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Slaughter and May

Capsule

Slaughter and May (Slaughters) is the most profitable law firm in the United Kingdom and one of the top ten legal moneymakers in the world. Despite being the smallest member of London's rarefied "Magic Circle" of five, Slaughters boasts more FTSE (Financial Times and Stock Exchange) 100 companies as clients than any of its competitors. The centennial-plus firm also fosters a unique culture among its fellow corporate mavens, preferring to cultivate its internal workforce for partnership opportunities and eschewing the global expansion that began to be a widespread trend in the late 20th century. Those policies, especially the latter, paid off with a satisfying stability when other businesses were reeling from the financial meltdown of the early 21st century that led to massive restructurings, layoffs, and bankruptcies. Indeed, the firm even prospered within the crisis by assisting the UK government in rescuing faltering banks from complete ruin — an interesting venture into nationalization from lawyers who had made privatization a top priority some twenty years before. In short, by keeping itself comparatively lean in size and remaining alert to the needs of a changing world and economy, Slaughters appeared quite enviably poised to maintain its venerable status well into the years ahead.

Founded in 1889

William Capel Slaughter and William May met at the London law firm Ashurst Morris Crisp & Company, where Slaughter was an associate and May was completing his three-year term of articles (a kind of legal apprenticeship) in the 1880s. The firm had very few partners, as was customary at the time, and the addition of Morris' son to the partnership ranks in 1887 was very likely a deciding factor in Slaughter and May's seeking professional fulfillment elsewhere. Slaughter was the elder and, thus, more experienced of the two, and it was he who broached the idea of their joining forces. May passed his examinations in January of 1888 and, apparently, signed on as Slaughter's assistant directly afterward. Then, on January 1, 1889, the partnership of Slaughter and May was officially launched.

Although the new partners became lifelong friends and colleagues, their backgrounds and personalities were starkly contrasting. Slaughter was born on May 11, 1857, the youngest of six children. His paternal grandfather and great-grandfather had been cheesemongers, and his father (Mihill Slaughter) had begun his career as a coal merchant, so the Slaughter roots were solidly working class. There were many independent tradesmen in his mother's (nee Ann Erskine Capel) family as well, but her father, uncle, and a cousin enjoyed a comparatively higher social standing and income level via jobs in the financial industry. Such contacts almost certainly were a boon to Slaughter's father, as is indicated by his upward career move to secretary of the Railway Department of the Stock Exchange after his marriage to Capel in 1846. By the time the youngest Slaughter came into the world, his family was comfortably settled into a fashionable London suburb.

Slaughter was privately educated and did not attend college — a not unusual path at the time for someone who aspired to a legal career. He spent the five years in articles required of nonuniversity graduates (graduates only needed three) at the legal offices of Benjamin Gay Wilkinson and George Bernard Harvey Drew. In July of 1879, he qualified as a solicitor and joined Ashurst Morris Crisp & Company, one of the city's top commercial law firms. Slaughter remained affiliated with the firm for ten years, gaining the invaluable mentorship of senior partner John Morris in the process. He also discovered an abiding passion for the law — one that overrode all others.

May was a different kind of creature entirely. He was born on May 4, 1863 into a prosperous family that had been landholders in the Thames Valley since the 16th century. His father and grandfather were both prominent surgeons, and he was reared in an immense house overlooking the Thames River. He attended boarding school at the famous Charterhouse School in Surrey before heading to Oxford University to major in classics and modern history, graduating in 1884 after staying an extra term to take a class in religious studies. But it was not merely a privileged background and thorough education that set him apart from his future law partner — it was also a vast range of enthusiasms and talents that extended far beyond the law. May was, among other things, an avid reader, something of a poet, an accomplished musician and composer (four of his compositions were published during his lifetime), and a devoted sports- and outdoorsman. Indeed, in many ways, May was the very antithesis of Slaughter. Yet their differences proved to be complementary, not discordant, and their partnership not only endured, but thrived.

Instant Success

Thanks to an enviable relationship between Slaughter and his mentor, Morris, the fledgling firm started out with a strong client base. Tacitly acknowledging the lack of opportunity at his own firm and recognizing Slaughter's impressive legal acumen, Morris had allowed Slaughter to set up his own practice in 1887 while still handling clients at Ashurst Morris Crisp. After the founding of Slaughter and May in 1889, this bond was further strengthened by a special fee-sharing arrangement between the firms, as well as an informal referral set-up that Morris often utilized in his role as the head of various companies in order to avoid conflicts of interest with Ashurst Morris Crisp. Slaughter and May benefited enormously from this largesse, as it leant the firm a powerful clientele and certain cachet from its inception.

Initial clients included Schroder and Company, railway contractor George Pauling, the Home and Colonial Stores, and Baron Emile d'Erlanger. All were very important, but it is difficult to overstate the influence of the latter two on Slaughters' success. Erlanger was a leading French banker with business interests in many countries. In addition to keeping the partners busy with his myriad professional requirements, Erlanger was a major source of new clients - Pauling and Schroders, for instance, had both been introductions of the baron. A trifle less glamorous, but hugely important nonetheless, was the Home and Colonial Stores account. Co-founded as a small retail operation by Slaughter's sister's brother-in-law, Julius Drew, in 1888, it was transformed into a vast concern under the firm's guidance (Slaughter also served as the company's chairman for nearly 30 years). It grew from just 14 shops in 1888 to 107 in 1890, 300 by 1900, and 600 by 1914 - and such rapid expansion naturally necessitated a variety of legal services, thus providing Slaughters with a substantial amount of work from the time of the firm's formation.

