Finding a way to stand out remains the single biggest headache for any senior and managing partner.
Solicitor John Theodore Goddard likely had a small budget for business development, but as he acted for Mrs Wallace Simpson in her second divorce proceedings, raising the profile of his practice didn’t prove especially challenging in 1936.
Subsequent Theodore Goddard clients – John Profumo, the Rolling Stones, David Bowie, Michael Jackson – also rather jump off the page. Even on the legal business front, TG was interesting, merging in the 1950s with the firm founded by David Lloyd George.
The modern firm, though, is defined by its 2003 merger with Leeds and Manchester firm Addleshaw Booth, which within a few years took the outfit into a different league – corporate, City, international.
Accordingly, the firm’s EC1 headquarters look amazing – you could be in Allen & Overy, Linklaters, DLA Piper, Hogan Lovells, Herbert Smith Freehills, Freshfields… .
And that rather illustrates the problem for Addleshaw Goddard. The firm is playing in a market where differentiation is currently very difficult indeed. Its strapline, ‘A premium business law firm with international reach – expect a lot from us’, could belong to any number of firms.
AG’s profitability and profits per partner, though good and markedly up last year, don’t match that of the firms it looks like. Fellow ‘northern upstart’ DLA Piper – another Leeds and Manchester firm that shared this label, attached to Addleshaw Booth as it merged – is now in the global stratosphere.
Even outside the magic circle, many of the City neighbours AG’s offices resemble are more profitable, and by a large margin.
And so to the reported merger talks with German firm Luther – another firm fond of straplines and slogans (‘Hits the mark. Luther – precision, perfect timing and an eye for what matters’). It follows confirmed talks with US firm Hunton & Williams.
Held side by side, Luther and AG look very compatible: commercial client base; several national locations; a small string of international offices; those slogans. Law firm mergers can fail – before or after the event – for any number of reasons. Disparity in finances or liabilities, client conflicts and IT are all high on the list.
But incompatible cultures are the lead reason for a merger failing to deliver on its promise. On that front, AG’s 2003 merger is judged to have worked very well – harmonious, well managed, sustainable.
As with UK-US mergers, a UK-German tie-up is never going to be about boosting profits by cutting costs.
And it won’t be about differentiation. Any number of firms trod this path long ago (for Germany think Wessing, Deringer, Punder – the list goes on; likewise for the US – Hogan, Rogers, Piper, Fulbright…). From a certain angle, with Brexit on the horizon, such tie-ups are about running just to stand still for ambitious UK firms.
If the merger with Luther goes ahead, then good luck to both parties. AG is a well-run firm, liked by its clients – for whom it runs interesting initiatives like the ‘client development centre’. It is a regular at legal awards ceremonies.
But when any merger has bedded down, then AG, in common with many firms in that section of the market that is below the global elite and magic circle, still has a question to grapple with.
How is it ‘different’?
Unlike the chasing pack, magic circle firms don’t have straplines and slogans. They don’t need them.
The clients that once made Theodore Goddard jump off the page are of the sort who pay less than the corporate and financial sector clients the modern AG and its close competitors are after. Put starkly, Wallace Simpson divorced twice in a lifetime – whereas Morgan Stanley handled 265 mergers last year.
But for AG and other firms in this bracket, finding a way to stand out – differentiation – remains the single biggest headache for any senior and managing partner. Not least, major clients are proving to be increasingly fickle when they can’t tell the service and expertise of firms apart.
Eduardo Reyes is Gazette features editor