year, subject to a confirmatory partner vote, which will formally end on 16 December.

Harris had been planning to stand down after the end of his second term, paving the way for single chief executive in 2014. However, with some partners in London viewing the likelihood of the firm being headed by Gorrell as evidence that the 2010 merger was an effective takeover of Lovells by Hogan & Hartson, it was viewed as important that the firm held a lengthy discussion on succession.

Sensitivities over the integration of the two legacy firms have also been heightened by the staged rollout of a new pay model in legacy Lovells, which has been unpopular with some London partners.

Harris and Gorrell opened the discussion on succession plans with the transatlantic firm’s board during the summer, which in turn canvassed the appetite of partners to move to a single leader.

Speaking to Legal Business, Harris said: ‘Given the firm’s position in the market at the moment, it’s a natural time to make this transition. I have every confidence it will be smooth. There’ll be continuity but new people coming in will undoubtedly also have fresh ideas as well and that is a part of healthy progression.

‘In terms of the structure, Warren and I have not divided our roles by reference to geography but have shared responsibilities, while avoiding duplication. We’ve shared our roles. But inevitably, as we were involved in the development of the strategic rationale and implementation of the merger, we have a historical association and perceived connection with the legacy firms we came from. However much one tries to step aside from that and adopt a global position, which is what we have both done, you can’t totally eradicate that perception. And where we’ve got to now in terms of our integration and the importance we attach to a one firm approach – transitioning to a single CEO is a natural and healthy thing to do.’

Having made the decision to step down over the summer, Gorrell, who has been in management for nearly 13 years, said ‘everything came together in a way that it was a right time for the firm and for me’.

He added: ‘The firm was ready for one CEO, and [the new CEO] being based in Washington isn’t a factor. We were very clear throughout discussions with partners that they didn’t care so much where the person was from so much as we had the right person. There’ll be a little getting used to having only one person, and a different person. But people really understand the importance of a single CEO. It’s been well received.’

Over the past three years the firm has phased out some dual US-UK senior positions, with London real estate litigator Nicolas Cheffings moving to sole chair for a three-year term in February 2012, replacing co-chairs Claudette Christian and the retiring John Young.

Cheffings said that the firm’s board was tasked with carrying out an extensive consultation on the latest management reshuffle, to ‘make sure we had a handle on the current thinking of the partners’. That process did not involve Gorrell and Harris.

‘There was no question at all from partners around the world that starting off with co-CEOs was the right call and had worked well and efficiently for integration,’ said Cheffings. ‘Now it’s the right time to move to a single CEO. For the board, it was identifying the right person. Ultimately, it comes down to the individual. The feedback we have had to date on Stephen taking on the CEO role is universally positive. The board was unanimous in its recommendations.’

Hudd told Legal Business that he will be tasked with taking responsibility for the firm’s finances, operations and support functions, as well as overseeing corporate and finance.

‘We’re now ready as a firm to make this move,’ said Hudd. ‘We have a six or seven-month transitional period to work on the detailed allocation of responsibilities… We’re very much in listening mode with partners at the minute. I’m extremely optimistic.’

Immelt commented: ‘People were ready. Our firm has reached this point where a single CEO is the way to go. Clearly the job is a global one. A lot of what I’ll be doing is seeing the partners around the world. I definitely plan to spend a significant amount of time in London living there for parts of the year.’

Immelt said he did not expect any major changes in the firm’s current remuneration model but added ‘we are always seeking ways to improve it’. On the firm’s management structure, Immelt said he intends to review governance with Hudd ‘to make sure it’s as streamlined as it can be’.

For more on Hogan Lovells post-merger and the build up to the management reshuffle, see The daily grind – toil and tension as Hogan Lovells gets past the honeymoon period