THE BIG INTERVIEW

THE BIG INTERVIEW

Refresh perspectives

The challenge of rewriting a global law firm’s strategy in the middle of a pandemic may seem daunting to many leaders, but for former DLA Piper chief Sir Nigel Knowles it was all the excuse he needed to get back in the legal saddle. Josh Adcock hears his thoughts on taking the helm at DWF, how he plans to embed a meaningful career proposition for future talent and meet the Big Four on their own terms

As we sit down in a meeting room in DWF’s offices on the thirty-second floor of London’s Walkie-Talkie building and look down onto the Thames and the Tower of London, Sir Nigel Knowles looks right at home as the CEO of the kind of international business that might command such views. Unsurprising, as Knowles was formerly joint-CEO of DLA Piper, at that time the largest law firm in the world by revenue – since overtaken only by Kirkland & Ellis and Lathan & Watkins.

But the first few months of Knowles’ time as CEO involved far less imperious views, as he was largely isolated at his Sussex home. Having stepped up from being DWF’s chair to CEO in May 2020 at the height of the Covid-19 pandemic, he says the isolation of that time was a considerable obstacle to taking the helm. “At DLA Piper, I had interviewed or promoted every partner. I hadn’t met anything like that proportion of people at DWF by that stage, so I was operating as CEO without knowing how individuals tick – it was a real learning curve.”

At this point in the conversation, I start to see the outline of two clear themes in Knowles’ priorities: a high regard for personal relationships and an eagerness to take on new challenges. In fact, Knowles explains, it’s exactly the chance to do something new that prompted him to plot a new path into the legal market. After parting ways with DLA Piper in 2016, in 2017 Knowles took up the chairmanship of DWF, expecting the part-time position would allow him to focus on trusteeships and similar roles, such as being High Sheriff of Greater London. “I stepped out saying I would never step back into legal, because I had done everything there was to do. DLA Piper had seen life through my eyes for 20 years, and I thought it would make sense for the firm to move on without me.”

Getting down to business

But, alas, Knowles’ image of semi-retirement didn’t come to pass, as the allure of a new legal business challenge roped him back in. His first year as CEO was challenging, he says, and focused on securing the sustainability of the business in tumultuous times – but in this he was aided by expert collaborators. “Within five minutes of being appointed CEO I appointed Matt Doughty, who is outstanding at his job, as COO. From Friday 29 May and through the following weekend, I, Matt [Doughty] and Chris Stefani, our CFO, agreed on an approach that would take a closer look at the business and its structure.”

That involved some retrenchment from elements of the business that were inconsistent with its nascent strategy and sectoral focus. Specifically, he says the group removed two-thirds of its presence in Dubai, closed its Singapore and Brussels offices and looked at more comprehensively integrating other businesses acquired in the previous five years, instigating a short-term stay on further M&A activity.

The trio also chose to re-examine the business’s approach to the market. “We had profit centres that weren’t logical. So, we brought everything together into three global divisions and three global profit centres: Legal Advisory, Mindcrest and Connected Services.”

That new business structure came into effect from 1 May 2021 and, though there’s no danger of DWF moving away from its Legal Advisory roots, Knowles is especially interested in the growth of the latter two units. The acquisition of Mindcrest, finalised in March 2020, marked DWF’s entry into the world of the alternative legal supplier (ALSP), and a foray into managed services. Covering e-discovery, contract management, document analysis, legal analytics and many other areas where teams of expert lawyers aren’t continuously required, this unit, Knowles explains, will be a major part of the group’s future. “We see huge value in delivering Mindcrest-type services all around the world. Banks, financial institutions and insurance companies are beginning to create alternative legal sector panels, and Mindcrest gets on them.”

Connected Services is the second part of the DWF offering that caught Knowles’ interest in 2017, and again pushed him to sign up as CEO in 2020. It covers a range of offerings closely connected with legal services, such as claims handling, loss adjusting, forensic accounting, and technological solutions that allow clients to self-serve in these areas. “We also have a global entity management business, which is effectively a company secretarial business but makes heavy use of technology – which both current and potential clients are finding very interesting,” he adds.

“At DLA Piper, I had interviewed or promoted every partner. I hadn’t met anything like that proportion of people at DWF by that stage, so I was operating as CEO without knowing how individuals tick – it was a real learning curve.”

