As baptisms of fire go, you could not invent a more dramatic one. Two months after being elected senior and managing partners of A&O, Wim Dejonghe and Andrew Ballheimer found themselves steering the firm and its clients through one of the biggest economic and constitutional upheavals the UK and Europe have faced in decades – the shock UK vote to leave the EU.
They are both clear that the vote will have momentous implications, politically and economically. Clear too that the months and years ahead will be a time of immense legal complexity and uncertainty. The majority of clients were left in a state of shock and anger in the immediate aftermath of the vote, they say.
Yet, despite that backdrop, they are calm and determined as they reflect on the huge challenges that lie ahead.
“Running a business like ours is not a science,” says Wim. “It’s an art and it’s all about navigating uncertainty in an ever-changing environment. That requires agility. You just have to adapt to the environment – stay on course, or change your tack, depending on where the risk is coming from.”
Any big crisis means uncertainty for clients, he says. But that’s precisely the moment when they want to gather trusted advisors around them to plot the way ahead and to spot the risks, obstacles and opportunities that confront them.
Andrew agrees. “Our honeymoon period as a leadership team is, perhaps, over a little sooner than expected. But no business over a four year period – the term of our office – enjoys complete plain sailing. You just have to deal with the issues and take a high degree of confidence from the basic strength of our business.”
And A&O arrives at this point in good shape. The seven years since the global financial crisis have seen the firm enjoy a period of unbroken growth, in its finances, its offering and its global footprint (it now has 44 offices in 31 countries).
“We are a resilient business in terms of our geographic spread, product areas and alternative service delivery models. That puts us in a strong position,” says Wim.
Joined at the hip
Working ever more closely with clients forms part of the continuing strategy and, in these uncertain times, is all the more important.
The two men describe the huge amount of work that went on in the six months before the UK referendum to help prepare clients for its consequences, whatever the result.
A team led by London partner Daniel Shurman looked at the implications of both a ‘remain’ and a ‘leave’ vote, sending out some 21 specialist papers to well over 16,000 clients to keep them abreast of the possible legal and commercial risks and to help them prepare contingency plans.
On the day of the result, there was already a library of articles and advisory notes ready to go live on the A&O website and a team of partners was able to hold a call with clients to give an immediate assessment of the challenges. Nearly 2,000 clients registered for the call.
It’s all part of an effort to predict the unpredictable, says Wim.
“We wanted to be sure we could help them in a proactive way, rather than sitting back and waiting for the phone to ring. It’s about telling clients: let’s think together about what this means for the market, your business, our business – let’s look together for solutions.”
Andrew is clear that A&O can add greater value this way. “Our clients have to evolve to this new normal and so do we. But I think if we are closer to clients we will do it in tandem and help each other.”
That approach to collaborating with clients is now evident across the firm. It’s a shift away from being just a supplier of legal services to a new kind of connection. As Andrew puts it: “A purely transactional relationship is not really a relationship at all. The clients we are closest to, and the ones we do the best work for, are those that have us as part of their trusted inner circle.”
For Wim it’s about being ‘joined at the hip’ with clients. “Any client you talk to will say: what I really want from you is that you own my worries, share my concerns and come up with solutions, rather than just reactively answering legal questions as they arise,” he says.
“In terms of collaboration we do a better job than any other law firm I know. I’m actually convinced of that and a lot of partners hired into the business have confirmed it.” But he admits it is not perfect.
A challenge for the firm is to extend this approach still further. Too often in the past it’s been a case of selling a particular practice or office, rather than the firm’s overall capabilities. A&O people are now encouraged to think about the complete breadth of the client’s business and how we can bring the whole of A&O – across the world and across practice areas – to support them.
This same philosophy is also informing external partnerships, whether with A&O’s huge network of relationship law firms in jurisdictions where the firm has no office, or in global initiatives like the MarginMatrixTM joint venture with accountancy firm Deloitte to help banks handle massive changes in the regulation of derivatives trading.
“With MarginMatrixTM we had the idea, the legal expertise and an IT platform,” says Andrew. “But in terms of the roll out, manpower and skillset it made sense to everyone that we had a best-in-class partner to help clients across the world.”
Wim agrees: “You don’t just partner with anyone. We have a global quality and service standard, so we look for the best of the best wherever we operate. I can see us doing more such partnerships in the future.”
