As co-CEOs David Harris and Warren Gorrell enter their final weeks leading the partnership at transatlantic firm Hogan Lovells, newly-elected sole CEO Steve Immelt is putting relationship building high on his list of priorities, alongside harder objectives such as further global expansion and fine-tuning the firm’s remuneration system.
Working alongside City-based deputy chief executive David Hudd, who has his own objectives to boost the firm’s corporate and finance practices, Washington DC-based disputes lawyer Immelt and Hudd have now carved out their key priorities and individual and collective responsibilities.
Immelt will focus on strategy as well as external and internal client development initiatives, while managing the firm’s international management committee and partnership generally. Hudd will take over finances, operations and the future of the finance and corporate practices.
Since its audacious 2010 merger, the top 10 firm has largely failed to bring in the expected transactional names in corporate in London or finance in New York, where it sought to build a stronger underwriter practice.
Hudd tells Legal Business: ‘We’ve got to complete the unification process. It’s also no secret that we plan to further strengthen our corporate and finance practices. We’ve made huge progress in the last ten years. New York is a big priority along with parts of our London offering. I will be spending a lot of time with the heads of corporate and finance to further develop those practices organically and through lateral hires.’
This coincides with the wider message Immelt wishes to execute inside and out of the firm and he tells Legal Business: ‘We have to be realistic that we’re four years on and although we’ve accomplished a lot, I don’t think anybody can say we’re done with the process of building deep relationships between partners that are the fundamentals of a successful firm. The ethos has to embrace collaboration and an important element of co-ordination, and it has got to be client-centred with a problem solving approach.
‘I would like every partner to go out and attack problems with a view to what’s the cleanest fastest solution for a client. Firms that succeed in difficult markets like this are those that spend a lot of time obsessing about their clients, and about how to go to market. I want us to align on the importance of outstanding client service and for it to continue to be the lifeblood of our firm. I see that as a strategy.’
Other items on Immelt’s agenda for his four year-term, which officially begins on 1 July, include looking for potential development in Latin America with an eye on Mexico specifically, and reviewing the firm’s current remuneration model by 2016.
Specifically, Immelt wants to end problematic partner squabbling over origination points – the formula used to recognise ownership of clients.
Immelt says: ‘The best approach is to drive from the top down a very clear sense of what we expect in behaviour. You certainly don’t want to create an environment where people think selfishness or squabbling is the way to go. I expect our practice leaders to be aware of what’s going on and to step in real time to be certain that people are fair and generous, and thinking collaboratively. No one could ever say in a contribution-based system like ours that you could CCTV everything. You wouldn’t want that but we push hard to go below the surface. We try to set examples and engage through communication. David [Hudd] and I want our leadership to reflect that.’
One positive milestone in the merger journey was this year ending a period of flat financials, after Hogan Lovells in February unveiled its highest post-merger global financial results. Fee-income increased 5.2% to $1.72bn, while profit per equity partner rose by 10% to $1.21m and revenue per lawyer was up 3.7% to $742,613.
With the thorny issue of whether to revert from a dual management structure to a single chief executive and practice heads decided, Hogan Lovells is already putting to bed some of its higher profile post-merger power struggles.
Immelt concludes: ‘I’ve always thought this was a terrific idea but actually getting it to work was a lot harder than I thought it would be. From the tiniest thing to whether humour has a “U” in it to a complicated client conflict… it made us recognise that in order to make progress, we would have to find middle ground. We’re now seeing that relationship building push out not just at senior management level. If you don’t get that human element right, you can’t succeed.’