SJ Interview: Keith Froud

How has transactional practice shaped your approach to risk and long-term firm strategy?

M&A, fundamentally, is about progressing the business environment. When you think about it in those terms, there is a natural alignment with executive leadership. Both involve thinking about growth, development and long-term strategic direction.

I’ve always said that within the context of legal practice, whether you are an M&A lawyer or any other type of lawyer, a good lawyer needs to be able to identify risk but also propose solutions or potential solutions. The job is not simply to point out what could go wrong; it is to help clients navigate those risks and move forward. I think that mindset translates directly into strategic leadership.

Another point is that, as a firm, we have undertaken a significant amount of M&A ourselves. I have been involved in all of the major strategic activity and M&A-type initiatives the firm has undertaken over the last 15 years. In those situations, my role has been partly commercial and partly legal. Being involved in a firm that is constantly looking at ways to progress, whether through acquisitions or other forms of strategic growth, has allowed me to combine those perspectives.

There is also an important lesson from M&A that I think applies very directly to leadership: the importance of post-deal integration. 

Over ten years ago I was involved in producing a piece of thought leadership about this. In an acquisition there is often a huge build-up to completing the transaction, but from the client’s perspective the real work starts after the deal closes. Studies consistently show that whether an acquisition succeeds or fails depends heavily on the integration process.

That lesson translates directly into firm strategy. Any investment, whether it is an acquisition, opening a new office, or hiring a lateral partner, is only the beginning. What matters is what happens afterwards. How do you implement the decision? How do you ensure the investment becomes successful as quickly as possible?

Ultimately, strategy is about implementation. You could ask an AI system to produce the wording of a strategy and it would probably generate something plausible. But the difference between successful organisations and unsuccessful ones is execution. The real focus has to be on how you implement and deliver on strategic decisions.

For me, that emphasis on implementation is one of the strongest connections between my background in M&A and my approach to leadership.

You came up through corporate and M&A before moving into firm leadership. What adaptations have you had to make as decisions get made at scale in a global organisation?

I have been with the organisation a long time, and I often say that technically I have worked for one firm but it feels like I have been part of at least four different firms over that period.

The reason is that the firm has changed enormously. We have grown, internationalised and then globalised. As organisations expand in that way, decision-making inevitably becomes more structured.

In a smaller organisation, decisions can often be made more instinctively and perhaps more informally. As you grow into a global business, operating across multiple jurisdictions and cultures, you need more formal structures in place.

But for me, it always comes back to teams. Even in a very large and complex organisation, it is possible to create systems that allow decisions to be made efficiently while maintaining consistency.

You need to think carefully about structures: lines of delegation, information flows, approval processes and governance frameworks. You cannot run a large global firm in a chaotic way. It has to be professional and well organised.

However, if you approach these issues intentionally, and if you remain willing to learn from others, take advice and look at how other organisations operate, you can build systems that allow decisions to be made quickly and effectively.

Ultimately, systems are only as good as the people who operate them. That is why teamwork is so important. It requires constant effort to ensure those structures work in practice.

Interestingly, there is also a connection here with M&A practice. When you lead a major transaction, project management becomes critical. You are coordinating many different legal disciplines, corporate, tax, employment, regulatory and others. You are constantly leading teams and bringing together different perspectives.

So once again, there is alignment between the skills developed in transactional practice and those required in leadership.

International firms operating between elite US players and domestic specialists occupy a distinctive position. How do you see that segment evolving over the next five years, and where is the pressure most acute?

You are right that there are different segments within the legal market, and within the global law firm market more broadly.

We see ourselves as a global business law firm. Within that segment there are some outstanding firms, and I believe that over the next few years a group of those firms will emerge as the leading group within that space. Our ambition is to be part of that group.

Those firms will be defined by their clients, the quality of work they do, and the talent they attract and retain.

We are operating in a world of constant change and disruption, geopolitical, macroeconomic, technological, generational and societal. That environment shapes the way firms operate and the services clients require.

Last summer we launched a new global strategy, building on our previous strategy but identifying the areas where we needed to focus more intensely. We consulted widely with partners across the firm on a global basis, meeting them face-to-face during the early part of the year.

This took place at a time when there was a lot of discussion about whether globalisation was slowing or even reversing. But the overwhelming feedback from across the business was that our global strategy remained the right approach.

Globalisation has not ended; it has evolved. In fact, our clients now need support across multiple jurisdictions more than ever.

Clients require high-quality legal advice in many different parts of the world, often on a cross-border basis, but also strong local support in their domestic markets. Our role is to provide solutions in a world characterised by change and disruption.

For us, the key is to stay extremely close to our clients and ensure we can support them across multiple jurisdictions and areas of law. That model has worked well for us, and we believe it will continue to do so.

In public and cross-border M&A, are you seeing more conservatism from boards, or simply more complexity?

Boards remain highly interested in M&A. The underlying strategic rationale for acquisitions has not changed, and companies remain ambitious about pursuing deals.

What has changed is the level of focus on downside protection. In a world where there is considerable uncertainty about economic and geopolitical developments, boards want greater protection against potential risks.

As a result, deals are becoming more complex. Buyers increasingly seek mechanisms that protect them if performance does not meet expectations.

Earn-out structures are a good example. These mechanisms allow part of the purchase price to be contingent on future performance, which can help address uncertainty but also adds complexity to negotiations.

So I would not characterise the situation as increased conservatism. Rather, there is greater attention to protecting against downside risk.

