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Will you still need me? Clyde & Co’s partners have elected their senior partner five times in succession, he’ll be 64 when his latest term ends. Is such dominance laden with risk? Michael Payton should know CLAIRE SMITH THINK MICHAEL PAYTON, THINK BIG. He’s just been re-elected by his partners to serve an incredible fifth five-year term at the helm of Clyde & Co. He’ll be 64 when that term ends in 2009, having become senior partner at 39. He’s just won the Legal Business Senior Partner of the Year award, not least because the firm he runs has seen 85% turnover growth, and 75% PEP growth, over the last half-decade. But this is no management guru along the lines of Nigel Knowles or Jonathan Goldstein – Payton has never even sent an e-mail. Walking into his office is almost like stepping back in time. The most striking omission is that staple ingredient of lawyers’ offices, a computer. ‘I’m
Photography ADRIAN HOBBS
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> just not very good at that,’ Payton confesses. ‘Cherrill does it all.’
Cherrill’s computer Cherrill Connerty is his secretary, and occupies an ante-room replete with a large PC. She is a middle-aged lady sporting disarmingly casual jogging pants and baggy top. Connerty radiates happiness, despite being distracted by what is clearly a busy schedule. Her cropped blonde hair is dyed pink. Although she is distinctly un-City, Connerty is without doubt the power behind the throne of one of the longest-serving law firm leaders in the Square Mile. To get to Payton, you must negotiate Connerty. The paperless office is certainly not a concept which has reached Clyde & Co’s top table. Payton’s desk is tidy but stacked with paper – mainly printouts of e-mails delivered by Cherrill. Today’s pile includes an e-mail from one of Payton’s partners, requesting his company at a dinner with the Pakistani foreign minister. But three-quarters of Payton’s time is spent running his phenomenal insurance disputes practice, undoubtedly one of the world’s best. Also on his desk is an e-mail referring to the ongoing insurance problems arising out of the World Trade Center attacks over two years ago. ‘I’m looking this morning at a fascinating issue,’ he says. ‘An airline is ordered by the aviation authorities in the US, along with all other airlines, to get its aircraft out of the sky on 9/11. Is that a grounding, or a forced landing? That determines whether the policy pays – millions may turn on the answer.’ He
Make an appointment: Payton’s infamous secretary Cherrill; the power behind the throne
pauses, and then adds: ‘It’s exciting, Claire, honestly it is.’
Vote winner
Most partners in management in the City balk at the idea of staying in one role for ten years, let alone 25. What’s more, most would balk even more at the thought of having the same person running their firm for a quarter of a century. But Payton’s most PAYTON’S PROGRESS – THE RISE AND RISE OF CLYDES recent reappointment was the result Turnover PEP of an uncontested £500,000 £100m election. £90m 90m The firm’s head £400,000 of corporate, £370k 370k £400k 400k £345k 345k Andrew Holderness, £80m says: ‘Every time £276k 276k £71m 71m £300,000 £79m 79m there’s an election, £221k £221k £62.1m 62.1m we all consider £200,000 54.5m £54.5m whether the right £60m person is there, and £100,000 this time no one else ran. It’s not just £40m 0 us kowtowing 1999 2000 2001 2002 2003 because he is who he is, there’s an Source: Legal Business 100 Turnover Average PEP absolute sense that
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we have got the right chap and we want him to carry on.’ ‘I think people would be scared of putting themselves forward in case it was seen as disloyal to Michael,’ says one former colleague. ‘He is associated so very clearly with the success of the firm. He’s very capable, very direct and very wellconnected. But I find it slightly unusual to have kept him for another five years – I find it a very safe, conservative move.’ But a firm so closely tied to one man – there is no managing partner – has obvious succession issues. ‘Michael’s very aware of that,’ says Holderness. ‘He’s also aware that because he has such a large character, he casts a large shadow, so we need to start looking at who will take over the mantle.’ Payton is slightly bashful on the subject of his mammoth reign. ‘I do stand for election, and there may well be other people who want to do it. I definitely have to think about succession now, even if it is five years away. ‘I very much hope that there are people that want to do it, because it is a fantastic job,’ he enthuses. ‘Running a business is immensely interesting – if you were bored with running a business and bored with practice, you would be bored with people and bored with life. Golf, now that’s something that’s boring. But how could I
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ever be bored doing this? It’s just not a word in my vocabulary.’
