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Less revolution, more evolution

In May 2016, Wim Dejonghe was elected senior partner of A&O and Andrew Ballheimer was elected managing partner. Here, they discuss their vision for A&O, the challenges that lie ahead after the Brexit vote, the current situation for global businesses, what the competition looks like in 2016, and how important it is to have a strong alumni network.

This year marks the beginning of a new era for the leadership of A&O. What are your plans for the future?

Andrew: We’ve inherited a fantastic platform from the previous leadership. Obviously it’s a real privilege to lead A&O, but it’s not a revolutionary change, so much as an evolution. We already have many of the building blocks of success, but now we can build on those achievements.

We’ve set five key priorities. The first is a real focus and push on clients. We’re inspired by the fact that A&O as a firm is seen as the most client-centric firm out there. It’s all about our clients, not about us. We need to understand their agendas and help them achieve their business objectives.

The second is to focus investment on those parts of our offering that aren’t quite complete but need a little more support. In particular, we’re pushing development in the U.S. and China, and keeping an eye on India, if the market there opens up. We’re also looking to invest more in France, Germany and Spain.

The third is to have a big push in revenue. We want to eat into our competitors’ market share and be ahead of the market as new opportunities appear.

Our fourth priority is diversity. We’re a people business and want to be able to promote our most talented people. That requires an expansive talent pool, which means we need to be as inclusive as possible. It makes business sense, and is the right thing to do morally.

Lastly, we aim to innovate constantly. When you look at the FT Innovative Lawyers Awards, A&O has come in the top three for innovation since the awards were started.

Wim: Innovation is an evolving opportunity, so maintaining that competitive advantage through our innovation is vital.

Have you had time to form a joint vision?

Wim: Yes. Very shortly after the election process had finished, our bi-annual partnership conference took place in Dubai, which gave us the perfect opportunity to set out our vision to our fellow partners.

Andrew: We had eight weeks to draw up our strategy. In that time, however, we also had to do our previous jobs; we had to draw up a financial forecast for the firm and we both took a short break. So in terms of actual preparation time, we had two to three days!

Wim: Andrew came to my house in Belgium and the two of us spent a day and a half just talking until we arrived at those five key priorities. We wouldn’t have been able to do that if we’d stayed in the office.

Andrew: Clearly each of us had thought about our vision for A&O during the election process. Even among the candidates, there was a minimum amount of divergence in terms of what we wanted to focus on, so it wasn’t as if we were poles apart to begin with.

Wim: On the election topics, we were 80-90% the same. In fact, the partnership was very much aligned behind the five key priorities, so now we’re able to get on with implementing them.

That’s good news. How did the election process go?

Andrew: It’s the most intense professional thing I’ve ever done. You have to try to speak to every partner on a one-to-one basis, sometimes on the phone but also by flying to the international offices and meeting people personally. Even in a firm that’s actually not very political – there are no schisms or voting blocks in the partnership – for people who aren’t natural politicians, it’s odd going through a political process. I certainly felt a bit outside of my comfort zone. However, the engagement with the partners was fantastic. They all made time for me.

Wim: It’s definitely stressful but it’s also energising. There are a lot of good people out there with good ideas. Canvassing was really interesting – you get to see the pride in A&O, the ownership of it and people’s interest in how we’re going to move forward. It was very powerful.

Looking forward, then, do you have plans to open any more offices?

Wim: We’re not looking at opening any more offices at the moment (although if India opens up to foreign law firms, we will look at that) but we are looking at focusing greater investment in our U.S. capabilities. Our U.S. team is extremely high quality with great clients, but we lack depth in certain practice areas and we need to build that up to grow our share of the U.S. market. We’ve recently recruited five leveraged finance partners. Hopefully we can continue doing that.

Will any expansion be through lateral hires or are you looking for a merger?

Wim: There’s no merger out there that’s right for us in every respect. In this age, what you need is local law capability, which we have. You then need to have English law capability, where we are second to none. Then you need U.S./New York law capability across your network, as a parallel offering to English law.

