The USP

In 1994, a young South African lawyer named Kevin Gold was sitting in his office at central London practice Bayer Rosin flipping a coin to decide the future of the firm he ran. ‘Heads or tails… Olswang or SJ Berwin…’ A third, lesser-known firm was also at the back of his mind: Mishcon de Reya. It was no coincidence the three firms were vying for Bayer’s hand. Formed in 1985 and specialising in litigation, corporate, private client and real estate work, the nine-partner firm was a highly profitable little outfit with revenues of £9m and strong ties to lucrative South African business.

Africa’s largest economy was reforming rapidly following Nelson Mandela’s election to president and London law firms were intent on boosting their business links. Recalls Gold: ‘It was a complicated choice. Olswang was very sexy, located in Covent Garden, which was unheard of. SJ Berwin was a corporate powerhouse.’ But it was litigation specialist Mishcon that ultimately captured his interest. Not that Gold carried out much due diligence, relying on an article in The Law Society Gazette praising Mishcon’s potential.

‘I was incredibly naïve and young. Maybe I’m thick but it was the decision I made… once you do, you accept your life moving forward.’

Professional history vindicated Gold’s hunch. More than 20 years later, a beleaguered Olswang has resorted to a three-way merger with Nabarro and CMS Cameron McKenna, and legacy SJ Berwin went on to a troubled union with King & Wood Mallesons (KWM). Mishcon, in contrast, has reinvented itself from an outfit known for famous clients into the most upwardly mobile Legal Business 100 (LB100) firm of the last decade.

Through the 1990s the firm went through a chaotic reinvention to recast itself. While most peers were herd-like in strategy, Mishcon has continually broken from the pack, often in a colourful style that made legal glamour brands like Olswang look about as edgy as Linklaters. Financial performance outshines peers; the firm revealed robust profits for the 2015/16 financial year, with profit per senior equity partner (PEP) up 5% to £1m – one of only 11 in the LB100 to break into the seven-figure PEP club – as revenue in London climbed to £127.9m from £110m. Since 2006, the firm has added around £100m to its top line – a growth rate well in excess of 300%.

I thought I was a really clever immigration lawyer at the time. Kevin said: “This is what a proper practice looks like.” I moved on to other things.

James Libson – Mishcon de Reya

Following a recent consultation with the partnership, Mishcon has overhauled its strategy for the next decade, setting ambitious targets to lift UK revenue by 40% to £175m within the next three years. With Gold set to begin his final term as firm leader in April, giving him 20 years at the helm, the challenge will be to sustain Mishcon’s startling momentum and for Gold to avoid the fate of many veteran law firm leaders who outstay their glory years.

Says one rival managing partner: ‘Kevin Gold sits at the epicentre of its brand. Its thinking, its boldness, the turf it has staked out.’

Elliot Moss, the firm’s influential business development director, says Mishcon’s rise is due to clarity. ‘When your strategy is focused, you don’t mess around and say: “Oh let’s try nautical work or let’s try other types of media law!” Just do what you’re good at. We’ve got balls. And if you’ve got balls, you’ve got a clear focus and shit happens, and you can grow.’

Welcome to brand differentiation Mishcon-style. But is there more to it than that? What made Mishcon different to its peers?

‘America has those beasts, England does not’

The most obvious element to Mishcon’s gravity-defying ascent is rarely noted. In a legal industry typically defined by transactional work, Mishcon was disputes-driven before anyone took the idea of a large litigation shop seriously. More than half of its 383 lawyers primarily handle contentious work, often for high-net-worth clients, which has allowed the firm to ride not one but two boom markets that City law firms comprehensively failed to spot.

With UK net profit standing at £35m for the last financial year, a breakdown of revenue showed litigation generated the highest with £44m (34%), while real estate came second with £31m. Corporate followed with £20m, while the private wealth practice brought in £19m and employment generated £10m.

Disputes chief Kasra Nouroozi, who represented millionaire businesswoman Gina Miller on successfully challenging the government’s decision to trigger article 50 without parliamentary backing for Brexit, argues that the firm is ‘by some distance the biggest contentious house in London’ and draws comparisons with the aggressive disputes-heavy model of US law firms.

Meeting days after the Brexit High Court ruling at the firm’s Holborn headquarters, Nouroozi says: ‘[Mishcon’s success is] a convergence of bits of good fortune and being contentious-heavy. America has those beasts, England does not. The flight of capital into London and the City’s status as a hot dispute resolution centre has meant that anyone, frankly, who has had the ability in disputes, has done well in the last ten years. You would have to be a numpty not to have done well.’

