The seven lessons of Paul Smith’s $3 billion DuPont deal

Paul Smith has been chairman of Eversheds since May 2014 and his is one of the most inspirational business success stories you’re likely to hear. He has pioneered some of the UK’s biggest and most game-changing legal deals, including one that saw DuPont – America’s oldest company – hand Eversheds millions of pounds of business as their sole provider in the UK. In the first week of the relationship DuPont referred a $3 billion corporate deal. He also sealed a market-shaking arrangement with Tyco in which it replaced 285 legal providers across 35 countries with just one – Eversheds – overnight. Yet Paul’s early life gave few clues that he would become so influential. Born in Burnley, he left school aged 16 to become a factory apprentice, before setting up his own entertainment business as a puppeteer. Aged 19, after dropping out of a drama course, he decided to give university a try and stumbled into the law department, where he excelled. He joined Freshfields and stayed for four years, before moving to Eversheds, where – always displaying acute commercial instincts – he has stayed for 35 years, playing a major role in transforming it into one of the UK’s most disruptive and forward-thinking multinational law firms. Here is the story of Paul’s professional life, interwoven with his inspirational advice.

1) ‘Going for it’ gets results, and sometimes winds people up

After spending four years at Freshfields after university, I moved to Leeds to join the firm that would become Eversheds. After 18 months I was given the role of equity partner, at which point the rules changed to allow solicitors to advertise and market themselves. Before that, a business card was about as good as it got. I dived in and organised events, seminars and conferences in a bid to win new clients. Many of the traditional partners were very unhappy with my approach and I remember one saying: “You’re turning the firm into a Punch and Judy show” – which was pretty raw given my background.

But it proved successful. I think my best endorsement came from two chaps in flat caps from Yorkshire’s Longley Farm Yoghurts who, after hearing my seminar on EU law, said: “I didn’t understand a word you said lad, but I’d use you!”

After winning lots of new business, I concluded that a positive, energetic and focused approach to business development worked, and for the rest of my career I’ve been full-on with it, even when working on front-line litigation cases.

Over time, my commitment to business development has led to me winning a number of international clients including Michelin and Louis Dreyfuss Commodities, which in many ways is my legacy.

2) Sales is not a dirty word

When I became a partner at Eversheds’ Leeds office I was given a list of our top 20 clients. I could see that for various reasons they’d all be gone within five years at best, so I set about trying to find some new clients. I soon discovered that many companies in and around Leeds had Yorkshire-sounding names but were actually owned by American companies, so I went to see a few and asked how I could win their business. They told me I needed to go to the US and meet the general counsel [the chief legal officer] to persuade him or her to give me the business. I did exactly that and had some successes, so I decided to try to institutionalise this approach at Eversheds.

I booked a conference centre in the Yorkshire Dales and invited everyone with any knowledge of working for US clients. I also invited a respected PR man from the US, plus a leading American lawyer. It was the PR guy who gave us the confidence we needed: he told us that no one in the US had heard of the big London firms – Freshfields was better known as a grocery chain – so there was nothing to stop us. We made a target list and started to plan what we’d say to the Americans.

During lunch, the woman who owned the conference centre asked me what we were trying to do. “Ah, I see!” she said. “You’re trying to sell.” I replied: “Oh no, don’t be ridiculous, we’re lawyers – we don’t sell.” To which she said: “How can you win business if you don’t sell? My brother’s a sales director for a Dutch company – I’ll get him to sit in with you this afternoon.”

Her brother thought we were hilarious and couldn’t believe we were trying to sell our services without any sales training. He did some role-play with the messages we’d created and we were utterly hopeless – absolutely shocking.

Then from nowhere an understated guy from our Birmingham office started asking some probing questions and seemed to hit upon the right approach and the perfect messages. Eureka! It turned out this chap used to be a salesman and had been on a training course.

After the conference we booked meetings in the US and – low and behold – started winning work. Other parts of the firm got wind of this and we engaged Huthwaite International to teach us sales techniques. We trained hundreds of lawyers in sales and ended up with 500 new US clients.

All of this didn’t happen overnight but it came out of that conference and the sales focus that followed. Today we act for LinkedIn, Microsoft, Starbucks, Boeing and many more big American names.

3) Shoot for the biggest prizes, even when they seem out of reach

DuPont introduced us to what’s called the DuPont Legal Model. It’s a model underpinned by the idea of creating long-term partnerships built on trust with a small number of law firms, rather than having a vendor-purchaser relationship with many different providers. In the US under the new model, DuPont went from using 460 law firms to just 30.

I was familiar with DuPont’s new model when – from nowhere – we were invited to pitch for its UK business (it transpired that I had been recommended by a mutual client). I led the pitch and we were appointed as their sole UK firm having never done any work for them before. The $3 billion deal came along soon after.