Andrew: To put it into context, 50% of the global legal industry is based on U.S. law. Unlike any other jurisdiction, the U.S. regulatory regime is extra-territorial; if an act has any nexus into the U.S., even if the act happened outside of the U.S., both the U.S. prosecutor and the U.S. Courts can claim jurisdiction over it.

For a global firm, having that extraterritorial impact on our business means we have to have a robust offering across all practice areas. We aim for A&O to be at the forefront of the global elite. We currently have 150 lawyers in the U.S. and around 150 U.S. qualified lawyers elsewhere in the world. We have 1,000 English-law qualified lawyers, so we need to extend our U.S. offering.

What are the biggest challenges facing A&O at the moment?

Wim: There’s increasing uncertainty around the world, not just in the financial markets but also because of political instability and terrorism. Our challenge is to navigate that uncertainty without overreacting, but also to be alert to long-term changes to the market.

We’re a well hedged business and we can take changes on the chin, but sometimes these things come out of the blue, which creates an even bigger challenge. Brexit certainly came as a great shock to many, particularly outside the UK. Now, there seem to be more and more incidents where globalisation is being challenged by nationalist parties: in the UK, that’s what Brexit was all about; you can also see traces of nationalisation in Austria, France and even in Germany.

What are the biggest challenges facing businesses in general?

Wim: Businesses in general face the same issues as law firms. They’re also dealing with uncertainty for them and their clients. Globalisation – the philosophy of inclusion – is being challenged. Over the next ten years, I believe we’ll see the tension between globalisation and exclusion leading to more nationalism. For all businesses, this will have an effect on their strategic decisions. We’re a secondary business: we follow our clients, so whatever happens to them has an impact on us.

Andrew: If you’re at a local firm without an overseas presence, then you’re far more exposed to the local environment. Something like Brexit will have a far greater impact on you if you don’t have an international footprint which provides a hedge.

So, on 24 June, did you find a lot of clients turning to you for guidance?

Andrew: Yes. We had scheduled a briefing call for 2,000 clients which ended up being hugely oversubscribed, so we shared the recording with a further 4,000. Because there were only a finite number of lines, we invited employees who wanted to listen in to join us in the auditorium. When I came down, the auditorium was packed with more than 500 people. They were standing, sitting on the floor or packed into the lobby outside where there must have been 100 people. I couldn’t actually get in – it took me half an hour to get to the front!

Wim: During the call, it was like the images from the Second World War where people were listening around the radio. I’ll never forget that day. After the call, I spent the whole day driving around London on the back of a scooter from one media interview to another. It was surreal.

What have been the main concerns both forA&O and for business in general following Brexit and how hasA&O been addressing those concerns?

Wim: In the first instance, we ran the briefing call which dealt with the implications of Brexit for the regulatory environment, what immediate action people should take, passporting, financial products etc, all of which was very carefully prepared to give clients an immediate steer. On the back of that call, clients have been planning and hedging their risks and we’ve been helping them with that.

For us, the longer-term possible risk is that English law might lose some market share to New York law, but it won’t happen overnight, if it happens at all. Otherwise, we’re in a good place because we’re among the leading firms in all the leading centres of commerce across Europe – basically anywhere the financial institutions could move to. We might need to increase our English law capability in those places. However, I’m confident London will continue to play a major role in the global legal industry.

Andrew: The world continues to change. Spain has another election on Christmas Day. France and Germany have elections in 2017. In politics, things seem to be moving. There’s revolutionary change; there’s a disconnect between the things that happen in the EU in Brussels, and how the general populace is feeling. Brexit was a wake-up call, and I’m not sure it was heard.

Looking back to law, do you regard the concept of the ‘magic circle’ as outdated?

Wim: It’s been outdated for a long time. It was coined 20 years ago when 80% of our revenues were in London; now that figure is around 30% with similar statistics for Clifford Chance, Freshfields and Linklaters.

