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Law firms setting jobs pace

The job market for solicitors at the nation’s leading law firms has strengthened and is growing at 5.3 per cent after faltering in the second half of last year.

The nation’s 40 leading firms have created the full-time equivalent of 352.5 new jobs for solicitors in the past 12 months.

This more than compensates for the six months to December when many firms were reluctant to hire and the number of non-partner fee earners fell 1 per cent — or the equivalent of 69.7 full-time jobs.

The fastest employment growth — in percentage terms — is taking place at a handful of small practices led by 17-partner Thynne + Macartney where the legal workforce grew by 60 per cent.

But in terms of the absolute number of new legal jobs created, Gilbert + Tobin was in front.

In the past 12 months, this firm has added the equivalent of 47.6 full-time jobs, just in front of Mills Oakley Lawyers which added 44.8 and HWL Ebsworth which added 37.6

However, the 40 firms remained cautious about appointing partners, with the total growing by just 2.1 per cent — or the equivalent of 48.9 full-time partnerships — since this time last year.

In percentage terms, the fastest growing partnership was at Sparke Helmore (25.9 per cent), followed by the small Australian practice of international firm Quinn Emanuel (20 per cent) and Thynne + Macartney (14.9 per cent).

These are the key findings from the first tranche of The Australian Partnership Survey, conducted by Eaton Capital Partners.

Other findings, which will appear next week, will identify those firms where women lawyers are being promoted to partnership in the greatest numbers.

Danny Gilbert, a co-founder of Gilbert + Tobin, said the growth in the legal workforce at his firm was linked to it reputation and standing.

“We are attracting a lot of work — more than our share of the ­market if you base that share on some per-partner proportional basis,” Mr Gilbert said.

He believed this had been due to what he described as “a relentless determination” to attract the best partners.

This was now “absolutely paying off, in terms of revenue, profit and headcount”, Mr Gilbert said.

Ian Robertson, the national managing partner of Holding Redlich. Picture: Hollie Adams
Ian Robertson, the national managing partner of Holding Redlich. Picture: Hollie Adams

At Holding Redlich, where the legal workforce grew by 35.9 per cent, national managing partner Ian Robertson remained positive about the firm’s prospects.

“We think there are good opportunities for a medium-size ­national law firm to do well provided we are client-focused and constantly seeking to improve our ­efficiency,” Mr Robertson said.

At McInnes Wilson Lawyers, where the legal workforce grew by 36.4 per cent, chief executive Paul Tully said some of this was attributable to last year’s merger with the Canberra office of Dibbs Barker. McInnes Wilson had also opened offices in Adelaide and Melbourne.

David Kearney, who is Wotton + Kearney’s chief executive partner, said the 25.3 per cent increase in his firm’s legal workforce was attributable to its “boutique strategy” and global alliance.

By specialising in insurance work “the talent market knows we stand for something” and this meant the firm was able to attract the best insurance lawyers.

Internationally, Wotton + Kear­ney has an alliance with firms in the US, Britain and Germany that had enabled it to better service clients and post lawyers internationally.


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Qatar rights group hires Swiss law firm to sue blockade countries

Ali bin Smaikh al-Marri, chairman of Qatar’s National Human Rights Commission giving a press conference in Doha on 8 June, 2017 (AFP)

A top Qatari human rights group said it will employ Swiss lawyers to seek compensation for those impacted by the decision of Gulf countries to cut ties with the emirate.

Lalive, a law firm with offices in Geneva, Zurich and Doha, is finalising an agreement with Qatar’s government-appointed National Human Rights Commission (QNHRC) that will be announced on Saturday.

Ali bin Smaikh Al-Marri, chairman of QNHRC, said his group would take action against Saudi Arabia, the United Arab Emirates and Bahrain, which cut ties with Qatar this month.

“We’ll be coordinating to start legal action with those affected by these sanctions,” Marri told a news conference.

Some cases will be filed in courts in those three countries and in some courts that have international jurisdictions, like in Europe, related to compensation

– Ali bin Smaikh Al-Marri, QNHRC

“The three countries are responsible to compensate those affected,” he said, adding many Qataris qualified for compensation.

“Some cases will be filed in courts in those three countries and in some courts that have international jurisdictions, like in Europe, related to compensation.”

Representatives of the Qatari, Saudi, UAE and Bahraini governments could not immediately be reached for comment.

