Christopher Saul, senior partner at one of the City's top law firms, describes how the partnership is adapting to survive
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Christopher Saul, of Slaughter and May, says he is cautiously optimistic that the firm's model is a good one for dificult times and it can afford a short-term sacrifice to increase market share to not show enlarge option.
Slaughter and May has always been different. The last of the big traditional partnerships, with nothing as vulgar as a public relations department, it prides itself on never having hired a partner from outside the firm. But its restrained approach — compared to the gung-ho expansionism of Clifford Chance or Linklaters — once derided as old-fashioned, is now looking more appropriate in the credit crunch era.
Indeed, according to Christopher Saul, the senior partner, “last year was actually busy for us. In some ways, the financial crisis played to the firm's strengths.”
Last year, despite an alarming drop in deal activity, Slaughter and May, one of the UK's oldest corporate law firms and by most accounts its most successful, played a role in several big transactions, advising BHP Billiton on its attempted takeover of Rio Tinto, Banco Santander on its £1.25 billion purchase of Alliance & Leicester and British Airways on its Iberia merger discussions. More importantly, it secured the role of legal adviser to the Treasury, playing a key role in the nationalisation of Northern Rock and the rescue of Britain's high street banks.
Mandates on such high-profile restructurings will be crucial for the leading law firms if they are to compensate for the absence of the sort of multibillion-pound deals that sustained them during the boom years. Linklaters, for instance — perhaps the biggest threat at present to Slaughter and May's position as the City's top law firm — has more than 100 lawyers busy on the Lehman Brothers' administration.
Yet even with an upturn in insolvencies, there may not be enough work to sustain the record levels of growth achieved by top firms in the past few years. “Looking forward over what will be a pretty difficult year for the economy, I'd say [we will be] maybe a bit less busy overall,” Mr Saul admitted — but how many managers in other industries wouldn't kill to have even a hope of matching their best year? “We are cautiously optimistic in relative terms.”
Mr Saul was speaking in his vast office at the firm's building in Moorgate in the City (he apologised for its grandness, explaining that it was inherited from his predecessor). In a corner of the room is a wooden train set, a gift from a client. On one wall is a framed montage of newspaper clippings assembled by his wife from a trip to South America, during which Mr Saul slept through a military coup.
Mr Saul, 53, became senior partner in May after four years as head of the firm's corporate practice. Largely unknown beyond his colleagues, clients and rival takeover lawyers, he was hailed, nevertheless, in legal circles as an astute appointment. His peers say that he is not only capable but a genuinely decent person, a convincing counter to Slaughter and May's reputation in some quarters for being smug and aloof. Despite earning a reported £2.4 million, he takes the Tube to work from his home in Notting Hill. He describes his politics as close to The Independent — liberal-leaning — and holidays with his family in places such as Libya and Colombia. An animated talker, he becomes especially enthusiastic when talking about pop music acts such as Amy Winehouse and Kings of Leon. His one apparent indulgence is a 1973 Porsche 911.
Mr Saul joined Slaughter and May as a trainee in 1977 and is unswervingly loyal to the firm: he rejects any characterisation of his colleagues as arrogant and talks of their “collegiality” and “sense of fun” — a description sure to raise eyebrows among those who depict the firm as one of the City's most demanding employers.
Although Slaughter and May does not publish its financial results — as a traditional partnership, it is not legally required to — several legal publications estimate its revenue last year to have been about £420 million. That was considerably less than its magic circle rivals Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters, each of which billed in excess of £1billion, but Slaughter and May is believed to be vastly more profitable. Its partners earned an average of more than £1.5 million last year, according to several estimates.
According to Mr Saul, Slaughter and May is also better placed than its competitors to weather a recession. He cites two reasons: first, its lawyers are encouraged to avoid specialisation, which allows them to shift their focus more easily if demand for certain work disappears. In recent months, the firm has moved several partners from its structured finance practice to bolster its restructuring and insolvency capacity.
Second, Mr Saul says, the firm has resisted the temptation to expand internationally. While most other large firms opened offices in Europe, Asia and the Middle East, Slaughter and May has maintained only a minimal presence outside London, with small offices in Brussels, Paris and Hong Kong. Instead, it prefers to rely on a loose network of “best friend” ties with some European firms when it requires foreign legal advice. This, Mr Saul says, has allowed the firm to keep its overheads relatively low while its competitors struggle to prop up unprofitable foreign offices as revenues decline.
A few years ago, this approach was criticised as being excessively conservative: many said that the firm was too focused on the UK, that its client base, dominated by FTSE 100 companies — it represents 28, more than any other — was stuffy; and that it had been too slow to grasp the importance of private equity and investment banks. Yet its prudence has turned out to be one of its greatest strengths, Mr Saul said.
He was quick to add, however, that the firm was not complacent about protecting its position. “We know we're a quality outfit, but we also know that the competition is great and that we've got to work really hard every day to be worthy of the respect of our clients and competitors.”
Like other firms, he said, the firm is carefully monitoring its cost base and cashflow. According to lawyers at its rivals, it has also been aggressively targeting new clients and mandates, stooping to compete for the sort of work it most likely would not have sought during the boom by ruthlessly discounting its rates — much to the irritation of its competitors.
