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An extraordinary and transformative year

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Senior partner Wim Dejonghe reflects on a game-changing year for A&O, culminating in the transformative merger with Shearman & Sterling, record full-year revenues and progress across many other strategic areas.

Let’s start with the big news – the merger with Shearman & Sterling. Why is this such an incredible opportunity for A&O?

It starts with our strategy. We want to be the world’s first fully integrated global elite law firm, serving the most sophisticated clients in their most sophisticated work.

To do that, we have to have the best people and excellent capabilities in key practice areas, which for us links to our strategic priorities: technology transformation, private capital and energy transition.

But doing business globally has become increasingly complex. Regulation is getting more complicated, the world is much more fragmented and the uncertain geopolitical environment has a direct impact on the law.

These days clients increasingly look to partner with a legal adviser that can handle all their cross-border matters across multiple markets, rather than work with many different firms in different jurisdictions.

To be a truly global firm, we also need to be equally fluent in English law – highly relevant in a lot of cross-border finance and M&A work and in arbitration – U.S. law, the only other exportable legal system, and the laws of the world’s most dynamic markets.

While we’ve been growing our presence in the U.S. since the 1980s and have built a top quality practice across six offices, A&O lacked bench strength and brand recognition. The merger with Shearman & Sterling delivers that.

A&O Shearman will have recognition in U.S. boardrooms and access to a first-class corporate client base in the world’s largest legal market. In a highly litigious commercial environment, our litigation practice will be right up there with the best.

And with nearly 4,000 lawyers across 48 offices, A&O Shearman will have unparalleled global reach and local depth that clients increasingly demand.

Is this a trend others will follow?

We expect to see greater consolidation in the industry and we know others want to build a great transatlantic law firm.

But it’s not easy to pull off. You need cultural fit, client fit and a brand that is equally strong in both firms. There aren’t many that meet those requirements.

A&O reported strong revenue growth at the full year point, although profits were flat. What do you attribute that to?

Our revenues climbed 7% to GBP2.1 billion – breaking the GBP2bn barrier for the first time. We’re a secondary industry.

We follow the market. These numbers show we’re growing faster than our competitors because we’ve read the market correctly and picked the right strategic priorities.

Profits remained level at GBP892 million, partly reflecting the impact of high inflation and interest rates at a time of great economic uncertainty.

But mostly it’s down to salaries. There’s an intense war for talent in our industry and we need to pay at the top of the market to attract the best. That’s had the biggest impact on profitability, but it’s a trend we see right across the legal sector.

...we’re growing faster than our competitors because we’ve read the market correctly and picked the right strategic priorities.

As A&O announced the results, we learned that managing partner Gareth Price was leaving.

Yes, sadly, Gareth decided to retire from A&O for personal reasons, after 30 years.

I’d like to express our gratitude for Gareth’s loyal and stellar contribution to the firm – starting out as a trainee, becoming one of our youngest partners in 2003 and being elected managing partner in 2020.

He led our market-leading energy and infrastructure practice for many years and, as managing partner, steered us through the pandemic and played a pivotal role in the negotiations with Shearman & Sterling that have set us up for success in the future.

Following Gareth’s departure, I’m delighted the Board unanimously voted to appoint Khalid Garousha as interim global managing partner until the end of April 2024.

The energy transition is one of the greatest challenges of our times. What are the opportunities for clients?

Our activity has grown exponentially in this area and it’s really exciting. We now have more than 250 energy transition specialists who have advised on over 200 projects in 45 jurisdictions, across new energy transition technologies.

The size and scale of this challenge – and thus, the opportunity – can be hard to comprehend. Our recent study in partnership with Climate Policy Initiative helped us visualise just how big the net zero financing gap is: tracked climate finance passed USD1 trillion for the first time in 2022 and yet an estimated USD6-7tn of climate finance is required annually to deliver net zero by 2050.

We’re working across the full breadth of transition technologies that will help accelerate net zero, including hydrogen, carbon capture, batteries and green manufacturing. Many of these projects are truly groundbreaking, and these technologies are advancing – quickly. For instance, we’re currently advising the sponsor in relation to the development and financing of the GBP20bn Xlinks Morocco–UK power interconnector project as well as the U.S. Department of Energy on the USD11bn BlueOval battery projects in the U.S.