Buttressed by such a strong starting line-up, Slaughters quickly became a force within London legal circles. Other early clients included Barings, Morgan Grenfell, and Rothschild's, as well as several smaller banks, and by 1932 the firm was the second largest in the city. May passed away that same year and Slaughter had preceded him in 1917, but the legacy of those two remarkable men was lasting and indisputable as their firm's stellar reputation escaped the confines of London alone and established itself in the global community.

Unique Culture

As the decades passed, Slaughters expanded its expertise and its frontiers. In the 1950s, for example, the firm's U.S. client base grew through its work for Bank of America and Morgan Guaranty. In the 1960s and 1970s, syndicated loans became a large part of its legal efforts, while the 1970s and 1980s saw the firm play an integral part in the creation of the Eurobond market. Privatization became a top theme of the 1980s and 1990s, when Slaughters' legal teams were involved in restructuring a daunting number of government-owned businesses, including British Aerospace, British Airways, Jaguar, British Telecom, and British Steel, into privately-held concerns.

But even as the world changed and Slaughters' size and status increased, the firm nourished a singular corporate culture that differed from those of its competitors. One aspect of this was a multi-specialist approach in which the firm's lawyers were encouraged to maintain a relatively broad spectrum of expertise, thereby allowing them to fairly easily shift focus when and if certain areas of work became less in demand. Such flexibility inherently gave the firm the tools to effectively weather economic downturns. Another distinctive feature of the firm was its insistence on finding its partnership material within the ranks, refusing to engage in the common lateral hiring practices of other firms. This was especially interesting in view of Slaughters' founding fathers' lack of partnership potential having been one quite likely reason the firm even existed. It also resulted in a workforce with close ties to one another and exceptional loyalty to its employer. And finally, in a stance that did not become particularly relevant until the late 20th century, the firm did not engage in the global expansion that became so popular among its rivals. This, too, proved to be an efficient hedge against troubled economic times.

And so, as the 21st century approached, Slaughters was distinctively positioned to meet the challenges in store. It had the prestige of being a member of London's elite five law firms that constituted the so-called Magic Circle (the other four were Clifford Chance, Linklaters, Allen & Overy, and Freshfields Bruckhaus Deringer). Yet it maintained its own style. Many saw the firm's policies as stodgy and old fashioned — resistant to change on outmoded principle. And clearly, there was little to deny Slaughters' conservative bent. The question then became, "Had the firm truly rendered itself obsolete?"

Into the 21st Century

To suggest that Slaughters had buried its head in the sand over the trend toward globalization would be misleading. It had, for instance, opened offices in Paris and Hong Kong as early as 1974, with presences in Brussels and Beijing to follow (some few, such as a New York City outpost, were opened and closed along the way). What was different was the strategy it employed. That is, rather than feverishly opening branch offices around the world, Slaughters initiated what it dubbed a "Best Friends" network of leading law firms, including France's Bredin Prat, Germany's Hengeler Mueller, Italy's Bonelli Erede Pappalardo, and Spain's Uria Menendez. The idea was to reap the benefits of international liaisons without taking the risks of unmitigated expansion. The idea was widely seen as short-sighted and insular by other big law firms, but its merits were largely borne out after the new century's financial crisis started to take its toll on businesses and people around the world. The same was true of Slaughters other "prosaic" methods, such as discouraging specialization among its associates and partners. In short, while competitors were forced to downsize and regroup, Slaughters was prepared to address the new problems on its own terms.

In 2009, Slaughters remained the smallest of the "Magic Circle" firms. On the other hand, it was the most profitable firm in the United Kingdom and one of the ten most profitable on the planet. It boasted more FTSE 100 clients than any other firm and, unlike its "magical" brethren, was not anticipating any employee lay-offs. Indeed, it had managed to prosper in the turbulent times by securing the role of legal advisor to the UK Treasury in 2008 and, ironically, assisting in the partial nationalization of the country's many faltering banks.

This was not to say that the firm did not have to make adjustments to stay profitable. Measures such as salary freezes and modifying its billing practices were instituted, for example. And in perhaps the most shocking development of all, Slaughters was reportedly in talks in late 2009 with a legal process outsourcing (LPO) provider about outsourcing some low-level work. The negotiations were reportedly at the request of a single Slaughters' client and did not imply a wider trend, but white shoe law firms around the world still surely shuddered at even the thought.

Nonetheless, it appeared certain that, far from being passé, Slaughters was quite capable of adeptly handling the pitfalls of the fresh century. And it was equally apparent that a great deal of that ability was by design, not happenstance. Perhaps the firm's legendary head of corporate practice, Nigel Boardman, put it best to Alex Spence of the Times in 2007 when he said, "We're not different because we are stupid. We're different because we think it's the right way to be. If it became clear to us that there was a better way to be, then we'd switch. It's not a religious belief. It's a business judgment and business judgments can change. I think the demand for high-quality, individually tailored, highly committed legal services will remain the same. If we continue to do that, I don't think clients will mind whether we wear space suits or togas. Actually, clients don't care about our strategy — and rightly. I mean, why should they?"

As the lawyers say, "Res ipsa loquitur."