Before that we hadn’t been anywhere near a half-billion dollar deal, so there was internal resistance because some people thought we were playing beyond our league. However, we performed well and 15 years later we’re not only DuPont’s sole UK law firm, we also work with them in Asia and Europe.

4) Accepted opinion is often stuck in the past

Following the DuPont win, I believed the one-firm model could work elsewhere and started talking to other general counsels, including Tyco’s.

At an Eversheds planning meeting I mentioned that I was pursuing a strategy whereby a client would use us for everything for a fixed fee. A group of external consultants replied that there was no demand for such an arrangement because their research categorically showed that clients wanted to choose different law firms for different jobs and were not cost sensitive. In hindsight I’m reminded of the Henry Ford quote: “If I’d asked my customers what they wanted, they’d have said a faster horse.”

I ploughed on with my idea and we ended up pitching for Tyco with 12 other firms. We made it to the final two but the process was hugely difficult, with Tyco cherry-picking the best bits from each pitch as they went. Eventually we won.

5) To enjoy stellar success, you must take big risks

After winning Tyco the fun really started because throughout the pitch process I’d kept readjusting the offer to meet demands. Overnight we replaced 285 law firms in Europe, the Middle East and Africa, and all the work had to be done on a fixed fee. Such a deal was unprecedented.

Nothing could have prepared us for taking over from so many firms overnight. In Paris, 150 live litigation cases arrived in a week. In Italy the handover was less the gracious: a car slowed down and one of the outgoing firms threw the files into a doorway.

The deal was that we would reduce Tyco’s legal fees by 20% in year one and 30% in year two. The wheels were shaking and at one point we were on the verge of being sacked because we didn’t have the infrastructure to handle such a fast handover.

However, we learnt fast and spent £1m to create our Global Account Management System (GAMS), which has since won awards all over the world. Eventually, after a lot of effort, we got on top of things and were able to provide data in real time showing Tyco’s legal costs and savings in each country.

It got better. Before Eversheds, Tyco had no handle on their legal spend but with our new system, they had control on costs, plus an overview of all outstanding matters across the world. As time went on we got more sophisticated and were able to slice and dice the data to reveal information such as the top ten litigation cases and the main areas of exposure.

We met the 20% fee-reduction target in year one and the 30% reduction in year two. The relationship is now 10 years old and we’ve reduced Tyco’s spend by more than 50%, and the contract has been renewed four times.

It would never have happened if we hadn’t taken a risk and backed ourselves.

6) Gaining long-term client trust is more important than striking lucrative short-term deals

The DuPont deal was greeted by hoots of derision by many in the industry at the time. Why would any law firm agree to reduce their earnings, they said? But that misses the point – the idea is to build a long-term relationship based on trust, which then results in additional revenue and more client wins.

Gaining trust is the ultimate aim because it leads to great things. The Tyco deal started as a fixed-fee-only arrangement but the additional work we’ve been awarded since means that today the fixed-fee portion is just 25% of the overall account.

Too often with lawyers it’s a transactional relationship with clients when it should be a long term partnership. For me, the holy grail of being a lawyer is gaining the status of trusted adviser. After Lehman Brothers collapsed in 2008, DuPont held a crisis meeting and I was the only external lawyer invited to that meeting – that was a big moment.

One deal I did post-Tyco was with FMC Technologies of Houston. What’s interesting is we get paid according to client satisfaction, so at the end of every project our service is rated between three and five by FMC’s in-house legal team. If we are rated three we get 80% of the invoice; if we get a four we receive 100%; if it’s a five we get 120%. When I agreed to this deal I was very unpopular – the reaction was: great, you’ve just given away a 20% discount. I said no, it’s an arrangement based on mutual trust.

After eight years FMC’s average payment to us is 108% of the invoice value and therefore it is a profitable client.

7) Survival requires innovation and diversity

Throughout my time at Eversheds I’ve always recognised the need to apply business thinking to the practice of law. Doing that means constantly innovating and updating ‘traditional’ business models and never accepting the status quo. The DuPont deal, the Tyco deal, the FMC deal – these one-firm, fixed-fee arrangements were seen by many as crazy, but they’ve transformed Eversheds and have proven to be the right course for us to take.

Today the legal market is under attack like never before. New companies are coming into the legal space all the time and law firms that don’t adapt will die. However, those that are prepared to change, think entrepreneurially and learn from other businesses can thrive.

I also believe law firms that encourage diversity have an advantage. I chair our Diversity Committee and social mobility is a big passion. Given my background, I want to encourage kids from backgrounds you wouldn’t necessarily associate with lawyers to pursue a career in law. We run our ‘Unlocked’ programme, where we mentor 16-year-olds from state schools. We put the best in the Eversheds Academy and sponsor them through university. I believe you exclude a huge amount of talent if you choose from a narrow pool of people.



This article was originally published 20 April 2015