DWF takes the hot seat (… again)
In 2019, life was sweet for the global legal business that is DWF, as it raised nearly £100 million in the largest-ever legal market IPO. But more recently, as touched upon in this edition of a familiar newsletter (shameless self-plug here), the buyout agreements with Inflexion Private Equity Partners came to completion and Inflexion officially took the reins from DWF.
On the surface, this appears to be a very astute and lucrative business move for Inflexion. Figures represented in this article by The Lawyer demonstrate that over the last five years, DWF has not only expanded its number of lawyers by roughly 430 since 2019, but has also seen a remarkable increase of 149.5% in the average profit generated by these lawyers during the same period.
And yet these seemingly brilliant data appear to be all smoke and mirrors – as a deeper look into the figures reveals that this initially impressive-seeming increase has in fact taken the firm’s profit per lawyer (PPL) from a meagre £12,000 to a not-exactly-stellar £30,000.
However, another level has been added to the conundrum, as DWF’s Chief Financial Officer has pointed out that the PPL statistics cover a period when the company transitioned from a privately owned partnership to a PLC, making a direct comparison of the numbers not entirely accurate.
DWF is definitely one to watch in the coming months, with the firm’s debt mountain currently sitting at around six times its annual profit. Let’s hope Inflexion has a solid action plan for what looks to be a double-edged acquisition.
Axiom Ince: what fresh hell is this?
In what could be described as the Twilight saga of recent legal news (if the Twilight saga had been based on accusations of alleged dishonesty and dodgy dealings), new revelations have come to light about Axiom Ince’s demise.
A quick refresher in case you’ve been off-planet for a few months: in April, Axiom (previously a small, relatively unheard of legal practice) bought the Ince Group (a well-established maritime law firm) when it went into administration due to failure to publish financial reports. Shortly thereafter, Axiom also bought Plexus Legal from its administrators, and merged the three firms to form the ill-fated Axiom Ince.
Axiom Ince was shut down last month by the Solicitors Regulation Authority, triggering a police inquiry into allegations of fraud involving £64m missing from the client account. The former managing partner of Axiom Ince, Pragnesh Modhwadia, is defending a claim for alleged breach of fiduciary duty. Investigations into the missing £64m have revealed uncertainties surrounding the use of the missing money, and whether this was really spent on the supposed acquisitions or extravagant expenses. The situation is definitely riddled with complexities.
Well, the Axiom fiasco has reached a new low, as a recent Times article has revealed that the Law Society Gazette has determined that the 160,000 practising solicitors in the UK will have to pay as much as £400 in one-off top-up fees to the profession’s compensation fund. Ouch.
And if you’re a private solicitor, that’ll be another £100 on top please, just to cover the costs of the SRA’s intervention into Axiom Ince, as this intervention is expected to cost between £10 million and £15 million, significantly surpassing previous cases.
SRA chief executive Paul Philip gives his two cents, saying that “based on what we know, the cost of contributions to the fund is going to go up quite radically”. For now, he is collecting the normal contribution for this year to the fund (£690 for firms and £30 for individual lawyers). How admirable.
Rest assured, however, as Scotland Yard has confirmed it is investigating the matter after a referral from the professional watchdog.
I’ve let my feelings about the compensation fund for this case manifest themselves in the form of a poll, which involves circulating rumours that solicitors in England and Wales are going to be required to make a one-off payment of £400 in order to plug the massive black hole in the Compensation Fund.
Whichever way you vote, interact with me here and let me know your thoughts. Whether that’s simply voting or following up with why, I’m all ears!
Ashurst takes centre stage next to Addleshaw Goddard in the litigation roadshow
Was litigation ever really counter-cyclical? Maybe. Maybe not. Either way, that view seems to be growing obsolete as disputes are increasingly producing the big bucks across the economic cycle.
According to The Lawyer magazine, in recent years, even out-and-out corporate firms like Ashurst and Macfarlanes have upped the ante with their prioritisation of litigation, which has proved extremely fruitful for them.