Qataris are the wealthiest citizens in the world per capita enjoying wealth produced by the world’s largest exports of liquefied natural gas.

Many own assets worth millions of dollars in neighbouring Saudi Arabia and the UAE, including hotels, real estate and farmland.

Others have cancelled travel plans and scrapped import deals with UAE-based firms since the countries cut ties with Qatar on 5 June and imposed economic sanctions, accusing it of funding militants.

It was not immediately clear under what jurisdictional basis the legal claims would be made and whether governments involved would have to first agree to arbitration.



A man walks on the corniche in Doha (Reuters)

Lalive, which declined to comment, has practised in Qatar since 2006 and unlike other international law firms does not have offices in Saudi Arabia, Bahrain and the UAE.

The firm’s partners include Michael Schneider, an expert in international commercial arbitration who represented Saddam Hussein’s government in the UN Compensation Commission over claims related to Iraq’s 1990 invasion of Kuwait.

The Gulf crisis, the worst to hit the region in years, shows no sign of abating.

Last week, Riyadh laid down a list of 13 demands for Qatar to meet by 3 July, including ending support for the Muslim Brotherhood, the closure of Al-Jazeera television, a downgrade of diplomatic ties with Iran and the shutdown of a Turkish military base in the emirate.

The UAE has told Qatar it should take the demands seriously or face a “divorce” from its Gulf neighbours.

Qatar said it rejects all foreign interference in its policies.

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Theater of Law

Leading law firm Schulte Roth & Zabel (SRZ) presented the
premiere of Theater of Law, a new co-production between Theater
of War Productions
and the Forum on Law, Culture & Society.
The event featured Emmy Award-winning actor Reg E. Cathey (The
Wire, House of Cards, The Immortal Life of Henrietta Lacks),
Tony
Award-nominated actress Kathryn Erbe (Law & Order: Criminal
Intent, Oz),
Tony Award-nominated actor Zach Grenier (The
Good Wife, Fight Club, Deadwood
) and Obie Award-winning actress Ana
Reeder
(Hedda Gabler, Top Girls, Sight Unseen). Held at SRZ’s
New York office, the actors performed a dramatic reading and initiated
audience discussions.

This Smart News Release features multimedia. View the full release here:
http://www.businesswire.com/news/home/20170629006384/en/

Schulte Roth & Zabel presents the premiere of Theater of Law, a new co-production between Theater of ...

Schulte Roth & Zabel presents the premiere of Theater of Law, a new co-production between Theater of War Productions and the Forum on Law, Culture & Society. Photo credit: Bruce Gilbert. From left to right: Thane Rosenbaum, director of Forum on Law, Culture & Society; Bryan Doerries, artistic director of Theater of War Productions; actor Zach Grenier; Christina Henry of Schulte Roth & Zabel; David Auxier-Loyola of Schulte Roth & Zabel; actress Kathryn Erbe; Schulte Roth & Zabel partner Dan A. Kusnetz; Sarah L. Huff of Schulte Roth & Zabel; actor Reg E. Cathey; actress Ana Reeder; and Jeffrey A. Lenobel, Schulte Roth & Zabel partner, chair of the Real Estate Group and a member of the Board of Directors of the Forum on Law, Culture & Society.

Designed for legal professionals and for those who have had experiences
with the legal system, Theater of Law is an innovative project
that features readings from an ancient Greek tragedy about the first
trial in Western culture, and is aimed at engaging audiences in
constructive, thoughtful dialogues about the power of justice and the
law, and its impact on local communities and society as a whole.

“We are pleased to present the debut of Theater of Law. It
is truly an innovative program that ignites thoughtful discussions about
justice and today’s legal system,” commented Jeffrey A. Lenobel,
SRZ partner and chair of the Real Estate Group. “Last night’s
performance was inspiring and, we are thrilled to say, the first of many
exciting Theater of Law programs to be performed around the
country,” added SRZ finance partner Joel M. Simon. Mr.
Lenobel and Mr. Simon serve on the Board of Directors of the Forum on
Law, Culture & Society.

Mr. Cathey, Ms. Erbe, Mr. Grenier and Ms. Reeder read excerpts from Eumenides,
translated and directed by Bryan Doerries. The Greek
dramatist Aeschylus, in his trilogy of revenge plays, Oresteia,
concludes the cycle in Eumenides with the trial of Orestes — the
son who kills his mother because she had murdered her husband, Orestes’
father. It is the first trial presented in Western culture — judge, jury
and the community watching from the gallery — ordered by the gods as a
way of introducing the ancient Greeks to the virtues of a legal system
and the end of self-initiated blood justice.

