Eifion Morris is determined to fast-track Stephenson Harwood’s future with an ambitious plan to double firm revenues in five years.
“The firm is at the beginning of a period of change. In the last two and half years we’ve made some significant changes to future-proof our business,” the firm’s chief executive said.
The plan, which involves focusing on performance, reorganising areas of the business and managing a transition in the partnership, has not been implemented as quickly as the firm’s management would have liked, having been delayed by Covid until May this year. But for Morris, the long-term picture is most important. “We always expected these changes—which will lay the foundations for the future success of the firm—to take a few years,” he added.
Morris is undeniably under pressure to perform after mediocre results in recent years. The firm was one of the few U.K. Top 50 law firms to report both a revenue drop and partner profits fall in the 12 months to April 2021. Its revenue was to down 2% to £209 million, while average equity partner profits are at £685,000, down 10% from an all-time high in 2015-16. The firm will no doubt be hoping for stronger numbers when it announces its results for the most recent financial year in the coming weeks.
Perhaps more concerning is that firms that would historically have been classed as rivals to Stephenson Harwood thanks their shipping expertise—Clyde & Co and HFW—have gained ground on the firm. In 2019, Stephenson Harwood’s average equity partner profits were clearly ahead of both firms. By 2021, that lead had vanished.
Morris, who was appointed in October 2019, said the pandemic had had an impact on output but that the future looked promising. “The firm is well balanced: around 50% of our revenue is generated from contentious work, with the other half generated from non-contentious work,” he said. “Like many law firms, our transactional teams have been incredibly busy for the last couple of years. But during the pandemic there have been fewer disputes—and that has had an impact. Given the current economic and geopolitical environment, we’re expecting that to change.”
At the same time the firm had a sharp drop in its number of equity partners. Between 2020 and 2021, the number fell from 98 to 81.
Morris attributes the sharp fall in equity partners in 2021 to retirements and redesignations—both equity partners retiring and leaving the firm, and also a transition phase for other equity partners moving to fixed equity partner (FEP) status.
“We also invested in new partners during that time, particularly in our sectorial areas of focus, with 24 internal promotions and 38 lateral hires. It reflects our ambitions for the future and demonstrates that our new partners share our ambition for the firm’s success, while recognising it will take some time for our strategy to come to fruition,” he said.
Period of change
With such changes going on, irrespective of Covid, the last two-and-half years were going to be a period of flux for the firm. “If there’s a thread that brings together everything we’re doing, it’s building the firm for the future. We’ve worked hard to consolidate the business and get the right foundations in place,” he said.
“The launch of our new strategy, which we began implementing in May this year, is a significant milestone. It’s a bold, ambitious, statement of intent; a roadmap for the next five years that will drive a step-change in the nature and complexity of the work we do. It is also the first time the firm has specifically adopted a sector-based approach as part of its strategy.”
As part of Morris’s grand plan, the five new key sectors where it hopes to excel are transportation and trade, private capital and funds, decarbonisation, life sciences, and technology. It has set up a global leadership team, with the appointment of five new practice group leaders, and four new office managing partners, as well as changes to the London practice group structure.
Increasing the amount of collaboration across different practice areas, and carrying out more complex and bigger projects for clients and increasing the number of long-term client relationships, are also key.
“I want us to be a leading firm in Europe, Asia, and the Middle East, in our chosen areas of focus,” he said. “The five key sectors we’ve targeted for significant growth cover our existing areas of deep strength and industry knowledge, as well as sectors that will continue to grow and develop in coming years, and which are well suited to our strengths of supporting clients with their complex business challenges.”
The key sectors
Morris believes that while transportation and trade is a core area of strength for the firm, it also has significant potential for further growth. “Shipping, aviation, rail, and the trade element are very important, in the fact we’ve got a market-leading practice in commodities. Supply chain issues, and rising commodity prices, are a sweet spot for us as a firm. That links to infrastructure and how you transport goods around the world,” he said.
The firm claims to have depth and breadth of expertise across private capital and funds practices, an area that includes clients with capital to deploy and invest, either on their own account or on behalf of others. He said the firm recently merged two large real estate investment funds to create the eighth-largest U.K. REIT, with a £3.9 billion property portfolio.
In addition, former Macfarlanes private wealth head, Jonathan Conder, recently joined the firm, with a mandate to help build the private wealth offering across the network. “We are in a strong position to build on this, and our aim will be to become the ‘go to’ firm for all the legal services high-net-worth individuals require,” Morris said.
On decarbonization, the firm’s work is in areas ranging from hydrogen batteries, energy from waste, wind, solar, and offshore wind in particular, to the decommissioning of oil rigs. “This is where the future lies, including in this part of the world,” Morris said. “For us, it’s an exciting area, and a growing area. It’s where tech was in the 1990s.”
The firm also expects life sciences, where it has worked on two of the main Covid vaccines, and has strong relationships with multi-nationals, will provide work across commercial, competition, tax, corporate finance, and IP law. Its experience in technology will mesh with the Gulf Cooperation Council’s (GCC) pace-setting work in blockchain and cryptocurrency.
A key plank of the firm’s plans is to bolster the strength of international network, based on the success of the Paris office, which has grown rapidly. “It is a great example of how quickly we can move. In the last two and a half years, we’ve been joined by 10 new partners and grown the Paris office into a full-service offering. We want to replicate that growth trajectory in our other offices,” he said.
Dubai is clearly another target for rapid growth, as Morris explained to Law.com International on a visit to the Middle East’s business hub, to oversee the next phase of the firm’s regional expansion. Launched in 2012, the office now comprises 12 partners.
As incoming Dubai managing partner, Rania Tadros joined from Ince & Co. Dubai, where she was also managing partner. “Our ambition is to build out the office across multiple practices,” she said. “Shipping is one of our really strong points, but the growth in the last six months shows the focus and progress on the finance and corporate sides.”
In addition, the firm has offices in Singapore, Seoul, Hong Kong, Shanghai and Piraeus. Morris has big plans for Asia. “We are looking to expand Singapore, and then at opportunities throughout the Southeast Asia region,” he said.
In Singapore, the firm has an alliance with Singaporean firm Virtus Law. “It enables us to give clients seamless local and international law advice; Virtus can advise on Singaporean law while we advise on English law. We also have a network of other law firms we work with throughout the region—on a ‘best friends’ basis. It’s the same in Europe.
In what Morris called a strategic reprioritisation in China in May 2020, the firm closed down its Beijing office, to focus on Hong Kong, where it has 23 partners today, and Shanghai, where it has two. “Our second largest office is Hong Kong. We have a tie-up with a Chinese law firm there too,” he said.
Regarding the U.S., the firm wants to rely on relationships with local firms. “A number of our competitors have done a U.S. merger. Our strategy for the next five years is to grow our network of U.S. firms that we work closely with. A number of them use us to help coordinate—what they call quarterbacking—other parts of the world for them, either on their cases or on their deals,” he said.
Morris refers to the current team as custodians of the firm and the authors of this chapter in its history. “We have got very ambitious plans for the firm as a whole. We inherited a successful and long-standing business, and it is our responsibility to ensure that we continue to build that business long into the future before handing it on to the next generation of leaders. Now is the time to develop and grow the business.”