Nouroozi was the major force in investment in Mishcon’s disputes practice during the 2000s, to cover more commercial litigation and insurance alongside investigations and IP disputes. A cursory glance at high-profile clients in recent years includes Galina Berezovsky, the second wife of deceased billionaire oligarch Boris, during her divorce negotiations; private equity house Terra Firma in its £2.3bn battle against Citi in London’s High Court last summer; and lawyer Krista Bates van Winkelhof in her four-year legal battle against Clyde & Co over allegations of discrimination in the firm’s Tanzania office, which went all the way to the Supreme Court.

The firm’s strength also lies in its ability to draw together its family law, offshore work and private client offering with other practice areas, pulling together the high-net-worth client base across borders and business lines. The private client credentials are strong in art and cultural property, where clients include Gagosian Gallery and The Fine Art Fund Group, while its contentious trusts and probate practice has heavyweight Mark Keenan, who previously defended family members of the late British property billionaire Jack Dellal, nicknamed ‘Black Jack’, after his widow sued for a greater slice of his estate.

The firm’s family practice also ranks in the top tier under the leadership of longstanding head Sandra Davis, whose clients have included the late Diana, Princess of Wales, former model and wife of Rupert Murdoch, Jerry Hall, Jimmy Choo founder Tamara Mellon, and footballer Thierry Henry.

In both disputes and private client, of course, Mishcon was aided considerably by the reinvention of London as a global portal for the wealthy and the shift from private client, from handling of wills, trust and property matters for old money into serving the wealthy mobile elite. It turned out as most City law firms were going expensively global, more of the world’s rich were coming to – or at least passing through – London.

The crossover between the personal wealth and businesses gave Mishcon its slogan: ‘It’s business. But it’s personal.’ The tag line has the considerable advantage of being distinctive, reasonably memorable and broadly true to Mishcon’s approach to client care. In law firm marketing, in the kingdom of the blind the one-eyed man is king, especially if he’s wearing a pair of custom Ray-Bans.

Sums up Gold: ‘Our sweet spot is the super wealthy of the world and their affairs and businesses.’

Stakeholders

If Gold stands out as the face and lead architect of Mishcon’s reinvention, part of the firm’s success has been to run a flat structure that goes light on hierarchy and heavy on entrepreneurial engagement. There is also a tight-knit group of figures at the core of the firm, many of whom have been there for years, driving the business.

The governance structure comprises an executive office with managing partner Gold, litigation partner and overseer of private client-led ventures, James Libson, and chief operating officer and non-legal professional Bambos Georgiou. Also influential in the group are department heads, including Nouroozi, corporate chief Nick Davis, real estate specialist Nick Doffman, and employment head Daniel Naftalin. Two other figures that have far more clout in shaping operations, strategy and branding than at equivalent firms are Moss and HR director Vanessa Dewhurst, who joined Mishcon in 2008 after a career in senior HR roles in investment banking.

Culture is the bedrock for growth. If people trust the decisions you made are with the right intention, that is half the battle.

Kevin Gold – Mishcon de Reya

 

The considerable reliance on non-lawyer professionals is, by consensus, a major factor in how the business is run. ‘One of the key things we’ve done differently is invest heavily in professionalising support services and getting the best people out of creative industries to join our team,’ says Libson. ‘In the early days, we would look at things, take on new projects, but we had no systems in place. We had to create values and a framework for the success we’ve built upon.’

The firm’s admirers say a disciplined and entrepreneurial approach at senior management level goes a long way towards building trust between Mishcon’s c-suite and the partnership. Disputes partner Richard Leedham, who joined from Addleshaw Goddard in 2015, says early on he developed a ‘personal chemistry’ with management. ‘I was frustrated with the amount of time talking about management and strategy at my previous firm. Here we have a leaner management structure.’

Avoiding bureaucracy does not mean an absence of process. Apart from empowered non-lawyer professionals, the firm developed its own quality assurance and risk management standard dubbed MQ2 (for Mishcon Quality Squared), backed by a 60-page book. The model is aimed at reinforcing best practice across areas like budgets, billing, communication, business development and client skills and the firm’s core values, basically a bible in being Mishcon. If it sounds a bit prescriptive for Mishcon, Gold is an admirer of the use of the Six Sigma process improvement model at General Electric by Jack Welch.

Nouroozi asserts: ‘We are here to invest in this business – we act as custodians. If we make it a place to fulfil your ambitions then people will lie in a ditch for you. They won’t leave. They will work hard.’