Theater of Law is an important work and we are delighted to
host this premier performance,” commented Alan S. Waldenberg,
chair of SRZ’s Executive Committee.

“For most of human history, justice was a private affair — tribes,
clans, families and individuals took matters into their own hands. This
Greek play reminds us of the power of the court system as well as its
impact,” said Thane Rosenbaum, director of the Forum on Law,
Culture & Society.

Theater of Law is a terrific opportunity for us to bring
our work to the legal industry. We are thrilled that Schulte Roth &
Zabel has made it possible for us to engage legal professionals in these
crucial discussions,” said Mr. Doerries, artistic director of
Theater of War Productions.

Theater of Law was developed by Theater of War Productions, a
social-impact theater company that has worked with 200 leading film,
theater and television actors to present dramatic readings of seminal
plays — from classical Greek tragedies to modern and contemporary works
— followed by public conversations in an interactive program designed to
address urgent community-based social issues. Theater of Law
is co-produced by the Forum on Law, Culture & Society.

About Schulte Roth & Zabel

Schulte Roth & Zabel LLP (www.srz.com)
is a full-service law firm with offices in New York, Washington, D.C.
and London. As one of the leading law firms serving the financial
services industry, the firm regularly advises clients on corporate and
transactional matters, as well as providing counsel on regulatory,
compliance, enforcement and investigative issues. The firm’s practices
include: bank regulatory; bankruptcy & creditors’ rights litigation;
broker-dealer regulatory & enforcement; business reorganization; complex
commercial litigation; cybersecurity; distressed debt & claims trading;
distressed investing; education law; employment & employee benefits;
energy; environmental; finance; financial institutions; hedge funds;
individual client services; insurance; intellectual property, sourcing &
technology; investment management; litigation; mergers & acquisitions;
PIPEs; private equity; real estate; real estate capital markets & REITs;
real estate litigation; regulated funds; regulatory & compliance;
securities & capital markets; securities enforcement; securities
litigation; securitization; shareholder activism; structured finance &
derivatives; tax; and white collar defense & government investigations.

About Theater of War Productions

Theater of War Productions (www.theaterofwar.com)
is a social-impact company that uses a combination of theater and guided
public dialogue to help communities address pressing public health and
social issues such as combat-related psychological injury, suicide,
end-of-life care, police/community relations, prison reform, gun
violence, political violence, natural and manmade disaster, domestic
violence, substance abuse, and addiction.

About Forum on Law, Culture & Society

The Forum on Law, Culture & Society (www.forumonlawcultureandsociety.org)
is committed to providing a unique, engaging, and entertaining
experience for both a public and online audience in examining the big
ideas of our day, including matters of law, justice, human rights and
civil society by bringing together influential artists, government
leaders and public intellectuals in a dynamic setting that is spirited,
enriching and alive. Thane Rosenbaum serves as the director.


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Charity calls for law change to force banks to help cancer sufferers

The banking sector must do more to help cancer sufferers, a leading charity has urged after it revealed a dramatic spike in the number of calls it is receiving from worried patients.

Macmillan Cancer Support said those seeking financial help almost doubled in 2016. More than a quarter of the people contacting the charity were doing so to ask money queries.

Nationwide and Lloyds Bank have partnerships with Macmillan, supporting customers living with cancer with initiatives such as capped bills and payment holidays.

Read more: European Commission launches probe over Aspen’s cancer drug price hikes

However, Macmillan chief executive Lynda Thomas said initiatives, such as credit card freezes and mortgage payment flexibility, should be rolled out more generally.

“We want a change in the law so banks are duty-bound to help financially vulnerable cancer patients,” she said.

Research by Macmillan indicated in the majority of cases (83 per cent) the average cancer costs were £570 per month.

Last week the UK’s financial regulator opened a consultation into whether cancer patients are getting enough support from the insurance sector. In particular it is examining the “challenges firms face in providing travel insurance for consumers who have, or have had, cancer, and the challenges for these consumers in accessing insurance”.

Read more: Watchdog reviews how travel insurers can give cancer patients a better deal

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Sell or No-Sell: Design Firms Weigh Choices for Future Growth

Diane Cho, a founder of a small Baltimore architect, and her partner, cold-called Carl Elefante, incoming president of the American Institute of Architects, when they heard through the grapevine that the 140-person firm of which he was a principal wanted to open an office there.

