John Pickering: Why the revolution at Irwin Mitchell is far from over

Chief executive John Pickering has been busy over the past couple of years with creating new management and business structures at Irwin Mitchell as part of his plan to convert it into an alternative business structure (ABS), which he succeeded in doing ?last summer. He is far from finished, however, and plans to undertake a series of mergers and acquisitions to further grow the top-20 UK law firm that started out as a small personal injury (PI) practice in Sheffield.

“We have radically overhauled how the business is structured, how it works and how it operates,” says Pickering. “But it’s an unfinished business. I want Irwin Mitchell to be even bigger and more impressive than it is today and to be recognised as a leading force in the delivery of legal services.”

Pickering says there are several mergers “under active consideration” as part of the firm’s growth agenda. “We are looking at a number of options at the moment,” he says, adding that these efforts are currently confined ?to the UK.

“We’re not looking at foreign offices at the moment. A foreign office could come about as a consequence ?of us doing an M&A deal, but it’s not ?our primary interest at this moment of ?our development, to seek to open in ?other jurisdictions.”

Instead, the focus is on significantly growing the firm’s corporate and commercial offerings, as well as expanding its consumer legal services, particularly in the areas of personal ?injury and family law.

“There are things that we are actively looking at but, as you will well know, you can look at things and, for various reasons, they might not happen. We’ve found quite a bit of that over the past couple of years or so,” says Pickering.

Changing structures

As the first top-20 UK law firm to ?convert to an ABS – and through the first multi-licence issued by the Solicitors Regulation Authority at that – Irwin Mitchell created a precedent for the ?legal market in August 2012.

There has been much speculation ?as to whether the firm will use its new status to obtain external investment, ?and Pickering says he has not ruled ?that option out.

“We decided that we wanted to become an alternative business structure because it would better suit our ability to grow our business and – if need be and if we wanted to – to bring in external investment. It would also help fit with the development of our legal and related services,” he says. “With that in mind, we then sought to restructure the business completely, so we decided that we would become a corporate entity.”

A range of changes were introduced as part of Irwin Mitchell’s ABS conversion. A group structure was created with a holding company as the top company (which is a corporate member of the LLP), with the legal work continuing to be done through Irwin Mitchell LLP.

A group governance structure was ?put in place, with a holding company board, an executive board in the LLP and a range of corporate committees. Non-lawyer professionals Mel Egglenton (formerly of KPMG) and Glyn Barker (previously at PwC) were appointed to ?the top company board.

Within the LLP, there was also a significant restructuring. The practice areas were replaced with two core ?fee-earning divisions: business legal services and personal legal services, ?with a chief executive appointed to each. “We deliberately did that so as to be very client focused and client facing in terms of how we structure and run the business,” says Pickering.

Equity partners were then moved to a corporate model of remuneration, making them shareholders in the business. “They get a corporate remuneration package which is based upon salary, they get a bonus participation and they have shares,” says Pickering. “There is the ability to get more shares because we set up a member share trust and the shares yield dividends, assuming of course that we continue to trade satisfactorily.”

With law firm partners carrying a perhaps underserved reputation for being resistant to change, it was no mean feat for Pickering to steer his partnership into voting for a radical overhaul of the firm’s governance, structure and partner remuneration model. So how did he do it?

“We went through a long process,” ?he reflects. “What we’re talking about ?is a radical reorganisation of the firm and we therefore had to take the partners on a journey to that end. It was quite an involved communication process with ?our partners, because we wanted them ?to understand why we were proposing these changes and why we felt it was ?in our best business interests to do ?so. Ultimately, we ended up at a ?partners’ meeting where there was unanimous approval of proposals for ?these changes.”

Pickering says he has no regrets about the changes that were made at Irwin Mitchell. “What I think we’ve got ?now is a much more cohesive way of delivering our business. The management structure which underpins this, the divisional structure with all of its machinations behind that, enables us ?to run the business in a much more efficient and organised way. Everybody’s very clear about what their role is and what they have to do to help the ?business to succeed.”

He has also been able to fulfil some ?of the firm’s growth aspirations by bringing in around a dozen senior partners to the business legal services division. However, this is only the beginning and further expansion is on the cards. “We’ve done some small acquisitions – nothing of true scale as yet,” says Pickering, “but we have been actively looking”.

Growth ahead

Irwin Mitchell recently reported that it achieved a five per cent rise in turnover ?for the past financial year, its first as an ABS. Pickering is pleased with the result, but wants to see substantial further growth in the next few years.

“We’ve just got through the £200m mark, that’s just where we are now. We significantly want to grow the business to become a much larger and stronger business,” says Pickering.

“We’ve got the right structure in place now, so I don’t think it’s going to change in terms of how we will operate from the corporate structure point of view. What we will see though – if our growth aspiration proves to be correct – is that it will be much larger. So we’ll have a number of much larger elements to a division.”