Supporting this rhetoric is the firm’s pay system, which has undergone significant change. In autumn 2015, the firm brought all partners, then comprising 76 fixed-share and 36 equity partners, into the equity and converted to a limited liability partnership. The model was a marked shift away from the firm’s previous structure, which consisted of legal directors, junior partners (or fixed-share partners) and senior (equity) partners. The new format saw every partner become a form of equity partner – albeit split into two bands consisting of ‘senior equity partners’ and ‘junior equity partners’.

The move to all equity coincided with the firm’s increased emphasis on individual performance to assess pay. Client origination will count towards a lawyer’s pay review among other metrics, including contribution towards training, mentoring, monitoring, work generation and meeting revenue targets. The merit-driven system gives junior partners the ability to earn more than senior partners, though some grumbling over its tightly-guarded full equity ranks has been known.

Though Mishcon runs a high-leverage partnership, its profitability is not just the result of financial engineering. Revenue per fee-earner, for example, for 2015/16 was £346,000, well ahead of the £254,000 average across firms in its second quartile peer group of the LB100. The firm has a wide disparity between entry and plateau earners of £465,000 to £1.7m for its core remuneration ladder.

The firm says it uses a merit-driven remuneration system for associates, with the average paid just under £75,000.

Jomati Consultants founder Tony Williams comments: ‘Gold has given the partners room – he doesn’t seem ageist or hierarchical – you get it if you earn it. That element of meritocracy is good and refreshing, provided there’s a level of transparency and people understand what’s expected of them and feel the criteria is used fairly and appropriately.’

Partners old and new consistently laud Mishcon’s focus on ‘core values’, essentially a constitution of principles and common ground values instilled by Gold upon taking the senior leadership role.

‘Feeling part of the culture of the firm – that is the bedrock for growth,’ says Gold. ‘If people trust the decisions you make are made with the right intention, that is half the battle. There is no politics around that. You may or may not make mistakes but people accept the purpose was correct.’

‘New thinking’

With strong growth, management has been allowed to make a number of investments in recent years. Notable initiatives have included establishing Mayfair Private in 2014, an independent, private client advisory business in conjunction with offshore fiduciary firm Opus Private to provide ‘discreet professional solutions’ to wealthy individuals, families and private offices. Overseen by Libson, the venture is intended to create a single point of access for co-ordinating legal, fiduciary and family office services. Mishcon also launched the umbrella brand Mishcon Private in 2010 to sell itself to high-net-worth clients.

The firm further acquired an alternative business structure licence in February 2015 to allow key non-lawyers to take a share of equity in the business. Management figures brought into the equity included Moss, Georgiou and Dewhurst. 2016 saw the launch of an e-discovery business with tech provider Unified and software developer kCura, agreeing a fixed-price three-year contract that it claims will save clients between 10% and 30% on large disclosure exercises. It also continues to invest in its business development capabilities in-house with the creation of the Mishcon Academy, where all fee-earners are required to spend 24 hours across the year. In typically flamboyant style, the academy has ushered in a series of high-profile and varied speakers to inspire the troops, including Stephen Fry, Shami Chakrabarti, an ex-Archbishop of Canterbury, politician and journalist Daniel Finkelstein, former European minister Douglas Alexander and Booker prize-wining author Hilary Mantel for a lecture dubbed ‘new thinking’.

The firm certainly takes such investment in staff seriously and is known for giving junior lawyers substantial client contact. Corporate head Nick Davis describes Mishcon’s investment in business development as ‘massive’, adding: ‘Anyone coming in – we give them all the tools to go and grow their businesses.’ Of the academy he notes: ‘I get a list of people who don’t attend.’

The firm has also made efforts to market itself as a progressive employer and is unusually flexible on working arrangements. Newly-qualified lawyers earn £63,000.

Sonia Campbell, an insurance litigator who joined as a partner from Addleshaws, observes: ‘You’re treated well here. I have three children and I wanted a balance. Addleshaws were fair about it. Mishcon went further. There’s a clear message to show women in the firm they are progressive.’ (Such policies have yet to feed through to partnership make-up, which only has 27% female representation, a figure falling to 17% for senior equity.)

Nevertheless, the firm has achieved strong retention of key lawyers, rarely losing partners to rivals, despite making a considerable number of lateral hires over recent years. A rare lateral who did not stay was Charlotte Harris, the telegenic and well-connected media specialist who became one of the faces of the Hacked Off campaign during the News of the World scandal. Having joined the firm in 2011 from JMW Solicitors, she joined Kingsley Napley in 2015, despite on paper looking like she was bred in a Mishcon laboratory. But the vast majority of laterals have stayed, with many partners from larger corporatised firms being seduced by the lack of red tape and autonomy on offer.