With retirement looming for herself and two co-principals, Cho worried about the financial impact on younger managers and employees.  “The decision to sell seemed like a way to address these concerns and create a path for both older and younger shareholders,” she says.

This experience was unlike Cho Benn Holback’s previous forays into merger-and-acquisition talks. After meeting with other potential buyers that were more focused on the bottom line than design, Cho says she immediately detected “culture clashes.” With Quinn Evans, “the chemistry was right … and the firms’ portfolios meshed in an unbelievable way,” she says. The deal was signed in May.

Ron Klemencic, chairman and CEO of Magnusson Klemencic Associates, sees a starkly different course for his 195-person structural-civil engineering firm. “We have no interest in selling or purchasing,” he says, adding that innovation “requires a strong culture and constant maintenance of that culture. Merging or selling means we will lose control and, ultimately, the culture we developed over more than 90 years.”

He observes, “Too much time and effort is devoted to trying to merge disparate cultures, agendas, markets and the like, taking top management attention away from clients and the work. We call it the march to mediocrity.”

Firms that share MKA’s view often attach adjectives such as “furiously” or “fiercely” to describe their independence.

To achieve next-step success, many industry architects and engineers must decide between a merger, a buyout or remaining independent—growing  staff, markets and geographies organically or even by making their own acquisitions. As principals age and seek to recoup investments—with improving economics and new interested buyers such as private-equity investors pushing up firm valuations—M&As have grown in appeal and in size.

“We have plenty of firms run by younger founders that, quite frankly, don’t need to sell, but they see it as an opportunity to accelerate growth.”

– Colvin Matheson, Managing Director, Matheson Financial Advisors

Deal numbers peaked in 2014 and 2015, say consultants that broker them and track trends, such as Morrissey-Goodale (se chart at top of story)

Larger design firms struggling with internal growth have relied on acquisitions, says Andrej Avelini, managing director of consultant EFCG. Among about 200 design firms it tracks, 2016 revenue growth averaged just 1.6% for those with $1 billion or more in revenue, he says. Deals include eye-popping “megamergers” fueled by public-ownership cash, such as AECOM’s $4-billion purchase of URS Corp. in 2014 and SNC-Lavalin Group’s soon-to-wrap $2.6-billion bid for U.K.-based Atkins Group.

Deals have slowed in the wake of oil-sector, election and other global economic uncertainties. But numbers are rebuilding, with action strongest among smaller firms. “Since 2010, the median size of a selling firm is 20 to 30 employees, typically generating $2 million to $4 million in annual revenue, with the median buyer around 300 employees,” says Steven Gido, partner in consultant Rusk O’Brien Gido + Partners. Colvin Matheson, managing director of Matheson Financial Advisors, says, “We have plenty of firms run by younger founders that, quite frankly, don’t need to sell, but they see it as an opportunity to accelerate growth.” The talent crunch is a newer M&A accelerator, says Jamie C. Kiser, Zweig Group consulting director, noting that a new key catalyst is staff additions, which historically have ranked as a low priority in its annual survey of deals. She says the “seasoned, experienced but still young and energetic [leadership] tier is an important one that is a gaping hole” in some firms.

Independents also are changing shape with less fanfare. “For all the headlines, this industry tends to quietly and steadily transition and perpetuate companies via internal methods, just like law and accounting firms: selling stock to a next generation of emerging owner-managers or implementing employee stock ownership plans,” Gido says.

Motivations for design-firm sellers are as varied as the firms themselves. “I had gotten to the point where I was tired of running a small business,” says Gregg Reese, president and sole owner of Summit Engineering Group, a niche transportation-sector designer acquired in 2015 by engineer Modjeski and Masters. “In the consulting field, it’s gotten more and more challenging every year to keep up. I love what I do, but it was wearing on me.”


Article Index:


Persistence

Selling MEP engineer RDK was the best approach for three aging partners who owned 75% of the 185-employee company “while the economy was good and the firm is doing well,” says CEO Chris Cummings of its June 6 sale for $33 million to serial acquirer NV5 Global Inc. It reported $302 million in 2016 revenue. “It was better to do it now, when we could pick where we wanted to be,” he says. After conversations with various types of buyers, Cummings says NV 5 “was large enough to afford us, but we could still have impact.” He admits “some apprehension of the future” but sees new cross-selling opportunities for RDK staff.