Pickering is hesitant to go on the record with the level of growth he wants to achieve for the firm and to disclose which mergers are currently under discussion. However, he does acknowledge that he intends to strengthen Irwin Mitchell’s range of legal services.

“We want to make sure that the business is better balanced, so I do want to see that we’ve got all the different legal disciplinary strands within business legal services and personal legal services growing to more optimal levels and therefore contributing more significantly.”

Personal injury – the firm’s largest fee-earning centre – is targeted for growth, as are several other areas within the personal legal services division. “We have a good position with personal injury, that’s our major area, we want to grow that and still get more market share.

“But, at the same time, we want to make sure that areas like family law, the development of our high-net-worth client services, which is a very important point for us, is moved on and becomes a much more significant part of our business.”

The corporate and commercial law division, which is being especially targeted for growth, is expected to ?benefit from the development of ?high-net-worth client services. “We ?see that area as creating a significant bridge between it and business legal services,” says Pickering.

“In terms of business legal services, we want that to have a much more significant component part. We’ve done quite a lot of work in real estate, that is now quite a significant area of our business legal services work, but there’s more to do to grow that. And, likewise, we want other component parts, such as litigation and employment, to also be much larger and bigger contributors.

“So we have analysed the business carefully, we’ve looked at component parts, we know where our priorities are for investment and we are intent on making sure that we deliver a strategy that will see those points delivered.”

Of course, achieving the firm’s ambitious growth agenda – which Pickering readily admits it is – will require a sizeable investment in specialist legal expertise and new internal processes ?and systems. Funds have been set ?aside for both.

“We’ve got to make sure that we can match our aspirations for growth by having a business that has an operational platform that can deliver it so that, if we do grow the business, we can actually handle the volume of work and do it in a very effective and efficient way so that we maximise profits and the returns for shareholders,” he notes.

“Therefore we are also looking critically at business support in its broadest sense to make sure that it is in as good a shape as it can be. There’s quite a lot of work and investment going into that space.”

This includes a “huge amount” of expenditure on IT to bring the firm’s systems up to date. “We’re currently dealing with updating and completely refreshing our case management systems,” says Pickering.

The firm has outsourced its facilities and archiving functions (“we felt that ?was a more efficient way of dealing with that”), while work is underway on legal process improvement and project management programmes. Some resources have also been allocated ?to move the personal injury team to ?a ‘paper light’ working environment.

“There is an awful lot that is being done within the firm just to make sure ?that we are running the business as efficiently as we can,” says Pickering, ?who emphasises that it is still “very ?much work in progress”.

Learning curve

As group chief executive, Pickering carries responsibility for ensuring Irwin Mitchell delivers on its growth plans. He says his appointment as head of the PI team in 1983 and managing partner in 2009 helped to prepare him for his current role, which he took in May 2011.

Looking back over his lifelong career at Irwin Mitchell, Pickering has trouble with claiming what he calls “personal credit” for the firm’s transformation from a small PI practice into the national firm it is today. He does however acknowledge that “it was the personal injury department that led quite a number of office openings – not every one, but most of them,” and that he was head of the PI team at the time. “All of the office openings that were led by the personal injury department occurred under my tenure until very recently when I assumed my new role.”

He readily admits that he was stretched when he first took over responsibility for managing the firm. ?“It was a bit of a learning curve for me, because you have a far bigger level of responsibility and you have to have a greater width and vision,” he says. “Moving into this role has definitely been a significant challenge, but I have enjoyed getting to grips with it.”

Pickering certainly took a gradual approach to settling into his new role. “The business of managing has come sort of osmotically to me. I have not had any formal training in this area, I’ve not done weeks at Harvard or anything like that, but I’ve done the odd course,” he says.

Despite this lack of formal management training, Pickering was apparently successful in leading Irwin Mitchell through a radical transformation. He credits this achievement to careful and regular communication with the partners.

“I think a lot of it is to do with listening to the people that you work with and understanding what they’re saying and being responsive to that, as well as trying to show leadership when it’s necessary,” he says. “We have always had an inclusive culture and a culture of communication, so we did take time to warn our partners and make sure they were clear about what they were doing.”

He feels the firm is in a much better shape today than it was just two years ago, but is far from ready to rest on his laurels. “We’re not finished, there is still a lot for us to do,” warns Pickering. “We have a very clear idea about what we want the business to look like and how well we want it to operate. It’s not a finished business, but we’ve come a long way down that road.”

Perhaps, in the end, it’s this mentality – that the work is never done – which will be key to Pickering achieving his growth ambitions for Irwin Mitchell.

Manju Manglani is editor of Managing Partner (www.managingpartner.com)