Davis recalls hearing the Mishcon sales pitch while a partner at Kilpatrick Townsend & Stockton: ‘I thought: “God, if even 10% of what they say is true, it’s 100% better than where I am.” I’d say 90% of it was true. I felt quickly there was a uniqueness and it’s still there today. It’s something we worry about more than anything.’

Other laterals include Clyde & Co private client partner Martin Davies and Pinsent Masons’ Daniel Greenaway in 2016. In 2015 the firm hired Proskauer Rose corporate partner Michael Nouril and Enyo Law litigator Annabel Thomas. The firm also recently bolstered its IP practice with KWM partners David Rose and Ray Black.

There is another notable element to Mishcon’s formula. By consensus the firm has consistently avoided panels and discount pricing to focus on clients willing to pay for high-end services, a tactic re-enforced by its affinity for entrepreneurs and ultra-high-net-worth clients.

‘Firms are obsessed with acting for big corporates and ignore the fact that they don’t have the ability to give out enough quality work,’ says Leedham. ‘We regularly pitch for corporates, but we don’t chase for panel work and therefore we don’t agree panel rates. If you don’t like our rates, don’t instruct us – no hard feelings.’

That said, Mishcon’s success has had ups and downs. Nouroozi says: ‘Ten years ago, my part of the business was very different. I took the decision to make recommendations to the board for investment in a variety of areas – we did what we did well and had depth of knowledge but it was narrow. We also had to build up our reputation by being super aggressive and major risk-takers. We pushed the envelope – we would go and see potential clients and while they liked what they heard the in-house counsel would respond: “Guys, you are just a little bit too rich for us… a little bit too direct.” I understood that.’

‘Everyone hated everyone’

If Mishcon’s growth has looked effortless in recent years, its model and approach was born out of acrimony and discord over 20 years ago. Tracing its roots to its launch in Brixton in 1937 as Victor Mishcon & Co, for years the firm was best known for its ‘sleb cases and its high-profile founder.

But the firm had been trying to widen its commercial practice, in 1988 merging with Bartletts de Reya, in 1994 absorbing Bayer Rosin and doubling the size of its real estate team the following year after taking on teams from Brecher & Co and Rabin Leacock Lipman. This brought in fresh talent and range to the practice but was initially turbulent.

Gold recalls: ‘When I made the decision to merge with Mishcon I didn’t realise that all the profits made at [Mishcon] at the time went to about three partners. And they hadn’t quite told the corporate department I was coming. Within about six months of me joining, effectively the heart and soul of the corporate department upped and left. Everyone hated everyone. I don’t think it was just about me. We got along but management never told me about the tensions that existed.’

The conflict was not just internal. The death of Princess Diana, a key client of then litigation head Anthony Julius who had managed her divorce from Prince Charles, gave Brand Mishcon a battering. The day after Diana’s death in late August 1997, the public began to send cash donations to the firm. Mishcon set up the Princess’s memorial trust and was embroiled in administering and managing the legal work behind it. At one stage, says Gold, over half of the firm was involved in managing the trust, whether responding to letters addressed to the Princess’s family or tracking cash sent in envelopes. Once the fund was established Mishcon began to charge at what Gold says was a heavily discounted rate.

‘We were vilified by the press for taking money from the Princess. It became this incredible burden that we had to deal with – this raw emotion from the country. Somehow that emotion became vested in this firm. It had a terrible, devastating effect. At the same time we were trying to do our day jobs and it was becoming impossible. It was from the ashes of this experience that everything came together.’

The episode led a core group to reassess the culture and priorities of the firm, which has formed the core of Mishcon since then, giving a longevity absent from peers.

Recalls Libson: ‘We had Lord Mishcon and loads of ambitious lawyers but no structure. Once Kevin and his crew came along… there was a young gang who wanted to harness the energy but bring more stability.’ Libson notes the impact the young bucks had: ‘I thought I was a really clever immigration lawyer at the time. Kevin said: “This is what a proper immigration practice looks like.” I moved on to other things.’

Says Nouroozi: ‘When I came here [in 1994 from Lawrence Graham] the place was hugely dysfunctional. Probably about ten or 12 of us, there was a whole generation of lawyers coming in. We are all still here and good friends. It gives us continuity, house style and approach. It works as an advert – people go to their friends at other firms and tell them about us.’

Says Gold: ‘Either we left because the place was quite soulless or we could make it a place we want to come to on a daily basis. That was the start of the core values discussion. It became famous for its family department and acting for royalty and movie stars. But that was always a small bit of our work. It took a long time for people to realise we were more than that – we were bigger than a private client firm.’