Who do you now regard as A&O’s main competitors?

Andrew: The main global firms now, apart from us, are Latham & Watkins, Skadden, Freshfields, Linklaters, and Clifford Chance.

Wim: We all have the same challenges. I think the two American firms need to grow their English and local law capabilities, and the others need to grow their U.S. law capability. That’s basically it.

How are you preparing A&O to face non-traditional competitors now and in the future?

Wim: We’ve built an alternative delivery capacity which allows us to work more efficiently at lower cost for our clients. We have five initiatives: aosphere; the Project Management Office; Peerpoint; the Legal Services Centre in Belfast; and Digital and Online Services, which, together, mean we can go to clients and say: “We can deal with all of it for you.”

Andrew: Clients are very interested in having the integrated package. It’s important that we can offer it because we’re being challenged, not only by other law firms but, more recently, by the big four accountancy firms. They may lack a deep, quality legal knowledge, but they’re very good at systems. They’re also building a huge legal capacity. For example, in Spain alone, EY has 600 lawyers.

Wim: PwC is certainly one of the largest, if not the largest, law firm in the world now. They have more than 3,500 lawyers, doing mostly compliance work on models where they have one partner and around 40 lawyers working on a standard product which is process driven.

Andrew: We’re always working on our processes and delivery models, and in that sense we’re better placed than anyone else in the traditional legal industry, but we need to move on to the next level. However, when clients have a complex, multi-jurisdictional issue, they recognise that they need our global capability, project management and alternative delivery models.

I was at a conference recently with our global relationship firms which cover jurisdictions where we don’t have an office. Our keynote speaker was a high performance expert and author named Rasmus Ankersen. His latest book, Hunger in Paradise, is about the risk of success in business; he says the hardest thing is not to achieve success, but to maintain it.

Wim: I’ve always said it’s easier to get to the top than to stay there. Successful organisations become complacent, and I think it’s about staying hungry. A&O is doing really well. We have a fantastic market position, but we need to embrace these change projects on delivery, challenge ourselves and always try to improve our offering. That’s where the ‘most advanced law firm in the world’ philosophy and thinking comes from: a culture of challenging yourself all the time.

Looking at the strength of the Alumni Network, what relationships did you build in your early days at A&O that have remained valuable to you?

Wim: For most of my last years of full-time practice, a very large chunk of my work came from my old associates who’d moved on and become general counsel. Possibly the most fascinating deal I’ve ever done was from an ex-associate of mine who was going through the only real hostile takeover bid that ever happened in Belgium. The board was in a panic saying: “What do we do?” and he said: “I’ll call Wim!”

Each time he’s changed jobs since, he’s given me his legal work. It’s great to see the guy I recruited 20 years ago do so amazingly well. On a personal level, it’s a lot of fun to stay in touch, and that’s also good for the business, as you know them so well.

Andrew: I think for almost all of us here, our time at A&O is a key point in our career. It’s like having a badge that’s recognised around the world as a stamp of quality, of values and a certain type of culture. We’re all very proud of that.

How have you drawn on these relationships in your current roles?

Andrew: I have mentors who were ahead of me in the firm and who I can talk to and know they will give me completely unbiased, very informed advice. They know me, they know A&O and can empathise. It’s a fantastic resource to have.

Wim: It’s a community, in a way. I think the personal relationships are the most gratifying. I have a lot of friends from A&O who I go on holiday with and have dinner with. These are relationships based on trust, with people you’ve spent an important or seminal part of your life with, and who you can call on anytime.

How useful do you find having an extensive Alumni Network at A&O?

Wim: It’s part of the direction of travel for a career. We aim to create a community rather than an employer/employee relationship, which has easy exits and returns; where the line between being in and out is grey and smudged, and with more and different ways of staying connected with the organisation. The Alumni Network plays a big role in helping us do that.



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