Texas-based Bury had overtures from Canadian-based design firm Stantec, another long-time sector consolidator, for more than a decade when the 300-person firm agreed to an acquisition in 2016. “We weren’t a small company, but the resources that it takes to grow are tremendous. Stantec was persistent in its pursuit,” says James B. Knight, a former Bury executive vice president. He credits the new parent’s integration expertise for “a good process that allows us to see the positive future in front of us.”

That experience set up Stantec for even the experienced buyer’s most aggressive purchase: the $800-million acquisition—also last year—of giant MWH Global, which has a worldwide reach that includes construction. “Stantec tries to minimally change companies they acquire and incorporate the best parts,” says Texas-based MWH Vice President David Irvine. Stantec’s state footprint, which had been about a dozen staffers, now numbers about 700, he says.

Fresh from its epic $1.5-billion purchase of Parsons Brinckerhoff in 2014 and looking to boost its presence in the U.S. health-care market, Montreal-based WSP approached much smaller Dallas designer CCRD through its existing U.S. arm. At first, the 225-person firm was not interested, says former CEO Rick Rome. However, “our younger ownership wanted opportunities with a larger organization,” he notes.

“Consolidation is driven by failed leadership and ownership transition on the part of selling firms. Most founders don’t think about transition before it’s too late.”

– Mick Morrissey, Managing Principal, Consultant Morrissey Goodale

The group is working on a 1.5-million-sq-ft hospital in China, a project it would not have been able to secure before the purchase. Integration into WSP, a 36,200-employee global giant, was initially a shock, says Rome. “Things got better as we were able to spread the message,” he says. The year-long transition included adjusting to the rigid structure of a publicly held parent. “It’s the thing we knew we needed, but it is sometimes frustrating,” says Rome, noting loss of “some autonomy and light-footedness.”

But with less focus on ownership details, “we are able to focus on what we do best—projects,” he says. “It’s allowed me to be a better engineer.”

While 900-employee Thornton Tomasetti was three times the size of Weidlinger Associates Inc. when the two structural engineers struck a merger deal in 2015, Raymond Daddazio, the latter’s CEO and now TT president, says the firms had much in common.

Weidlinger had planned to obtain venture capital funding to expand its software business but, as a smallish firm, could not get investors. Instead, TT is making the investment under the firms’ merger deal as part of a new arm called Thornton Tomasetti Weidlinger Innovation Incubator. To date, it has spun off five companies, says Daddazio.

Over the years, other suitors “could not get beyond valuing Weidlinger as a professional services firm,” he says. “Only TT had the clarity of mind to value the intellectual property.” Working for a larger firm took some adjustment, but, “for the most part, bigger is better,” says Daddazio.

The experience may have eased the now-larger TT’s purchase of tiny 18-person niche firm Swallow Acoustic Consultants, completed in January. “Everyone is very happy. There is so much opportunity,” says John Swallow, its founder and now a TT principal. “Swallow has access to markets all across America.”

Now 70, Swallow calls the TT buyout his “exit plan,” which will provide his employees with a formal pension plan for the first time. “It means a lot to me,” he says.

Agreeing to become a part of 1,700-person design firm HOK in 2014 may have seemed daunting for 200-employee 360 Architecture, but the deal was facilitated by long ties among the firm principals.

According to 360 former President Brad Schrock, HOK was well managed and profitable, while the intended parent considered 360 creative, entrepreneurial and aligned in a very specific niche. As a sports design specialist, observes Schrock, “we were a fresh market for HOK,” which had been out of that sector for several years. Bill Johnson, another former 360 owner, admits some clients were confused by the change. “We had a lot of explaining to do,” he says. Johnson advises industry peers that “you can never think about transitioning your practice soon enough.”
 

Design-Firm M&A Deals

Robert Agbede, CEO of Chester Engineers, agreed in March to merge his Pittsburgh firm into Ontario-based Hatch Group, a deal that restores a U.S. water-sector presence in the Canadian firm since it dissolved a joint venture with Mott MacDonald last year.

“While Chester has done very well expanding our footprint in recent years, sustained incremental organic growth can be difficult for midsize engineering firms,” he says. “There comes a time when other options must be considered,” says Adbede, now Hatch vice chairman and former sole owner of what became the largest African-American-owned U.S. design firm.