The way forward

Following a year-long consultation with the partnership in 2015 alongside external advisers Alan Hodgart and Robbie Cowan, this summer Mishcon finalised a business strategy for the next ten years, with a target to lift UK revenue by 40% to £175m within the next three years. Announcing a set of ambitious targets at its annual partnership conference in its headquarters at Africa House in Holborn, Gold presented key points of the strategy spanning until 2026, subdivided into three periods. Disputes will remain the major focus as the firm looks to launch a regulatory practice within the next year, and deepen its bench in insurance, business crime, contentious tax, and international arbitration.

Perhaps most ambitiously, Mishcon is hoping to build out its corporate practice and broaden its offering in equity capital markets, a move that will take it further outside its high-net-worth comfort zone, even if the firm aims to focus on fast growth and entrepreneurial clients. Such an ambition is expected to lead to more investment in transactional support, regulatory advice, private equity and tax consultancy. The talk is of forging a quality mid-market practice comparable to Travers Smith and Macfarlanes within three to five years, a huge ask even for such an upwardly mobile practice.

Investment in technology is also on the agenda. Chief strategy officer Nick West, who joined from alternative supplier Axiom in January, is tasked to ‘drive the automation of everything that can be automated whether it’s legal or process’. West is currently talking to a number of providers, including RAVN and Kira, about contract automation.

And following on from the roll-out of its private client and e-discovery ventures in recent years, Gold says the firm ultimately envisions itself growing as a broad-based consultancy business over the next ten years.

Management insist there is no desire to merge with another firm or open new offices. In truth, part of the firm’s success has been focusing on London and avoiding the costs of foreign launches. However, Mishcon is looking to strengthen ties with its international referral network and establish new relationships with a greater share of US firms. Practices which currently often work with Mishcon include Gibson, Dunn & Crutcher, Kirkland & Ellis and Willkie Farr & Gallagher.

If there has been one major strategic reversal it came with Mishcon’s 2010 US launch in New York. Initially launched by Nouroozi to cover disputes, the practice was structured as a separate business, generating $13m (£10.5m) at its peak. However, the firm opted to scale back the practice to focus on patent litigation, moving the team to smaller offices, and revenue for the last financial year stood at £4.8m.

We built our reputation by being super aggressive and major risk-takers. Potential clients would say: “Guys, you are too rich for us… too direct.”

Kasra Nouroozi – Mishcon de Reya

Gold says the move floundered on translating its culture stateside. ‘Everyone is an individual in New York. We talk about our values – they don’t actually really buy it. That’s been the biggest lesson – just because you speak English doesn’t mean you understand the same language.’

Financially the firm is in good stead to achieve its goals: major spending has revolved around its move to the 120,000 sq ft Africa House on Kingsway in Holborn, which costs roughly £7m a year in rent – around £3m more annually than the firm’s previous offices. Until last year Mishcon had been spread across four offices in Holborn. Other major expenditure includes taking out a one-off loan for £18m to refurbish its new offices last year, of which £7.5m has been repaid. The firm plans to repay the remainder by 2020.

Gold says the firm will need to more rigorously enforce its ethos as it gets bigger. ‘You have to accept you can’t know everyone as intimately as you did before. But as long as within that you insist the core values and ways of behaving are non-negotiable then you can survive quite well. We are a pan-global player but ultimately a London-centric firm.’

Although Mishcon frequently gets approached ‘by a high percentage of American firms’ with a presence in London, Gold insists the firm has no interest in a merger. ‘I’m always happy to meet but it’s not on our agenda. We want to serve our clients on an international front where they know who and what we are. There aren’t many global boutiques left and that gives us a competitive advantage in the market place… as against some people who have decided to become part of some multinational cartel.’

Is there a limit to Mishcon’s remarkable growth? The firm’s fortunes are heavily tied to London’s status as a port for rich globe-trotters but Brexit or not, it is hard to see a serious challenge on that front. The sustained rise of Travers Smith and Macfarlanes also suggests there is a clear niche for a profitable, high-quality independent staffed by partners with no desire to be smothered in a global law firm.

Luck also clearly played a major part in Mishcon’s rise as sticking to what it was best at ended up being better business than anyone expected. But the firm did an impressive job of seizing such opportunities when they emerged. Mishcon’s flair and willingness to reject the profession’s orthodoxies are genuine, not marketing puff.

Its ambitions will make it harder to maintain the singular culture that has served it so well. As its US adventures demonstrate, taking Mishcon global and keeping it Mishcon is fiendishly difficult. Probably the biggest challenge facing the firm is re-inventing itself when the core group that have driven it for years hand over.

Gold has the same conclusion: ‘I sit with about 15-20 others who have been together since the mid-90s. The point is how we as a group pass our experience and allow space for others. I’ve made my money.’

sarah.downey@legalease.co.uk