Looking at the recent wave of departures from Travers Smith brings to mind fears expressed by peers when we last did a major analysis of the firm back in 2019.
Four years ago, harbingers of doom were quick to jump on the perceived threat to such a UK-centric firm amid Britain’s exit from the European Union. Noted one corporate partner at a US firm at the time: ‘If profit starts to fall post-Brexit, what do you do with Paul Dolman? If Paul left, it would be a killer blow. He is talismanic.’
Clearly Travers’ luck ran out in 2021 when the talisman left for Latham & Watkins, however material fallout from this loss was broadly foiled by the extraordinary Covid-era private equity boom in 2020/21 that saw revenue spike 15% at the firm and profit per equity partner (PEP) soar 22% to £1.22m.
The mood of the 2021/22 financials was far less bullish, and while the firm has long been a slave to reporting to a later financial year, ending 30 June, its fate was sealed with Russia’s invasion of Ukraine and the wholesale economic volatility caused by rising costs globally. Bad news for PEP, which fell 9% to £1.093m, even as equity partner numbers stayed more or less flat at 58.
A former partner once said: ‘The thing that keeps Travers successful is persuading people that there’s more to life than money. You get good work and you are treated well.’ Indeed, it could be seen as a testament to the firm’s civilised reputation that ex-partners and those at rival firms do not seize upon the partner exits as an excuse to stick the boot in. One City corporate partner notes, perhaps more realistically than cynically: ‘It’s easy for partners to be loyal to a good firm when that firm is profitable.’
It is overly simplistic to say that all the recent departures have been for American firms in London with far more spending power. However, the greatest loss was Travers’ head of private equity Ian Shawyer decamping for Cleary Gottlieb (a firm that last year grew PEP 28% to $4.7m) in January, while Ed Ford and Sacha Gofton-Salmond taking their skillset in the sought-after and lucrative private equity secondaries space to Simpson Thacher (which upped PEP 14% to just shy of $6m in our Global 100 report) was also significant. Finally, Travers’ head of M&A tax Jessica Kemp will be joining White & Case, which grew PEP 16% last year to $3.5m.
Regardless of Travers’ pride in being one of the few firms to still cling to lockstep – comprising 100 points but no performance-linked gates (albeit a percentage of the profits does go into a bonus pool for high performers) – if there is a criticism to be levelled it is that the firm should have altered its remuneration structure to something more dynamic sooner, as have most City peers before it.
Travers will point to the appointment of the credible Lucie Cawood as head of its private equity and financial sponsors group as a fillip and proof of a succession plan, while that group also includes the much-admired young partners Genna Marten and Ian Keefe.
Travers has been through the wars before (lest we forget the immediate post-Lehman years) and came through it without the hedge it now has of a substantive disputes practice, led by the respected Rob Fell. Now, management will have to make some difficult decisions to ensure the outcome is not worse.