“Chester’s long history in water and environmental engineering connects well with Hatch’s urban solutions, digital operations and P3 advisory capabilities,” says Agbede. The link now offers Chester’s 200 staffers employee ownership and provides a larger platform for Agbede, who grew the firm out of minority-business-enterprise status, to mentor other minority-owned design firms.

Designers that choose to stay independent say a shared commitment to preserve a firm’s legacy for future generations is a strong profit motivator. “We’re not driven by a fiscal model,” says transportation engineer VHB’s CEO Michael Carragher. “Some 1,300 employees own VHB, and our responsibility is to leave it in a better condition than we found it. We’ve been able to do this while still being profitable.”

Not for Sale

Environmental engineer OBG is moving to grow itself as an acquisitor, having learned from past mistakes. “We made a smaller acquisition many years ago that did not deliver the results we expected,” says Senior Vice President Tim Barry, manager of its growth strategy. “In hindsight, there were strategic and cultural miscues.”

Buy-and-sell inquiries to the $125-million-revenue firm—what Barry terms the “industry effect”—now are analyzed in a new business process, called “Checking Our Progress and Adaptive Changes.”

That process enabled the so-far more successful purchase in early 2017 of Natural Resource Technology, a 75-person environmental engineer in Milwaukee. Firm President Laurie Parsons, now an OBG senior vice president, says NRT already was engaged in internal succession when OBG approached. “We took a measured amount of time getting to know” the intended parent. Managers who had joined NRT after other firms’ buyouts offered tips. “We listened and learned from these people,” she says.

But independents doing their own acquisitions can make mistakes. “There’s a belief you can purchase a firm and improve it because we’re all engineers,” says Gerry Salontai, an industry consultant and former CEO of engineer Kleinfelder. “That’s proved difficult.”

Target Engineers CEO Raj Rangaswamy says his firm chose private-equity investment to fuel its growth in a 2016 deal with Keystone Capital for a 65% share. For Target, a 160-person construction inspection firm, to grow at the same pace it has since 2000, “we needed financial strength,” he says, ruling out the options of an employee stock-ownership plan or a buyout.

Both mechanical engineers with MBAs, Rangaswamy and his partner own 30%, and other managers own the rest. P/E ownership “reduces our financial risk, and we still run our operations,” he says. “Whatever our culture was before, it’s the same now.”

With P/E firm involvement often just a few years and with high expectations for a return on investment, Rangaswamy understands peers’ reluctance to go this route.

But he claims his financial reporting to Keystone is little different than reporting to banks, and the P/E has been key in vetting prospects for an acquisition Target hopes to make in the next six months.

P/E firm interest in the AE sector has grown in recent years, “given its consistent growth track record, low capital needs and firms’ staying power,” says EFCG’s Avelini. But he admits deals have failed for firms with too much debt, a lack of “business acumen” or where investment was insufficient, forcing a search for a new partner.

Long-Term View

Carollo Engineers isn’t shy about describing itself as fiercely independent—it’s actually a key part of the firm’s business plan. The California company, which reported $247 million in revenue last year, is a regular target of some of the largest industry acquisitors. But CEO B. Narayanan says not being one is a strategic advantage, as is its water sector-only focus.

Most of its larger competitors are diverse firms, serving multiple sectors. Being a privately held sector specialist “allows us to take a really long-term view of the water market [without] all the distractions,” says Narayanan. “Our clients don’t need to worry that if a market gets hot, they will be abandoned. Our employees know the same thing. That’s a strong strategic alignment.”

“In the past five years, gaining additional staff has drifted upward as a priority for our mergers and acquisitions. Historically, it was near the bottom of the list.”

– Jamie C Kiser, Director of Consulting, Zweig Group

Narayanan says Carollo is focused on ownership transition, making sure it never gets “too top-heavy. That takes a lot of planning,” he says. Equally key is to ensure that the financial incentives “are aligned in a way that there’s never a reason for any group of firm owners to say we could make so much more if we sold,” he adds.

The firm also hammers home the value of independence to its owner groups, emphasizing that “the company is not ours to sell. No one wants to be the one who pulls that trigger,” Narayanan says.

Good bottom-line numbers help. When many water-sector designers saw single-digit growth, Carollo has grown by 15% to 20% annually. “Everything works when the company is successful … and people are happy,” he says. “We spend a lot of time worrying about that.”