Sir Nigel Knowles, CEO, DWF

This focus on growing the non-traditional profit centres seems to be effective, as DWF’s HY22 reporting (issued December 2021) showed. Mindcrest revenues grew by 8%, while Connected Services grew by 14% – of which half was organic. Having un-paused acquisitions in 2021, the group acquired BCA insurance claims and consulting in Canada, and Zing 365 Holdings, a compliance training business, integrating them into Connected Services.

Knowles explains that the strategy around growing these arms of the business is not only to make acquisitions but to offer Connected Services and Mindcrest services to existing clients of the Legal Advisory part of the group – and vice versa. “We’re prioritising our focus on those things that will provide the biggest return and be the most synergistic, and we have a massive opportunity to sell services from across our Legal Advisory practices, plus services from all three divisions, to all of our clients, and to expand our service offering across different geographies.”

He adds: “Connected Services in particular are really exciting – we can scale them to create significant value for everyone. Though we will continue to build Legal Advisory, there could be a day when Mindcrest and Connected Services, together, generate the same revenue as Legal Advisory,” Knowles adds.

If this sounds like an overarching vision that’s both grand and slightly familiar, Knowles has a clear template for what he wants to achieve at DWF. “We intend to build a global professional services business with its origins in the legal sector, in contrast to the Big Four, which are global professional services businesses with their origins in the accounting sector.”

“We intend to build a global professional services business with its origins in the legal sector, in contrast to the Big Four, which are global professional services businesses with their origins in the accounting sector.”

Sir Nigel Knowles, CEO, DWF 

Investing in the future

Speaking of the Big Four, Knowles refers to the accounting giants not just in terms of how DWF goes to market, but also their power to invest in themselves. DWF was famously the first UK law firm to list on the main market of the London Stock Exchange, announcing its IPO in January 2019, and it subsequently became the largest law firm ever to list, valued at £366m in March 2019.

Despite only 6% of respondents to Briefing’s Frontiers 2022 report projecting that their firm will be a publicly listed company (PLC) in five years, Knowles thinks the benefits of listing will become hard to ignore. “It gives you a competitive advantage in so many ways, including the ability to raise investment and incentivise your people. It’s been difficult to seriously consider in the last couple of years when you couldn’t meet people in person but, as we speak, there are probably people signing up advisers – I think there will be a lot more listed law firms in the future.”

As Knowles sees it, such a shakeup of the legal market landscape should be welcome, and an attractive method for law firms to achieve new sources of investment. “The legal market is massively fragmented,” he points out, saying that, of the approximately $789bn legal market, no single law firm owns even 1% of it.

When compared with the Big Four, all of which own about 20% of their market, he says it’s clear the partnership model has held firms back. “Legal can’t match the investment power of the Big Four – the accountancy firms have each spent billions of dollars in recent years optimising their performance and buying technology-related businesses to help sell more products or become more efficient. The LLP model isn’t really working, because investment has to come from the pockets of equity partners. But, if you’re listed, it can come from raising money in the market. It would be fairly unachievable for most partnerships to buy a business like Mindcrest.”

“[Listing] gives you a competitive advantage in so many ways, including the ability to raise investment and incentivise your people. It’s been difficult to seriously consider in the last couple of years when you couldn’t meet people in person but, as we speak, there are probably people signing up advisers – I think there will be a lot more listed law firms in the future.”

Sir Nigel Knows, CEO, DWF

On top of the investment benefits of listing, Knowles adds that doing so creates a capability to reward employees through share options, capital gains and dividends – all unavailable to a traditional partnership. “The vast majority of DWF colleagues received shares on the day of the IPO, and we have share awards for those who have been promoted or otherwise delivered excellent performance. Everyone can join in the success of the business by being a shareholder.”

Being in-personable

The relevance of attracting and retaining talent has rarely been more pressing, as our conversation takes place against the backdrop of the so-called Great Resignation and the war for talent, which has seen NQ lawyers’ salaries reach as high as £150,000 per year, with US-based firms leading the charge. Though Knowles is in favour of rewarding people for contributing to the success of the business, he feels this game of salary escalation is unsustainable and counterproductive. “Several clients have indicated they’re not interested in being billed huge amounts just to pay for lawyers’ six-figure salaries. Plus, there’s much more to a young lawyer’s career than working really hard, earning a lot of money and, in some cases, burning out.”

Far higher on his priority list is having people join DWF as trainees, qualifying and staying for a sustainable career. “You’ve got to show people you appreciate them, and that means investing in their careers by demonstrating there is a career structure, and performance managing in a constructive way. We’ve had 94% of our trainees who qualified in September 2021 stay with us, which I’ve been very pleased about.”