PAYTON’S PREFERENCES
Riding high
Born: Educated: Lives:
Payton’s career dates back to the days when university wasn’t the only way into City law firms. He left school at 16 and began his articles a year later, at a two-partner high street practice in Northallerton, in Yorkshire: ‘At that age I was given all the divorce work, which I must say at the time I found extremely embarrassing,’ he recalls. After four years, the City beckoned, and he responded to a Clyde & Co job ad for a shipping lawyer. Having got the position, luck stepped in. Payton credits his stunning practice to a passion for horse racing that he shared with the firm’s then head of shipping, Maurice Hill. ‘He was one of the greatest shipping lawyers of his day,’ Payton says. ‘And because we had this great shared interest in racing, I was the only person he would talk to. I would go into his office to talk about the horses, and then sneak in a question about the file I was working on.’ Hill died tragically of a heart attack in 1971. ‘The then senior partner said to me, “you are the only person who knows this practice, you’d better become a partner and take it over”,’ Payton says. ‘Then, when the senior partner retired in 1984, they said I’d better take that job over too.’ His love of racing has endured. Payton’s office is adorned with photos of his prizewinning horses, and our conversation is interrupted by a call on his mobile from his trainer in Chantilly. They talk of Ascot, and then Payton shows off a picture of his best ever horse, called Nuclear Debate, a champion sprinter in 2000. ‘He was one hell of a horse, one of the fastest horses I ever saw, just amazing,’ he says, dreamily.
Big business Under Payton’s leadership, Clyde & Co has been transformed. As one competitor notes:
Family:
Hobbies: Favourite book: Favourite film: Favourite holiday destination:
Llandrindod Wells, Wales Felsted, Essex Highgate, second house in Normandy Married to Sally. Two stepsons, aged 33 and 31, and two daughters, aged 24 and 22 Horse racing and France Damon Runyon stories Woody Allen’s Manhattan Anywhere in France
‘He’s gradually turned what was essentially a marine outfit into much more than that.’ Payton has stuck to a strategy of focusing on insurance and reinsurance, shipping and transport, and international trade and energy, and has grown the global spread of the business to a point where overseas offices now contribute 22% of the turnover. In May 2002, the firm merged with HPMBC in Paris to add an insurance practice that billed £7m in its first year, and last year the firm was one of the first into Iraq, signing a cooperation agreement with a firm called Numan Shakir Numan. Already, 2004 has kicked off with the winning of a licence to open in Abu Dhabi. ‘In the early days it was terrifying,’ he admits. ‘You realised how little you actually knew about managing. Our turnover was about £6m and it was nearly all shipping. It was plain
‘People said to me, “Just wait until you see penile implants, Michael”. Fortunately, I have to say, they never came to litigation.’ Payton’s insurance practice is diverse, but has its limits
that we needed to expand, both in the shipping sector and in insurance, and that’s what we did. We established the corporate practice, and began the expansion that has taken us from £6m to the £100m firm that we are today.’ Holderness, who joined as a partner seven years ago from what is now Dechert, says, ‘I’m told stories of how, when Michael took over way back, the firm was of a certain size, and in the early period of his tenure it grew dramatically. There was a pause for breath, but now we are expanding again and you can see he hasn’t lost his ambition and drive to keep on growing it.’ On Payton’s style of management, he adds: ‘He has a very light touch – he doesn’t run this firm like Big Brother telling us what to do. The partners are given responsibility to run their own practices, and occasionally there’s just a gradual nudge on the tiller.’
Changing faces Payton is criticised by some as too ‘old school’, and two former partners spoken to for this piece question the firm’s diversity policy. In Legal Business’s diversity survey a year ago, Clyde & Co fared worst of the top 25 firms in the UK for its gender mix, with 90% of its partners being male. On diversity, Payton argues that the issue is just as important as some of his excolleagues might suggest. ‘We promote purely on merit,’ he says. ‘I don’t regard it as an issue. In fact, I’m not at all sure what the word means. Take our partners in Paris. To state the obvious, they are all French – is that diverse? At least two of them are “white” but born in Africa; one of them is black, and born in Africa. Is there a distinction? Or, in Hong Kong, is a partner who is ethnically Chinese not “diverse” because he has always held a British passport. And so on. What, as one might say, a nonsense.’ And there have been tough times under Payton’s leadership too. He names 1994 and 1995 as his worst years. ‘We had to part company with a number of partners,’ he says. ‘That was very difficult, because it was something we had never done before. There were fairly uneven contributions, I think one would have to say, and looking forward there were various partners whose positions and practices didn’t really withstand close scrutiny. Our overall figures were not good, but I think it’s been a steady upwards graph since then.’
