Can Slaughter and May survive London’s US invasion?

Each autumn, companions at elite British legislation agency Slaughter and Could are invited for the “paterfamilias” — a chat with the senior companion or “father of the household” — about their efficiency. The ritual is consistent with the legislation agency, which has lengthy projected an air of rarefied mystique.

This yr, nevertheless, after a long time of the format, the agency has renamed the yearly dialogue as an “annual dialogue”.

Whereas the change could seem to be a footnote within the historical past of the 135-year-old establishment, it’s proof that even Slaughters is being compelled to adapt within the face of an onslaught of US legislation agency funding in London, which has sparked the biggest market disruption in recent history.

“All the things has its time,” mentioned Roland Turnill, Slaughters’ senior companion, in his first interview since taking over the helm in Could. To youthful companions the Latin identify “might seem anachronistic”.

London-headquartered law firms have been grappling in recent times with a rising tide of American companies increasing within the Metropolis, utilizing their deep pockets to lure expertise from English rivals. The pattern, spurred largely by personal fairness funding in Britain, has compelled a variety of UK companies to overtake remuneration fashions and improve pay in a warfare for expertise.

Even Slaughters, which has largely averted the hiring frenzy, elevated salaries 20 per cent for its most junior legal professionals out of season this yr. The choice got here after a group of US firms upped pay in London, forcing the UK’s “magic circle” companies — the likes of Slaughters, Linklaters and Freshfields — to reply.

Slaughters has not suffered the identical quantity of companion defections to American rivals as friends similar to Linklaters, which has seen 21 London companions depart for US companies over the previous two years, in keeping with information from authorized recruitment consultancy Edwards Gibson. That is partly as a result of Slaughters is just not a giant personal fairness participant. Nevertheless it additionally speaks to a distinct technique, one the agency is now doubling down on.

Slaughters has been outlined by its suite of blue-chip shoppers — names similar to GSK, Diageo and Rolls-Royce — and excessive profitability, with a cachet that reaches past the authorized sector.

Shopper mandates over the previous yr alone have included advising Vodafone on its proposed £16.5bn domestic merger with CK Hutchison’s Three UK, Google in relation to its numerous competitors investigations throughout Europe, BHP in one of many largest-ever class actions in England and the Premier League in its arbitration proceedings in opposition to Manchester Metropolis.

One of many final true lockstep companies, through which companions transfer up the fairness ladder that underpins take-home pay primarily based on years of service, the fascination with Slaughters has partly been maintained by the agency’s choice to stay a normal partnership slightly than an LLP, which implies it doesn’t need to disclose revenues or companion pay.

Common income per companion are estimated to be pushing £4mn. The agency’s complete income was assessed to be £654mn and income of £310mn for the final monetary yr, in keeping with authorized publication The Lawyer.

The agency additionally doesn’t purchase into the lateral hiring tradition of different companies — Slaughters has solely ever made two exterior companion hires in London. As an alternative, it has wager the home on homegrown expertise and tradition.

“A mix of cutting-edge work, excessive profitability and an virtually mystically cohesive, homegrown partnership has made Slaughter and Could’s companions virtually impervious to headhunters,” mentioned Scott Gibson, founding father of Edwards Gibson.

That “mystically cohesive” tradition has manifested in a number of traditions. Companions have their very own pigeon holes containing bespoke serviette rings contained in the companion eating room. They’re inspired to lunch collectively as usually as attainable and should all the time sit within the subsequent accessible seat. Such etiquette could appear antiquated, however in keeping with Slaughters’ legal professionals, it additionally creates a collegiate ambiance. Employees are even allowed to carry their canine to work at some point a month.

“I don’t assume we make any effort to be mysterious,” mentioned Turnill. “However we do really feel a robust sense of belonging with one another and I feel that tasks itself to the skin world.”

One uncommon space that has attracted criticism in recent times is Slaughters’ failure to take a position earlier in personal fairness as a apply space.

The choice to not make investments “highlights how innately British the agency is. Appearing primarily for UK plc firms was a strategic mistake,” mentioned one companion at a US agency in London.

Whereas Slaughters’ companions reject the concept the agency missed the boat by not transferring sooner on personal fairness — as a result of, in keeping with one companion, “the boat’s big” — the agency is now taking steps to develop the apply.

The agency made its first personal fairness companion promotion this yr and is aiming to double apply revenues within the subsequent 5 years, concentrating on higher mid-market work and, by way of that, some greater gamers.

“I don’t assume I might look again on personal fairness and say there’s some big failure there. However I might say that it’s an apparent space of focus now,” mentioned Turnill.

In contrast to its rivals, which have grown massive networks of world places of work, Slaughters has additionally lengthy eschewed worldwide growth in favour of a community of referral relationships, choosing the highest companies in key jurisdictions.

The technique offers Slaughters a decrease price base however depends on a heavy funding in its international relationships to make sure the work retains flowing between their “finest buddies” — companies similar to Italy’s BonelliErede and Spain’s Uría Menéndez.

“Latest London strikes by the US companies have led the European one-stop-shop companies to attempt to match these strikes stateside.  However that’s a really robust market to overcome and get return on funding,” mentioned Simon Nicholls, Slaughters co-head of company and M&A. “Our mannequin has all the time been totally different and it nonetheless offers us strategic agility.”

Siobhán Lewington, a companion at authorized recruiter Macrae, mentioned: “Slaughter and Could’s place stays distinctive within the London market. It’s a lot smaller than its friends . . . leading to a popularity for a extremely personalised service delivered by some severe heavyweights.”

Slaughters’ variations are additionally what appeal to younger expertise. The extra boutique-style mannequin — the agency has simply over 100 companions — means people can have an even bigger affect on choices.

Recognized for having one of many shortest and most coveted partnership tracks of any legislation agency, from an consumption of roughly 85 trainees solely about seven will ever make it to companion, with some reaching the standing in as little as 7.5 years.

The method is gruelling, in keeping with individuals who have labored on the agency, with associates placed on the “partnership course of” — a rotation by way of totally different apply areas — usually for a variety of years. A number of companions should endorse a candidate if they’re to obtain the final word prize, which additionally contains an instantaneous pay rise from about £250,000 to greater than £1.5mn.

“These associates on monitor to partnership, they’d change into virtually like robots. They’d begin speaking the identical and dressing the identical,” mentioned one one that had labored on the agency. “Anybody who comes up into the priesthood has been by way of the seminary.”

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Nonetheless, within the face of rising competitors in London and the necessity for higher flexibility and variety, the agency has additionally tried to modernise. A senior counsel function was launched as an choice earlier than partnership in 2016 and associates also can select to cut back their working hours for decreased pay. 

In some ways Slaughters’ future seems safer than its magic circle rivals who’re battling frequent defections to US companies and making massive investments to make sure their worldwide footprints repay. However with few levers to tug financially to match the hovering pay packets of American outfits — which have reached as a lot as $20mn for a choose few — the agency should maintain on to the key sauce of its tradition if its success is to endure.