That inevitably leads to more complex transactions.

Has regulatory scrutiny, particularly around national security, foreign investment and ESG, fundamentally changed deal strategy, or is it mainly an additional compliance layer?

I would say it is an evolution rather than something entirely new.

Regulatory considerations have always been part of M&A transactions, but they have become more prominent in recent years. National security reviews, foreign investment controls and ESG considerations are increasingly relevant.

For sellers assessing competing bids, price remains the most important factor. However, deal certainty has become even more important than it used to be.

A bidder may offer the highest price, but if there are concerns about their ability to secure regulatory approval or navigate the regulatory process successfully, that becomes a significant risk.

Regulatory scrutiny can also create delays between signing and closing. In some cases the gap can extend to twelve months or more.

That introduces additional complexity. The parties must agree on how the business will be managed during that interim period and what happens if performance changes.

So the regulatory environment does not necessarily change the strategic logic of deals, but it certainly adds complexity and increases the importance of deal certainty.

Do you expect a prolonged period of lower deal volume but higher strategic intensity, or a return to consolidation driven by scale?

There is clearly uncertainty in the global economy at the moment, particularly given geopolitical developments.

However, if we take a longer-term perspective and set aside short-term shocks, the trend we were seeing was a gradual return in deal volumes.

The US market has been very active, and the UK market has also been picking up. Assuming there is no major economic shock, I think that gradual increase is likely to continue.

There is a significant amount of capital available. Private equity firms have raised historically large funds, and corporates with strong balance sheets are also looking for opportunities.

There are regional variations, of course. Different countries and markets may experience different cycles at different times.

But overall, there is substantial capital available and a continuing appetite for strategic transactions.

One observation I found very helpful came from a Reuters journalist speaking at an event a few years ago. He said that in today’s environment it is very difficult for corporates to make precise forecasts. Instead, businesses need to think in terms of scenarios.

That is an approach many organisations have adopted. It is about being agile and preparing for different possibilities.

AI is becoming more visible in legal practice. Where do you see genuine structural transformation, and where might the profession be overstating its impact?

Technological change, including AI, is one of the most fascinating developments affecting the profession. I am not sure AI is fully embedded in the legal sector yet, although it is moving in that direction.

Generative AI represents a very significant technological shift, potentially comparable to the introduction of the internet or email. However, the precise scale and timing of its impact remain uncertain.

What is clear is that the potential efficiency gains are enormous.

We recently selected an AI legal assistant provider after conducting extensive trials. Interestingly, we first assessed the market a couple of years ago but concluded that the technology was not yet mature enough to justify a large-scale rollout.

When we revisited the issue last year, the technology had developed significantly. That convinced us that now is the right moment to move forward.

I have described this year internally as our “year of AI”. Our objective is to ensure that by the end of the year everyone across the firm has developed a degree of familiarity with the technology and is comfortable using it.

The goal is to build what I call “muscle memory”. Once people become accustomed to using these tools, they will be able to adapt more easily as the technology evolves further.

At the same time, it is important to recognise that technology does not replace the human dimension of legal practice.

Lawyers will need to be technologically literate and comfortable working with new tools. But the relationship between lawyers and clients will remain fundamental.

In fact, as technology becomes more widespread, those human relationships may become an even more important differentiator.

For that reason we are investing heavily in relationship skills training across the firm. Technology and people strategy must develop side by side.

Is the UK still structurally competitive as a global legal hub, or are US firms reshaping the hierarchy permanently?

The United States is unquestionably the largest legal market in the world, and its influence is enormous.

Some US firms have expanded aggressively internationally, including in London, and that has had an impact on the global legal market.

However, the UK remains extremely important.

For global law firms, the UK is a key market for several reasons. First, there are many major clients based here. Second, the UK has an exceptional pool of legal talent. And third, the UK remains a highly profitable legal market.

The talent point is particularly important. UK lawyers have long been accustomed to working internationally. English law is widely used across global commerce, and London remains a major international financial centre.

Historically, UK firms were among the first to internationalise because they grew beyond the limits of the domestic market.

That tradition of international engagement and the sophistication of the UK legal sector remain major strengths.

So while the US market is dominant globally, the UK remains a highly influential and important legal hub.

Finally, what qualities have become more important in lawyers over the past decade, and which traditional markers of success are becoming less relevant?

Technology skills have clearly become more important.

Even before generative AI, we saw a rapid increase in the technological competence of lawyers during the pandemic. That trend is continuing.

Lawyers today need to be curious and willing to adapt to new tools and technologies.

At the same time, many of the core qualities of a good lawyer remain unchanged.

You still need to provide excellent legal advice. You need to identify risks, propose solutions and work diligently on every matter.

Curiosity is important, not just about technology but about the wider environment in which clients operate.

And perhaps more than ever, lawyers need to stay close to their clients.

I once saw a memo written in the 1950s by the senior partner of one of our legacy firms about client service. The principles in that document, responsiveness, proactivity, understanding the client’s needs, would still be entirely relevant today.

Technology changes the way we work, but the fundamental importance of relationships remains.

In fact, as technology becomes more widely available, the human element may become an even stronger differentiator.

Lawyers will increasingly work alongside colleagues with diverse skill sets, including specialists in technology and data. But the core professional qualities, judgment, curiosity, responsiveness and relationship building, remain essential.

Those principles have endured for decades, and I believe they will continue to do so. 

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