Change is on the way at Herbert Smith as David Gold, who over the last 36 years has built a reputation as one of the most fearsome commercial litigators in the country, will stand down after five years as the City law firm’s senior partner in April.
In a distinguished career, Gold has represented Abbey National Treasury Services in its dispute with Barings after its collapse; fund manager John Duffield in his claims against Jupiter Asset Management and Commerzbank; and even music manager John Reid’s dispute with Elton John and dancer Michael Flatly.
During that time he established a reputation as a lawyer’s lawyer regularly representing other partners from rival firms who were in dispute with their own partnerships. There is a joke in City legal circles that unhappy lawyers often have David Gold’s number on their speed dials.
But in three months Gold will give up his post and will be replaced by competition partner Jonathan Scott who was elected last month. The question for many in the City is what will the 58-year-old mercurial litigator do next?
But the first thing Gold, a Herbert Smith lifer, is concerned with is making sure his hand over to Scott is as smooth as possible.
“I will work with Jonathan Scott to brief him on what we have been doing,” says Gold, a small, unassuming man in a beautifully cut lightweight charcoal suit. Gold is a careful listener and has a habit of unpacking a question, dismissing its weaker parts, before venturing an answer. With Gold all conversation is a form of chess.
He is sitting in the snug meeting room C20 on the first floor of the firm’s imposing headquarters in Exchange House, just behind Liverpool Street.
Gold adds: “But I don’t want to interfere. That is not my style; it will be up to Jonathan to take the firm forward. I am incredibly loyal to this firm.”
However, one of the key things Gold will be keen to impress on Scott when they sit down together is that the pace of international expansion – the firm employs 2,300 staff in 17 offices across the world – must be maintained.
During his time in charge Gold says the firm has grown in India, Tokyo, Singapore, China. The Moscow office has grown threefold over the last three years.
He also adds that despite the recession the firm – which is regarded as being just outside the Magic Circle City firms of Allen & Overy, Linklaters, Freshfields Bruckhaus Deringer, Slaughter and May and Clifford Chance – pressed ahead and opened an office with seven partners and 20 lawyers in Madrid last June. “We had the confidence to open even in this tough environment,” says Gold.
He says: “The challenge for the new management team is to continue growth in emerging markets such as India, Africa, the US and South America. We have had a lot of meetings with firms in the US and South America.”
Gold adds: “Why are we interested in emerging markets? Because in the future the biggest companies in the world will come from there. They have money to come to the UK and buy assets and we want to be acting for them.”
As regards Gold’s next move after the handover to Scott is complete, he dismisses talk that he will go back to head the firm’s powerhouse litigation department, which is regarded as the best in the City and accounts for 40 per cent of Herbert Smith’s revenues.
He says: “I do not want to become head of litigation again. We have good people there doing good work. I have not yet decided what I am going to do next.”
But he adds: “I don’t intend to give up work, am I not ready to take up gardening. My mind is still razor sharp. But there is no great rush. The phone usually rings.”
Some observers say Herbert Smith could well keep on the vastly experienced lawyer in a consultancy role. But like any other top figure, Gold is not without his critics.
Some contend it would be difficult to see Gold in an ambassadorial role for the firm because along with his quick mind comes a theatrical, argumentative nature that makes him difficult to work with – or so they claim.
More substantively, critics argue that in the second half of his five-year tenure the firm’s leadership became excessively centralised, pointing to the partnership charter introduced in 2007, which gave a tighter definition of partner’s duties.
Gold rejects charges that he has been high-handed, adding that he purposely took a back seat when the partnership charter was drawn up.
He adds that he meets with the firm’s senior partnership council four times a year, with the London partners at least twice a year, and is always on the road meeting partners based abroad.
He says: “I have consulted at all times, but there came times when I had to make decisions. And I wasn’t prepared to let consultation become a filibuster.”
But Gold does concede his questioning nature can make him difficult to approach. He says: “I suspect there is some validity to it. But I do listen. I don’t have fixed views. I am approachable. But I do ask questions, sometimes difficult ones, and I am entitled to do so.”
The downturn led the firm taking what Gold calls “a bit of a hit” on its full year figures last year.
The firm’s sales were up 5.2 per cent at £444m, though profits per equity partnership was slumped 18.4 per cent to £845,000.
The firm’s other departmental powerhouse, corporate, which along with litigation also accounts for 40 per cent of sales, acted on the Yell refinancing, the EDF acquisition of British Energy, and on Bradford & Bingley’s rescue package last year. However, this could not offset the general slowdown in M&A, IPOs and its real estate business. This led partner profits to fall to maintain investment in the firm.
Even so its finance department, which the firm has targeted for growth over the last decade, had its best year in 2009. This is largely because of an overall change in strategy at the firm.
He says: “Up until a few years we tended to act mainly for borrowers, rather than lenders. That has changed. In the past we would quite happily work on a case to sue a bank. We don’t do that any more, because it damages relationships and they do not talk to us for years. We want to develop relationships because they have access to capital and other clients in the secondary market.”
Gold says the unit “is still far smaller than Allen & Overy and Clifford Chance. But we are now on most banking panels. And now we are highly respected in the market for our finance work.”
Herbert Smith also has an alliance, of around eight years standing, with German firm Gleiss Lutz and Benelux counterpart Stibbe. Some argue Herbert Smith, the largest of the three, would win more banking business if it went ahead with a full-scale merger.
Gold says: “The alliance has been wonderful for each of the firms. It is a selling feature to clients. And we work long and hard to deliver a seamless service. For instance, a single partner will lead on a piece of client work that involves all alliance firms. Would the alliance be even stronger if the firms merged? I think it would. But this is not something to rush. As each of the firms get to know each other better this is something that may come.”
Gold thinks the UK economy has entered the year poised on a tightrope.
He says: “We go into 2010 with considerable uncertainty over who will run the country and in massive debt. We have to work out how to cut these debts, but can’t do it too fast or risk damaging recovery.”
He also warns that the government must avoid over-regulation in the financial sector so making the UK “an unattractive place for global businesses”.
He adds that it is “naïve” for governments around the world “to think they can achieve a worldwide regulation regime. There will be a lot of competition between financial centres such as in the Middle East, and the more traditional centres in London and New York”.
On the whole, however, Gold says that the mood in the City “is cautiously optimistic right now”.
You get the sense David Gold is up for the fight the rest of 2010 is sure to bring, in whatever role he takes on – but then you get the feeling London’s top litigator is always up for a fight.
CV | DAVID GOLD
Work: Qualified as a solicitor in 1975, and has worked for Herbert Smith ever since then
Education: London School of Economics
Family: Married, three children
Lives: Marylebone, Westminster: “All my children are grown up but we all live together there.”
Also has a house in Marbella, Spain and in Thorpe Bay, Southend where he grew up
Hobbies: Theatre and Bridge: “I used to play a lot more Bridge. I used to be a killer Bridge player.”