Listed legal business DWF ousts chief executive amid covid-19 crisis
Listed legal business DWF today announced it was ousting its longstanding chief executive in favour of its chair to help steer it through the coronavirus pandemic.
Chief executive Andrew Leaitherland is stepping down from DWF “with immediate effect” to be replaced by chair Sir Nigel Knowles who was previously chief executive of legal giant DLA Piper.
Leaitherland has been chief executive and managing partner of DWF since 2006 and led the firm to its March 2019 initial public offering (IPO) which was the largest ever for a UK law firm.
“In responding to the challenges created by covid-19, the board believes that strong and experienced leadership is essential,” DWF said in a statement.
“The board believes that Sir Nigel Knowles, chairman, will provide this leadership and as a consequence, the board has asked Sir Nigel Knowles to assume the role of group chief executive officer with immediate effect.”
DWF’s share fell 7.5 per cent to 75p in early trading. DWF’s share price has plunged during the crisis from 140p in March.
Chris Sullivan, senior independent non-executive director, has been appointed as interim chairman. A committee of independent directors has been formed to run a selection process for a permanent chairperson over the coming weeks.
Knowles said: “I am very grateful to have had the opportunity to serve as the group’s chairman and even more honoured to have been asked now to lead the company as its group chief executive officer. Andrew helped build a great business for which we are very grateful and we wish him the very best.
“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.
“I look forward to working with the existing strong management team to both navigate through the near term challenges presented by the external environment and on executing on our stated longer term strategy.”
DWF warns on profit
In a trading update issued today, the firm said it had been harder hit by the covid-19 pandemic than it anticipated and today downgraded revenue and profit expectations for the 2020 financial year.
In late March, DWF said it expected revenue growth of 15-20 per cent for the year following the impact of the crisis.
Today it said, the disruption experienced in April was greater than anticipated and as a result revenues grew by circa 11 per cent over the financial year.
It said the crisis had further reduced profit expectations for the year, with expected earnings of £34m, with underlying adjusted earnings of around £21m.
The firm said that after a tough April, activity levels improved in May, “with a number of new client wins, including panel appointments, and with a good pipeline of bid activity”.
DWF said that despite the lack of activity in April, it was the group’s strongest month ever in terms of billings and cash collection. with over £40m of billings and over £45m of cash collected.
DWF said this trend is continuing into May with the result that net debt was better than expected at £64.9m, with total available facilities standing at £122m.
The business said it expects to operate within its banking covenants.
DWF said its investment in new partners over the year had not yet paid off which it blamed on the coronavirus crisis.
“A substantial level of investment was made over the year as the group positioned itself for growth in certain markets with a net 25 partners joining the business.
“However, the [fourth quarter] weakness has meant that new hire productivity levels have not increased as originally expected,” the firm said.
DWF said its commercial division was hit with a six per cent decline in revenue and said that investment over the year meant “gross margin declined markedly”.
The firm said poor performance of its corporate and transactional units were the main driver of the decline in revenue and said it was planning “further actions to protect margin” in this area.