The Cocktail Stirrer
The legal market continues to be disrupted by new non-traditional competitors and, more importantly, by the pressure on general counsel to reduce legal spend, with no loss of quality. We are still in the era of ‘more for less’.
Wim recalls a recent conversation with the general counsel of a leading telecoms company who said he was under pressure to reduce legal spend by 5% a year for the next ten years. Once again he talks about partnering with such clients to help them achieve that stretching goal. A&O has gone further than most in unbundling its service delivery model to meet this cost challenge. It has opened the Legal Services Centre in Belfast, launched the Peerpoint global resourcing platform and grown the aosphere online legal services business. It has also opened the project management office, allowing it to win some of its biggest assignments ever in areas such as bank ring-fencing and in global corporate restructurings.
“I call our project management office the stirrer that mixes the cocktail,” says Wim. “We’ve unbundled the delivery of services but you need something to pull all that back together, in exactly the right blend, so that you can offer the client a seamless service.”
It’s this ‘composite offering’ along with our global footprint that sets A&O apart, says Andrew. “It puts us almost in a class of one.”
The risk agenda and growth
General counsel have a range of testing issues on their minds right now, topped, of course, by Brexit. Other concerns include mounting regulatory risk in financial services, big changes in international tax, complexity in antitrust regulation and the protection of key assets, particularly intellectual property.
Looking for new paths to growth, in what is an increasingly fragile economic environment, is also a prime concern. Recent years have seen companies, which are struggling to raise top-line earnings organically, bear down on costs and use M&A transactions – some at “pretty crazy prices” – as an alternative way to improve margins.
Both men predict a further period of restructuring and, despite a current slowdown from last year’s record levels of M&A, an eventual return to higher levels of transactions. But they are clear that the greatest opportunities for long-term revenue growth lie in developing markets, a particular focus for A&O in recent years as it has expanded its network of offices.
“I do think longer term it will be in Asia, and Africa, where the opportunities lie because there is a growing middle class there,” says Wim. “People sniff at GDP growth of 6-7% in China, but, frankly, that’s a pace of growth Western economies can only dream of.”
Culture – continuity and change
A&O has long been known for having a distinct culture, with words like ‘collegiate’, ‘collaborative’ and ‘community’ often used to describe it. But how does that sit alongside the firm’s determination to be a high-performance market-leading organisation? What is expected of an A&O lawyer today and what is demanded from A&O in return?
Wim is clear that A&O needs to find new and more flexible ways to recruit the best of the best. The firm is trying to build “a platform for excellent lawyers” – a place where you can choose different ways to do stimulating work for the firm, build continuously on your legal training and gain a real understanding of how the law and the market is evolving.
“But I also think the best lawyers are more than just lawyers. They have to have other things going on in their lives,” he says.
“It’s one thing to be a good technical lawyer. But, actually, if you want to be a really good practitioner you need a lot of other skills and an ability to draw on a broad range of experiences. We really want complete people, rounded people who are excellent lawyers,” he says.
Andrew puts it slightly differently. “It’s very important that our lawyers and staff are role models and that we create an inclusive environment where you can be as diverse as you like as long as you are professional and put the client’s aspirations at the heart of what you’re doing every day.”
That, above all, is what has allowed A&O to create a unique culture – one which has stayed in place in the 30 years he has been at the firm. He describes it as “human and humane” and says it is remarkably consistent across the firm’s offices, whether in Bangkok, Tokyo, Munich or London.
“It’s hard to describe a culture,” adds Wim. “It’s not a still picture. It’s a movie, because it evolves.
“But in essence it’s about caring – caring about quality, performance, doing the right thing, caring for each other, working together, being humane, helping each other out, solidarity. It is mind blowing actually and very touching and I think all of us want to leave the place in a better condition than when we joined it.”
The road ahead
Uncertainty will remain the order of the day for some time but Wim and Andrew are clear that many opportunities lie ahead.
“It is all about continuity,” adds Andrew. “It’s obviously a challenging time at the moment for us and for our clients. But the building blocks are there for our continued success.”
From a strategic point of view A&O is in a strong place, says Wim.
“The legal market will continue to consolidate for the next five, ten or 15 years. But I think we’re well placed to be one of the winners.
“Whatever challenges are thrown at us by politicians or the economic environment, I actually do believe that will create an opportunity for us to continue to strengthen our business. That’s quite exciting.”