Has A&O been performing as strongly where technology and private capital are concerned?

Yes, very much.

We’ve advised on some standout tech deals, including OpenText’s USD6bn acquisition of MicroFocus and many digital infrastructure deals. And we’re right at the forefront of emerging technologies such as AI, quantum computing and blockchain. We were the first firm to test and integrate Harvey, a GPT-4-based generative AI tool that’s fine-tuned for lawyers, into our practice, and that means we’re best-placed to advise clients on using AI across their businesses. Our Markets Innovation Group (MIG) also develops tech-based solutions for clients, which means that we understand the intricacies of this technology better than most.

Our Silicon Valley office, now in its second year, advises not only tech companies, but companies across sectors on how to capitalise on technology transformation. And we continue to build our capabilities with important hires, not least around privacy, data and cybersecurity.

Revenue from clients in the private capital space has grown by a fantastic 60% in the past two years, with our infrastructure and private credit teams particularly active. Notable matters include EQT Infrastructure’s EUR3.4bn stake in Wind Tre’s mobile and fixed network and Macquarie Capital’s acquisition of a majority stake in CloudExtel.

U.S. money dominates this sector, so this is another area where the merger boosts our capabilities. Outside the U.S. law firms, we’re leading the market. With the merger we can grow that position much further.

It’s been a strong year too for Advanced Delivery & Solutions, hasn’t it?

Absolutely, and we’re proud of what we’ve achieved in the last ten years with the creation of businesses such as aosphere, Peerpoint, Fuse, MIG, A&O Consulting and Advanced Delivery legal.

All these businesses are flourishing, but we know some could grow faster with a change of approach. As we continue to invest, we’ve been considering how to boost their performance further. For example, we recently announced that A&O has forged a strategic partnership with Inflexion Private Equity to drive the continued growth of aosphere.

Being a responsible business is a core part of A&O’s strategy. How is this embedded into the wider firm?

It’s crucial for every business to have a genuine sense of responsibility and purpose.

For me, the starting point is simple. As lawyers, many of us are privileged and we have a responsibility, beyond making money, to give back to our people, our clients, and wider society.

Of course, that’s about looking at environmental sustainability, and we set our own science-based targets and work with clients that share our goals, another area where progress has been strong. We’re on track to reduce our absolute global carbon emissions by 50% by 2030, and this year we began reporting our global emissions through the Carbon Disclosure Project, along with some 18,700 other companies, many of them our clients.

But equally important is our social impact work, creating a culture that prioritises wellbeing, and working hard to improve diversity, equity and inclusion (DE&I) – particularly retaining diverse talent by creating a truly inclusive workplace.

Culturally, going back to the merger, I’m glad to say there’s complete alignment on this between our two firms. Our values fit well together and were at the centre of the very first conversations we had.

There’s a perception that the big U.S. law firms are all “eat what you kill” but that’s not true. Shearman & Sterling is 150 years old and its roots are in lockstep. Cohesion and providing quality client service within a collegiate workplace lie at the heart of its culture, like ours.

...we have a responsibility, beyond making money, to give back to our people, our clients, and wider society.

What progress is A&O making on DE&I?

This is fundamental for us and, these days, there’s no conversation about talent in A&O that doesn’t cover the diversity challenge. But it does take time. You’ve got to keep drawing attention to the issue, put stretching targets in place and then stretch them again when they are met, as we did last year.

We’re now making progress, particularly on women’s representation in the partnership. This year, 42% of partner promotions were women, bringing representation to 25% globally compared with 18% in 2019. There’s still much further to go to make sure we retain our diverse talent, which is why inclusion is key. The focus is retention rather than recruitment.

Much of the progress is down to targeted action at a local level and it’s great that we now have diversity champions right across our network, helping us decide what needs to be done, office by office.

For example, this year we’ve run allyship training in Belgium, promoted the role of male allies in the Middle East in creating an inclusive workplace, introduced reverse mentoring in South Africa, expanded our award-winning Asian Affinity Network in the U.S. and piloted a passport scheme in the UK to help disabled colleagues get the support they need more easily.

Feedback from colleagues on DE&I issues remains very positive, but we must never let our efforts slip.