California-based environmental-sector consultant Dudek also has devoted a lot of time to that challenge and to preserving a unique culture that CEO Frank Dudek says has generated a 13.5% average revenue growth over the past 30 years for the firm.

Says a staffer, “Board surfing is a big part of our employee culture, and Frank is a bodysurfer.” CEO Dudek says that, with an annual growth goal of just 10%, “we can maintain the high quality of services while maintaining our firm culture.”

Dudek says the firm’s “upside-down” organization has project managers and practice leaders functionally at the top, aided by company officers, support staff and board directors. “We’re careful in choosing outside board members who are not promoting build and sell,” he says. “We don’t know how this would work under another management philosophy and aren’t motivated to find out. I doubt we’d achieve the numbers we do with outside management.”

According to Dudek, “The right people to us are capable practice builders and PMs, not business managers or corporate organization chart-box fillers.” The firm’s goal has been “to repeatedly achieve upper-quartile profitability to fund investments, growth, benefits, retirements and operations,” says its CEO. The firm added to growth through small acquisitions. Says Dudek, “We’ll offer a fair price, but we’ll never be the high bidder in a competitive market.”

Right Fit

Fort Worth, Texas-based engineer Freese & Nichols also has spurned all M&A offers, which Chairman Robert Pence says averaged two to three a month in a recent year. With 2016 revenue of about $106 million, the firm considered selling itself in the 1990s, “when the industry was in a frenzy of consolidation,” he notes, adding that experts warned that midsize or smaller engineers risked being downsized. “We spent a year dancing with a large national firm, and the results were devastating,” says Pence. “It was our worst year financially, and staff was in turmoil the entire time.”

The inward focus since has included operational changes that earned Freese & Nichols a Malcolm Baldrige Quality award in 2010, the first and, so far, only engineer to win the prestigious U.S. Commerce Dept. recognition. He also cites profits “in the upper quartile, year over year.”

In tackling ownership transition, the firm limits the number of shares each shareholder can own and is adding new owners annually, “which will avoid future peaks,” says Pence. In a leadership competition that boosted 25-year veteran Brian Coltharp to CEO in January, all internal candidates remained at the firm—the same outcome that has occurred twice before in the past 15 years.

“Historically, deals don’t pan out due to bad strategic intention, poor due diligence, key people leaving after the sale, buyers overpaying and sellers’ rosy forecasts.”

– Steven Gido, Principal, Rusk O’Brien Gido + Partners

North Carolina design firm McAdams also relishes its independence, despite being approached by numerous “1,000-plus-person, super-regional” engineering firms seeking to buy it, says CEO Mike Munn. He says McAdams has “always declined even having discussions” with suitors.

The firm is in its seventh year under second-generation leaders who “enjoy and even thrive on running the business aspects. Munn says, adding that an M&A deal is not in the picture. “We know that what we have created is rare, and it fits us well,” he says.

Likewise, Idaho-based POWER Engineers Inc relishes the success independence has brought. “It’s important to understand that POWER does not have financial growth goals,” says new CEO Bret Moffett. “What we have instead are goals to grow opportunities for our people.”

He claims that focus “has led to excellent financial results” for the firm, which posted close to $400 million in 2016 revenue. “Looking back on our strategic plans for the past 10 years, nowhere does it state we’re building our firm up to sell it,” says Moffett.

Looking ahead, architect Cho says it will take continued effort to ensure that her firm and its new parent continue to mesh well. She says listening to younger employees and letting them step forward is crucial.

For independently-minded engineer MKA, CEO Klemencic says the path is clear. “With natural attrition and replenishment of the staff, a strong and stable practice is possible, ” he says.

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Pomerantz Law Firm Announces the Filing of a Class Action against B Communications Ltd. and Certain Officers – BCOM

NEW YORK, June 29, 2017 (GLOBE NEWSWIRE) — Pomerantz LLP announces that a class action lawsuit has been filed against B Communications Ltd. (“B Communications” or the “Company”) (NASDAQ:BCOM) and certain of its officers. The class action, filed in United States District Court, Southern District of New York, and docketed under 17-cv-04937, is on behalf of a class consisting of investors who purchased or otherwise acquired B Communications securities, seeking to recover compensable damages caused by defendants’ violations of the Securities Exchange Act of 1934.

