DWF CEO Leaitherland resigns making way for former DLA Piper head Knowles
Listed UK firm seeks 'strong and experienced leadership' amid pandemic disruption as chairman steps into frontline role
DWF chairman Sir Nigel Knowles has stepped in to replace long-standing chief executive Andrew Leaitherland as the listed firm experiences ‘greater than anticipated’ disruption from the impact of Covid-19.
The move marks an abrupt end to Leaitherland’s tenure after 14 years at the helm of the top 50 UK firm and sees an unexpected return to frontline management for Knowles, who as managing partner of national UK firm DLA oversaw its 2005 merger with US firm Piper Rudnick to create DLA Piper.
A statement to the London Stock Exchange this morning said Leaitherland had informed the board of his intention to step down with immediate effect and that Knowles’s appointment reflected its belief that ‘strong and experienced leadership is essential’.
In the accompanying trading update, the firm revised down its expected revenue growth from its profit warning on 27 March to around 11% from 15-20%.
“In the event, the disruption experienced in April was greater than anticipated and as a result revenues grew by c.11% over the financial year,” the statement said.
"The impact and timing of Covid-19 gave little opportunity for remedial action in this financial year, further reducing the group’s profit expectations for FY20.”
DWF described the performance of the majority of its businesses as ‘creditable’ but said the arrival of a net 25 lateral partner hires as it positioned itself for growth had not led to the anticipated productivity increases due to the impact of the pandemic.
It said its Middle East business had ‘materially underperformed’ with Spain, Italy and France ‘particularly impacted’ in April and it had taken 'swift action to reduce some of the partner and new hire investment to ensure a focus on margin optimisation’.
It also highlighted a fall of around 6% in its commercial division revenue with its gross margin falling 'markedly' due to the level of investment and 'further actions’ planned to protect margins.
'Within commercial, litigation and real estate performed relatively better but did see some declines in activity, while the main impact was seen in corporate and transactional work,' it said.
However, the firm said it had seen activity levels strengthen in May with a number of client wins while April was its strongest ever in terms of billings with more than £40m of billings and more than £45m of cash collected, a trend that continued into May, meaning its net debt was better than expected at £64.9m and well within the group's total available facilities of £122m.
Knowles said: "Whilst today’s trading update shows there are near term challenges to be overcome, there is a significant opportunity to deliver attractive returns for our shareholders by consolidating the growth achieved to date and building an even stronger global platform centred around DWF’s complex, managed and connected delivery model.”
Senior independent non-executive director Chris Sullivan, who has been appointed as interim chairman while a successor to Knowles is found, added: "In these unprecedented times the Board believes that Sir Nigel’s extensive experience in building and leading a global legal business will be invaluable as group chief executive officer in ensuring that our strategy delivers sustainable growth and attractive returns for all our stakeholders.”
Leaitherland said: “It has been a privilege to be Group CEO of DWF for nearly 14 years and I am incredibly proud of the progress we have made in that time. It is a fantastic business with great people committed to delivering the best possible service to our clients. I wish Sir Nigel every success in taking the business forward."
His departure comes hard on the heels of two acquisitions, made in quick succession by DWF, following its listing in March last year.
In January, it announced the acquisition of longstanding Chicago-based managed services business Mindcrest for $18.5m, hard on the heels of its acquisition of Spanish law firm RCD for €50m in December.