“Several clients have indicated they’re not interested in being billed huge amounts just to pay for lawyers’ six-figure salaries. Plus, there’s much more to a young lawyer’s career than working really hard, earning a lot of money and, in some cases, burning out.”

Sir Nigel Knowles, CEO, DWF

Creating long-term relationships is something Knowles places a lot of value in, and he’s clearly in the camp that feels face-to-face interaction is the best method for achieving that aim – noting that our own conversation would likely not have been as engaging or revealing were we both staring into a screen. However, he admits it’s been especially challenging recently. “You need to have people identify with the objectives of the business and create a bond with it – that’s not so easy when you’re locked down. Meeting virtually precludes a whole suite of instinctive behaviours and removes opportunity – you have very different conversations on a Teams call.”

At the same time, he reflects that his own personal situation and preferences are unique to him – admitting to being the sort of person who enjoys being out “on manoeuvres”, and that there’s a need to adjust to the new working reality. “We are being very thoughtful about where people work. We encourage everyone to at some stage come into the office, but we’re recognising it’s not going to be five days a week.”

More important than deciding the exact number of days people are in the office, he says, is keeping in perspective what drives decision-making around both working from home and working in the office. “It’s all about relationships: my relationship with my family; my relationship with my firm; the firm’s relationship with its people; our relationship with our clients. That’s the perspective from which we’re considering the questions.”

Taking responsibility

When speaking to Knowles, another word that comes up is ‘transparency’. He says the business has tried to convey decisions to its people as best as possible, holding virtual ‘town halls’ with hundreds of people across the world to explain the annual trading statement out this month, and that being a good communicator is a crucial part of being a leader.

He also links this idea to the importance of generating “positive outcomes” for everyone involved with the business – a priority that feeds into many environmental, social and governance (ESG) issues. Little wonder then that DWF issued an ESG statement in 2021 to direct these efforts, shepherded by Kirsty Rogers, appointed head of ESG in January of that year. The statement included a series of solid diversity and inclusion (D&I) targets – it pledged to increase the proportion of women on the board to at least 40% by 2025 and, in the UK, increase the representation of Black, Asian and Minority Ethnic colleagues across senior management to at least 10%, across all career bands to at least 13% and in senior roles to at least 3% by 2025.

“You need to have people identify with the objectives of the business and create a bond with it – that’s not so easy when you’re locked down. Meeting virtually precludes a whole suite of instinctive behaviours and removes opportunity – you have very different conversations on a Teams call.”

Sir Nigel Knowles, CEO, DWF

Knowles explains: “Leadership, values, culture and dialogue all have an impact on diversity and inclusion – so we’re ensuring each divisional CEO is responsible and accountable for progressing a D&I action plan. Plus, we’re working on more extensive talent mapping and divisional plans to support our key initiatives.” For example, he says he’s sponsored an exercise to review the composition of the firm’s client teams, to make sure it represents a diverse workforce and ensure that is reflected in succession plans.

Just as the climate emergency is increasingly informing public and government agendas, so too is it on Knowles’ mind. As the former head of the environmentally focused Legal Sector Alliance, Knowles is conscious of the significant impact the legal sector can have on environmental issues. In common with only 14% of other Briefing firms, as per our research with HSBC in 2021, Knowles has accordingly urged DWF to set science-based targets, including reducing Scope 1, Scope 2 and Scope 3 emissions by 50% by 2030, intending to contribute to a net-zero future and to limit global warming to 1.5C.

He explains that will involve reducing emissions under the firm’s direct control by cutting energy use, transitioning to renewables, reducing the frequency and carbon intensity of commuting and business travel and investing in solutions that remove atmospheric carbon. But transparency is the overarching philosophy: “We’re focusing on being clear about the level of our ambition, rather than reducing emissions at a slower rate and paying for carbon offsets.”

Time to reflect

Having expected to never again lead a business and to limit his time to trusteeships and chairmanships, Knowles has had an intense experience as CEO. But, despite being pulled away from his Sussex home and denied the chance to further explore non-legal roles, such as being High Sheriff of Greater London for more than a year, he seems to have found a wealth of new opportunities to drive a new strategy at DWF. “My second anniversary as CEO was on 29 May 2022 – and it’s been a fantastic experience. I’ve done things I’d never before done in my first 38 years in the sector.”