Five years ago, Ashurst wasn’t even ranked in The Lawyer UK Litigation 50. But now, litigation is a big part of the firm’s focus, generating 19% of its £57m UK revenue last year. That’s a growth of 60% in five years. Pretty damned impressive. The firm has also been investing in its litigation team, hiring at least three new partners recently, with more to come in the near future.
In 2019, Addleshaw Goodard was in 50th place in the UK Litigation 50, and litigation contributed only 12% of its revenue. Since then, it’s risen 26 places due to a significant revenue increase of 184% (from £31 million in 2019 to £89 million in 2023), and litigation now makes up 25% of the firm’s revenue.
And at Macfarlanes? Disputes revenues are apparently up 83% since 2019, according to The Lawyer.
There’s little doubt in my mind that, when confronted with these impressive figures, the competition will be limbering up to take part in the litigation game.
What’s that idiom about bad apples spoiling the bunch?
And when a spoiled bunch comes with a hefty fine, vigilance is key.
The Law Society Gazette has revealed in an article in the Law Gazette this week that the CEO of the Solicitors Regulation Authority (SRA) has instructed that law firms must master the skill of self-regulation to avoid potentially huge fines for solicitor misconduct.
SRA CEO Paul Philip has said that an Economic and Financial Crime Bill should come into law in the coming months, which will pave the way for the SRA to issue unlimited fines in relation to financial crime. Currently, cases with fines exceeding £25,000 are directed to the Solicitors Disciplinary Tribunal. However, the SRA contends that this approach is time-consuming and doesn’t effectively tackle systemic problems within firms that may have enabled or caused the misconduct.
The comments section below the Gazette article is alive and well – with some choice comments made regarding a familiar £64m case and the role of the SRA.
A tale of two cities
Years ago, when I worked at OC, I noticed that Bristol and London ran on different clocks.
Not the official time difference of nine minutes (although we have a clock for that in Bristol). Rather, the start and end times of the working day.
In London, if you were in at 09:28, you were among the first in. In Bristol, if you arrived at 08:28, you were among the last in.
I learned to adjust my inner Mean Time as I travelled down Brunel’s famous tain line each time.
And that data is borne out by Legal Cheek’s excellent round-up of start times, finish times and total daily hours for some of the major US and UK firms.
A glance at the early birds list gives us a top 20 dominated by regional or national firms:
Law firm and Average start time (the early birds)
- Express Solicitors 8:20 AM
- Walker Morris 8:33 AM
- TLT 8:36 AM
- Womble Bond Dickinson 8:37 AM
- Eversheds Sutherland 8:38 AM
- Michelmores 8:38 AM
- Bevan Brittan 8:38 AM
- Mills & Reeve 8:43 AM
- Irwin Mitchell 8:43 AM
- Foot Anstey 8:44 AM
- Fletchers 8:44 AM
- Kennedys 8:45 AM
- DWF Group Plc 8:45 AM
- Shakespeare Martineau 8:45 AM
- Hill Dickinson 8:46 AM
- Ashfords 8:46 AM
- Birketts 8:46 AM
- Gateley 8:47 AM
- Shoosmiths 8:47 AM
- RWK Goodman 8:48 AM
The late starters? All US firms and The Magic Circle.
In my view, regional and national firms could make more of this in their marketing and in attracting talent. Only one firm in the top 20 early starters (i.e. pre-9am) leaves on average as late as at 7pm: Kennedys.
Everyone else is logged off in time for The One Show.
In other news
I think I’d be sobbing, too, if I’d just been hit with a £100m lawsuit. Sovereign wealth funds and local councils are among investors who have clearly had enough of the allegations of modern slavery against Boohoo, the fast-fashion brand.
Investigations into the runnings of the brand disclosed a harsh truth – Boohoo’s poor working conditions and low rates of pay in its Leicester factories are substantially true, and likewise, the monitoring of its supply chains was found to be inadequate due to weak corporate governance. It’s not looking good for the fast fashion giant, who also owns many other fast fashion favourites, including Pretty Little Thing and Nasty Gal, as well as high street brands like Karen Millen, Warehouse and Dorothy Perkins.
