Spotlight | Eliot Kaye

Junior lawyers used to work their way up to partner level within a reasonable timeframe and, crucially, stay at the same firm. Companies valued the continuity and it was a clear course for practitioners. These days the reality of progression often means lateral hires.

Former Berwin Leighton Paisner (BLP) solicitor Eliot Kaye made that choice eight years ago and has never looked back. “It’s antithetical to what I think is very important in business: loyalty,” he says. “But that is how the industry works now.”

And ‘hopping’ out of a law firm altogether is another, possibly better, option.

“There’s an opportunity to move into fund management that people just don’t think about,” he says. “They think if you’re going in-house, you’re a lawyer for whoever. But I think there is a real opportunity for trained lawyers, particularly in funds with a more risk-averse mandate.”

Kaye joined the investment world in 2006. During his seven years at BLP, he harboured no desire to leave until a former colleague approached him about an asset management department counsel
role at Shore Capital.

“The pros for staying in private practice were all comfort: I knew the people, I knew the place, it was security-blanket stuff.” When he thought about it and put pen to paper, there were several cons, though. Career limitation was the clincher, which, Kaye says, is something lots of associates foresee and fear.

Career ladder

• 1999 Joined Berwin Leighton as a trainee solicitor
• 2001 Qualified as a solicitor in the corporate department at Berwin Leighton Paisner
• 2006 Joined Shore Capital as funds counsel
• 2008 Appointed investment manager at Shore Capital
• 2010 Promoted to investment director at Shore Capital
• 2011 Promoted to director of Shore Capital
• 2012 Appointed director of Puma Investments

“In the old days, you joined a firm and, unless you were pretty useless, you were a partner in four or five years,” he says. “A partner meant a partner and, subject to a lockstep arrangement, that might have taken four or five years to buy into the equity.”

Now the journey from associate to partner takes almost double the time, Kaye says, and when you think you’ve become a partner you’re often called a “junior equity partner”. “This meant you got a very small percentage of the profits and a salary. You were a real partner in title but actually you weren’t a partner in the firm.”

Early ambition

A young Kaye fully intended to forge a successful legal career at one traditional firm when it was the norm. Rather than continue the family’s second-generation women’s fashion business in Bournemouth, he was urged by his entrepreneurial elders to “get a profession” and opted for a
life in London.

He swiftly abandoned his Kavanagh QC-inspired expectations of going to the Bar after intentionally shadowing a struggling junior barrister, and went on to serve training seats in property, tax, litigation and corporate finance at Berwin Leighton, as it was, settling on the latter discipline.

“It was an interesting period because the trough of the post-dot com crash had stabilised and it was an upward slope in terms of work,” he remembers. The Berwin Leighton merger with Paisner gave Kaye the opportunity to get involved with business development.

Before too long, he felt he was ‘on track’ to partnership and integrated in City culture. Competition was rife and he realised that, considering most top London firms offer quality advice, the only way to stand out and get noticed was by finding a niche area or working longer hours than his colleagues.

“This ‘vicious-circle rat race’ meant that even senior partners were interrupting their summer holidays with their families,” he says. “The time it takes to reap the real rewards and the lifestyle I didn’t appreciate at the time, but when I left, I saw it.”

At Shore Capital, Kaye is still under pressure – if a deal falls through, the business doesn’t get anything – but it’s a healthier kind that drives him rather than knocking his work/life balance out of kilter. There’s not the burden of the billable hour.

“When I was a lawyer in private practice, I was paid to worry and be at the office worrying until I couldn’t keep my eyes open. And that’s a big, big difference.”

Cashing in

The market and significant retrenchment of the high street banks has provided a golden time for the business, says Kaye, who in 2012 was promoted to director of Shore Capital and of Puma Investments, its retail investment division which provides asset-backed funding to established businesses across the UK.

“It should be harder than it is for us to deploy our money because the interest rates we’re charging are more expensive than Barclays or NatWest or whoever,” he adds. “Hopefully we’re nicer to deal with, we’re quicker, we’re more entrepreneurial, and that’s how we used to sell ourselves: you pay a bit more but you get a bit more.”

For the last two or three years, Kaye’s customers haven’t been able to get their money from anybody else. “Right now we are charging more on our loans. Our interest rates are higher but our risk is lower than it’s ever been.”

The landscape won’t change for several years, he thinks, but if and when the banks return to full service, what will that mean for business? “We would have to charge less to be more competitive because we were doing plenty of loans pre-2008,” he says. “Banks are still so tied in knots by
their regulatory capital requirements that they’re just finding it so hard to get money out to the kind of people we’re lending to.”

Peer-to-peer lending is going to be an interesting trend to watch and it’s a possible opportunity Puma Investments is looking into. Significant scrutiny from the Financial Conduct Authority lies ahead, he suspects, and while survival and continued growth is inevitable, so is heavy regulation.

“At the moment ‘Mrs Smith’ can, within three minutes on the internet, wire £1,000 to somebody she doesn’t know who’s going to borrow that money at a 5 per cent interest rate and pay it back next week. If Mrs Smith loses that £1,000 and her life savings are gone, there’s no recourse because there’s little regulation, little diligence.”

Skills spectrum

In such a regulatory climate, Kaye’s fixation about dotting every ‘i’, crossing every ‘t’ and taking a pessimistic view complements fund management. His counsel role quickly morphed into managing investments – most of the legal work is outsourced anyway – and he now oversees the investment team running venture capital trust, enterprise investment scheme and inheritance tax strategies.

He tells them to always think what could go wrong because if things go right it’ll be fine anyway. Such a culture has been conducive to the firm’s track record. The reason it has never lost any money on a loan is because it’s so meticulous and careful about doing the deal in the first place, he says.

“Of course we need to be able to number crunch and model, but when you’re trying to run a series of funds where it’s all about modest return but capital preservation, having a legal background, aside from giving you good attention to detail, gives you a conservative risk-averse make-up.”

Kaye has now passed the threshold of spending more years in investment than law. He’s had various promotions in a business with £1bn under management and his earlier retirement goal – to free up more time for family life, philanthropic work and following his favourite football team (Arsenal) – looks within reach.

He recommends others think about the wider picture. If you’ve trained to look after clients’ money from the legal side, doing the same from a financial perspective should be a viable transition, even for practitioners doing specialised tax.

“Yes, I was doing corporate law therefore the transition from a deal doer being instructed to a deal doer instructing is perhaps not as great as going from private client law to a deal doer.

“[However], a lot of the skills that you hone as a lawyer are the same and certainly in a business like ours, we are on the business development side, so it’s still all about looking after the client.”

Jennifer Palmer-Violet is editor of Private Client Adviser

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