Tell us about the work on wellbeing to support A&O’s people.

We engage in inspiring and challenging work, knowing clients and colleagues expect our best. Wellbeing is essential to this – to do our best we need to be at our best – and we’re making good progress. We’re implementing wellbeing plans in every office, making office heads accountable for delivery, and we’ve set a firm-wide goal to provide a workplace that promotes positive mental wellbeing, measured through our internal survey.

Hybrid working, which we’ve adopted across our global network, is an important part of this. But from a wellbeing perspective, when you’re part of a team, meeting in person brings a sense of purpose and integration. Being in the office is also vital where training junior colleagues is concerned. So, while I’m not suggesting we should be in every day, we need to keep sight of the collective benefits of coming in for the majority of our working time.

We want our people to be able to speak openly about their wellbeing and seek help with confidence. We have a growing community of 200 mental health allies and, to mark World Mental Health Day, we highlighted the power of storytelling with 20 colleagues from across our global network sharing their stories to inspire others.

Finally, we’ve set up a Wellbeing Advisory Board – a group of partners from across our network who will shape our wellbeing policies in the future, act as internal and external advocates for our approach, and report directly to our Board, holding us to account.

We’re implementing wellbeing plans in every office, making office heads accountable for delivery...

People are making an ever-bigger contribution to social impact work. Why is that so important?

Hours dedicated to this work have increased by a fantastic 56% over the last two years, in large part due to our programmes of work to support displaced people, for example Afghan and Ukrainian asylum seekers and refugees stranded on Greek islands. Last year, our lawyers volunteered 78,000 hours in support of access to justice, social finance, education, and employment around the world. In addition, partners contributed GBP3.9m to charitable funds, including GBP2.4m via the A&O Foundation.

Our global charity partnership with Street Child was a huge success and we’ve now chosen Women for Women International as our new global charity partner. This great organisation invests where inequality is greatest by helping women who are forgotten – the women survivors of war and conflict. I know we can make a huge difference to their work, not just with funding but through practical support and advice.

It’s important to remember bringing our skills to bear in this way links very closely with client work. In fact, we’ve renamed our Pro Bono and Community Investment team as the Social Impact Group, reflecting our clients’ growing focus on sustainability, which has seen social impact legal work increase sharply.

The Alumni Network goes from strength to strength. How do you regard the network?

I care about it very much. I look at other successful networks such as McKinsey’s and Arthur Andersen’s (which continues to grow even though the firm went bust years ago) and what strikes me about our programme and those other successful ones is that the members of the network are like a huge family. For A&O it means helping each other while at A&O and after leaving it.

That’s what we’ve created and like any family it’s important to keep investing in it to keep this great community of ours together. Given the number of people who are members of our network and attend alumni events across the world, I think it’s a shared ambition, which I'm so pleased to see.

In September you were honoured with a lifetime achievement award for innovative leadership by the FT and again at The British Legal Awards. What fantastic accolades!

It was very humbling to receive these awards, but, actually, I was in two minds about accepting them because innovation is never about one person, certainly not at A&O.

So, I accepted them on behalf of the whole firm. I saw them as a way of thanking all the people, hundreds of them, who are committed to making A&O a success by putting innovation at the heart of how we operate. Innovation should be a constant focus for any successful law firm in a rapidly changing world. It certainly is for us.

Looking ahead...

You’re coming to the end of your term as senior partner. What do you cherish most about your time at A&O?

The thing I cherish and am most proud of is our culture – the desire to help each other and the care people show for colleagues, which is so much a part of who we are as a firm. In a very competitive and sometimes aggressive environment, that’s something that’s easy to lose, but we still have it. I hope it will always be there.

And what does the future hold for you personally?

I’m not going to spend my life on a golf course – I’d be bored within a day!

I’ve never taken a sabbatical, so I may take six months off to review my options. I’ve also decided not to have any conversations about what I might do before January 2024.

I enjoy working and have lots of energy, with five, seven, maybe ten years of working life left in me, health permitting. I believe one of the secrets of staying young is remaining physically and mentally active, both professionally and socially.

Although I’m keen to keep working, it won’t be as a lawyer, and I don’t think I can work for another law firm. My loyalty to A&O and the joy I’ve had being part of this great firm wouldn’t allow it.

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