“We're happy to distinguish between the real value-added work, the important ‘bet the farm' deals, and work that is not of that nature and to distinguish what we charge,” Mr Saul said. It makes sense: as they look to slash costs, clients are increasingly concerned about the amount they spend on legal advice. And Slaughter and May, with a profit margin reportedly above 50 per cent, can afford a short-term sacrifice in order to increase its market share and keep its younger lawyers busy, avoiding the need for redundancies that could leave the firm with a shortage of talent in later years.
Even during the good times the firm had a flexible approach to pricing, Mr Saul said, preferring to negotiate fees based on the complexity of a particular transaction rather than billing by the hour, a practice increasingly unpopular with clients. Yet despite Mr Saul's confidence, he expects the next few years to be tough for even the best law firms. “This is clearly the worst downturn since the Second World War,” he said, “so while I'm optimistic that our model is a good one for difficult times, I am conscious that these are going to be atypically difficult times."
When the dust settles, Mr Saul said, there will be opportunities for lawyers. Not only will companies need advice on coping with increased regulation, lawyers will also play a greater role in putting deals together from the outset as greater attention is paid to minimising risk and protecting investors.
Q&A
If you could change one thing in the financial and commercial environment, what would it be?
At the moment, if I could do it, I would make debt available. What has been pretty odd is that the provision of debt has just more or less dried up. Everybody's been surprised about that, and everybody has different ideas about how one can free up the system. The big challenge at the moment is getting that lifeblood back. There is money around, deals could be done - but they're small and equity-based.
What does leadership mean to you?
Leadership to me means being worthy of respect. Being a source of ideas. I think that to lead you have to have ideas and the enthusiasm to share those ideas and encourage people to implement them. One of the things that really appealed to me [about becoming senior partner] was the cheerleading aspect. I enjoy sharing ideas about new things that we can do and encouraging the firm to strive to be better.
Which businessperson do you most admire?
Golly. I'll have two if I can. I admire Clive Cowdery. I think he's been a genuinely fresh person on the financial services stage. He's built Resolution once and he's on his way to building it a second time. I think he's thought outside the box. And in a desperately bleak environment he's succeeded in getting away an IPO. I admire him for what he's done in difficult circumstances. No 2, I admire Sir Stuart Rose. He turned around Marks & Spencer. He's always upbeat and I like people who are always upbeat. And I think he's done a great job in difficult circumstances. And they happen to both be clients of ours.
What's most important in your working life?
I hope this doesn't sound too corny, but for me working with people who I've grown up with and who are great friends. Here at Slaughter and May, we have actually largely all grown up together. Of 120-something partners, 101 did their training contracts here and the rest were associates here before they became partners. That means we all know each other fantastically well. That personal empathy and co-operation and support is fantastic and it's a big part of why it's good to come to work in the morning.
Who is or was your mentor?
Thomas Buckley. When I joined Slaughter and May in February 1977, I was allocated to sit with Thomas Buckley, who was one of the senior corporate finance partners. I did a year of what is now called a training contract but was then called articles of clerkship. He was fantastic because he was a great corporate lawyer. More than that, he was a very funny man. What he really taught me was that there's a lot of fun to be gained out of legal work. He also taught me that in negotiations you can often make more ground through a twinkle of the eye than a thump on the table.
What's more important, what you know or who you know?
What you know. You need to have a good knowledge of the law, the commercial landscape and of how things have been done before in order to be a good lawyer. Who you know will also be important — sometimes who you know will make the difference — but what you know is part of your basic substance.
Does money motivate you?
No.
What gadget must you have?
A CD player. I love music. Music is very important to me. I can't do iPods because I don't like things in my ears, but I love listening to music. And cars. I've always loved cars. I had a 1989 BMW M3: it looked a bit like a drug dealer's car. I've now sold that, but I still have a 1973 Porsche 911. I particularly like older, classic cars, but any kind of car will do.
How do you relax?
Again, music. Rock and pop music. The Kings of Leon. Amy Winehouse. I liked rock and pop music in my teens and twenties but drifted away from it in my thirties and forties. Then I came back to it big-time about ten years ago. The trigger may have been that I was given a jukebox as a gift from a client. On the back of that, I started going to pop concerts again. Now I go to 12 to 15 a year. I find it an extraordinarily uplifting experience.
CV
Born June 29, 1955, in Carlisle
Education Read law at St Catherine's College, Oxford
Career Joined Slaughter and May in 1977. Became a partner in 1986 and was elected head of the corporate department in 2004. Elected senior partner at the start of 2008 and took over from Tim Clark in May
Interests Classic cars; drives a 1973 Porsche 911 and, until recently, a 1989 BMW M3, which he drove around the Nürburgring in Germany last year. Pop music; favourites include Amy Winehouse and the Ting Tings. Travel; Colombia at Christmas. Reading; the last book he read was The Reluctant Fundamentalist by Mohsin Hamid. His favourite last year was Cormac McCarthy's The Road
Family Married Anne, who is French, in 1985. Two children, Edouard, 20, who is reading anthropology, and Laura, 19, who is reading French and Arabic, both at UCL
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