But is a £100m claim by shareholders enough to shift the tick box exercise mindset evinced by many employers when it comes to modern slavery compliance?
The proportion of people identifying as LGB+ in England and Wales, by their occupation
A recent study by the Independent has revealed which industries include the most LGB+ individuals, and here are the top five (presented by the percentage of total employees and the number of people identifying as LGB+). Or should I say, the industries in which people feel most comfortable to share that they identify as LGB+.
Air travel assistants 13.7% (3,210); actors, entertainers and presenters 12.3% (5,800); leisure and theme park attendants 11.0% (1,925); coffee shop workers 10.8% (4,325); and artists 9.8% (4,615).
The percentages of LGB+ people in the legal profession fall at 5.1% (1,255) of barristers and judges, legal associate professionals at 4.1% (1,790), and 3.6% (4,985) of solicitors and lawyers.
What do these figures tell us about the legal sector as opposed to the creative industries? Is there a reason more LGB+ people have become barristers and judges over solicitors and lawyers?
Important questions for the legal sector’s DEI champions to address.
What we say on campus echoes through the real world
The chair of the New York firm Davis Polk & Wardwell has rescinded job offers to three students at top universities after the emergence of evidence that these students have been involved in university organisations taking positions during the conflict between Israel and Hamas.
Chair Neil Barr has firmly stated the positions and statements issued by these organisations ran contrary to the values at Davis Polk & Wardwell, though the firm apparently remains “in dialogue” with two of the students “to ensure that any further color being offered to us by these students is being considered” – I’m not quite sure if that means an olive branch may be proffered if the students show themselves suitably penitent.
In this article from law.com, it is revealed that law firms are under pressure to vet students and their organisational affiliations more closely, in the wake of the Hamas attack on Israel. This proactive approach to disciplining contentious behaviour has been taken by other law firms, as Chicago firm Winston & Strawn LLP also rescinded its offer to the president of the Student Bar Association at New York University’s School of Law, who issued a statement that appeared to state that Hamas’ attack on Israel was “necessary”.
In related breaking news, it appears that the Met counter-terrorism unit is set to investigate tweets by Garden Court barrister Franck Magennis. According to The Lawyer, he has “been accused of publishing posts on social media platform X that glorify terrorism and support the terrorist organisation Hamas in its attack on Israel.”
Around the world in 80 pages
The Law Society Gazette has revealed the findings of a whistleblowing advice charity, which show that over one-fifth of workers are too fearful of reprisals to speak up about environmental concerns at work. And around one-fifth of employees have stated their concerns about providing proof and their fear that their concerns won’t be dealt with as other reasons for not speaking out.
The charity, Protect, has released an 80-page ‘toolkit’, aiming to provide steps on how to raise a concern and the legal protections in place for employees moving forward. The document has been crafted by a variety of professionals, including lawyers, trades union, non-governmental organisations and journalists.
Dates for your diary
- 8 November – Inspirational Women in Law Awards – A celebration of our role models in law. The Inspirational Women in Law Awards seeks to identify the trailblazers of the profession and individuals from across the legal profession who are leading the way in improving equality and diversity. In its eighth edition this year, the celebration of the award winners will be framed by a celebration of the achievements of all those who continue to be role models in the legal profession. In-person event at Clifford Chance, London.
- 8 and 9 November – Legal Innovators UK 4.0 – Legal Innovators is for learning, sharing and networking. After the great success last year, Legal Innovators will now take place over two days. The first day will focus on law firms and legal services businesses and how they are driving innovation. The second day will focus on innovation among in-house legal teams and legal operations professionals.
- 14 November – The Lawyer’s ‘In-House Counsel As Business Partner’ Event – Global instability is here to stay. In order to successfully navigate the current landscape of global instability and risk, organisations need to strategically invest in their people, processes and technology. That is where The Lawyer’s In-House Counsel comes into play at this informative and insightful event. In-person event at etc.venues County Hall, London