If you are a shareholder who purchased B Communications securities between November 7, 2013 and June 19, 2017, both dates inclusive, you have until August 28, 2017 to ask the Court to appoint you as Lead Plaintiff for the class.  A copy of the Complaint can be obtained at www.pomerantzlaw.com.   To discuss this action, contact Robert S. Willoughby at rswilloughby@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll free, ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and number of shares purchased. 

[Click here to join this class action]

B Communications Ltd provides various communications services for business and private customers in Israel. The company offers fixed-line telephony, fixed-line broadband Internet infrastructure access, Internet service provider, cellular telephony, international telephony, international and domestic data transfer and network, information and communication technology, pay television, multi-channel television, television and radio broadcasts, satellite broadcasts, and customer call center services, as well as other communications infrastructures and services.

B Communications is a subsidiary of Internet Gold–Golden Lines, itself a subsidiary of Eurocom Communications Ltd. (“Eurocom”), owned by Shaul Elovitch (“Elovitch”). 

At all relevant times, Bezeq The Israel Telecommunication Corporation Limited (“Bezeq”) has existed as a subsidiary of B Communications.  On or around June 24, 2015, Bezeq completed a merger with its subsidiary D.B.S., Satellite Services (1998) Ltd. (“DBS”), more commonly known by its trade name “YES”, a satellite television operator (the “Bezeq-YES Merger”).  Prior to the merger, Bezeq held a 49.8% stake in YES, while Eurocom held a 50.2% stake in the YES.  Pursuant to the merger, Bezeq paid Eurocom NIS 680 million to acquire its holdings in YES.

Through his ownership of Eurocom, at all relevant times Elovitch has exercised control over Eurocom, B Communications, and Bezeq, and has served at all relevant times as the Chairman of the Board of Directors at each of the three companies.

The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that:  (i) Elovitch had engaged in illegal conduct in connection with the Bezeq-YES Merger; (ii) discovery of the foregoing conduct would subject B Communications and/or Bezeq to heightened regulatory scrutiny and potential criminal sanctions; and (iii) as a result of the foregoing, B Communications’ public statements were materially false and misleading at all relevant times.   

On June 20, 2017, The Times of Israel reported that the Israel Securities Authority (“ISA”) had raided the offices of Bezeq and detained Elovitch. The ISA advised Bezeq that it was investigating “suspicions of violations of the securities law and the penal code relating to transactions connected to” Elovitch.  The Israeli publication Globes reported that the ISA is investigating the Bezeq-Yes Merger, as well as payments the unit made to Eurocom under pressure from Elovitch.

Following this news, B Communications’ share price fell $1.00, or 4.65%, to close at $20.50 on June 20, 2017.

The Pomerantz Firm, with offices in New York, Chicago, Florida, and Los Angeles, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com

CONTACT:
Robert S. Willoughby
Pomerantz LLP
rswilloughby@pomlaw.com


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State Auditor Appeals Controversial Law To Minn. Supreme Court

ST. PAUL, Minn. (AP) — State Auditor Rebecca Otto says she’s appealing a controversial 2015 law limiting her office’s duties to the Minnesota Supreme Court.

Otto has lost several legal battles over the law that allowed counties to hire private firms for annual financial audits. The state Court of Appeals last month upheld a lower court’s ruling that the legislation was constitutional on a 2-1 decision.

state auditor rebecca otto State Auditor Appeals Controversial Law To Minn. Supreme Court

State Auditor Rebecca Otto (credit: CBS)

Otto, a Democratic candidate for governor in 2018, had indicated she would appeal. She announced her formal appeal Thursday.

She says the law is an unconstitutional encroachment on her duties. Republicans who spearheaded the change say it helps counties save money.

Otto has spent more than $250,000 fighting the law so far.

(© Copyright 2017 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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State auditor takes fight over 2015 law to Supreme Court

ST. PAUL, Minn. — State Auditor Rebecca Otto says she’s appealing a controversial 2015 law limiting her office’s duties to the Minnesota Supreme Court.

Otto has lost several legal battles over the law that allowed counties to hire private firms for annual financial audits. The state Court of Appeals last month upheld a lower court’s ruling that the legislation was constitutional on a 2-1 decision.

Otto, a Democratic candidate for governor in 2018, had indicated she would appeal. She announced her formal appeal Thursday.

She says the law is an unconstitutional encroachment on her duties. Republicans who spearheaded the change say it helps counties save money.

Otto has spent more than $250,000 fighting the law so far.

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