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He adds: ‘The profitability of the firm, particularly in the last five years, has been transformed. First and foremost, we have got a lot of really good people, who are generating good work and have good practices.’ Payton has always had chief executives to do the day-to-day management while he focuses on casework. His current right-hand man is Peter Hasson. ‘He’s very intimately involved in all sorts of things and deserves a lot of the credit,’ says one former partner. Payton also credits the four-partner management board as vitally important to the firm’s success.
MICHAEL PAYTON’S BULL ADVENTURE (LEGAL BUSINESS, FEBRUARY 2003)
her over dinner one day what he would be doing tomorrow. She drew a picture of a building that she could see him visiting, in the middle of England, the following day. In fact, the next day he had to attend a funeral in Birmingham, and having never been to the crematorium before, he recognised it purely from Ella’s drawing. ‘It’s very interesting,’ he says. ‘If I had a similar situation again, I’d certainly use them.’
Super power High stakes
Despite his use of remote visionists, Payton himself is far from remote. Frank Lattal, the executive vice-president, general counsel and secretary at insurers ACE Bermuda, says: ‘I love him, he’s one of my favourite lawyers. He thinks like a businessman, and he is very practical and very strategic at the same time. He’s polite, but he’s affirmative and he’s credible, and he rolls his sleeves up and works hard. When we come to a meeting with Michael Payton, people sit up and listen.’ Julian Lloyd, a principal at Hiscox who has worked with UPDATE 2004: Payton and his wife won $75,000 compensation Payton since the 1970s, adds: from the insurers of the bull. They chose to put the money into what they ‘He’s also not above roaring with call The Bull Account, which now makes regular donations to various laughter and telling me that I have charities. ‘So the bull is being put to good use,’ Payton says. got this one completely wrong, ‘I saw a programme about and why don’t I just go back to the client this extraordinary woman called and sort it out. He’s not the sort of guy who Ella. The next day I rang up the smells fees and says I will fight this one lead underwriter and said: whatever.’ “What do you think? We could Hiscox doesn’t just rely on the top man. employ them to find Shergar.”’ ‘There are an awful lot of very good people Payton eventually tracked in that organisation,’ Lloyd says. ‘An organthem down, and convinced isation is a lot more than one man, but the them to come to Ireland and guy at the top has his neck on the line if it hunt for the horse for expenses all goes wrong, so he should take the credit only. ‘They never were able to when it’s going well.’ finally get to Shergar,’ he says. Clyde & Co expects turnover growth of ‘But they have been spectacularly 10% this financial year, and there was 14% successful, these remote visiongrowth last year. Payton hopes to open in ists. There’s something in it, no Abu Dhabi soon, and will this year focus on question about it. But there were expanding the business in India and certainly those in the market at Pakistan. The lateral hiring programme, that time that thought this was which has seen more than 12 new partners madness in the extreme.’ join in the last year, continues unabated. He has kept in touch with And Payton just goes on and on and on. LB ACE Bermuda’s Frank Lattal is impressed by his lawyer Ella, and tells a story of asking claire.smith@legalease.co.uk Indeed first and foremost, Payton is an incredible lawyer. After rummaging fruitlessly through a few drawers in search of his CV, secretary Cherrill eventually produces it. Take a deep breath: Piper Alpha; the invasion of Kuwait; Chernobyl-related contamination of food crops; the breakup of Yugoslavia; the breakup of the USSR from the perspective of insurers of the Russian oil and gas industries… the list goes on. ‘I have advised the market on most of its major problems over the last few years, and when you see them listed you can see just how diverse they are,’ he says. One of his most memorable pieces of work was on breast implants, advising on claims brought by the various manufacturers against the insurers. ‘The level of detail was just staggering. People said to me, “Just wait until you see penile implants, Michael”’ he recalls. ‘Fortunately, I have to say, they never came to litigation.’ Payton will try most things for a client, including the employment of psychics. When instructed by his insurance clients on the hunt for kidnapped racehorse Shergar, he called in some ‘remote visionists’ from Los Angeles after seeing them on television.
‘When we come to a meeting with Michael Payton, people sit up and listen.’
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