The Covid-19 pandemic spurred Hogan Lovells CEO Miguel Zaldivar to take two quick steps after becoming the firm’s leader July 1.
Zaldivar wanted to make sure his five-point management plan to increase collaboration among Hogan attorneys, and to concentrate on profitability, among other action items, was still sound in light of the pandemic. He and his management team consulted Harvard Business School senior lecturer Ashish Nanda, who had worked with the firm previously. Nanda gave the firm a high grade, according to Zaldivar.
Second, Zaldivar said he needed to make sure that the firm’s books were primarily in order. Covid-19 has caused significant disruption in Big Law, after all, including a migration of most attorneys to home offices, altered client relationships, and, in some cases—including Hogan’s—cost cuts that included salary reductions.
“I wanted to make sure the fundamentals were there,” Zaldivar told Bloomberg Law. “Thankfully, they are.”
Zaldivar said collections are coming in at record levels, and that the cost cuts, painful as they’ve been, have allowed the firm to maintain an even financial keel. “The business is holding better than expected,” he said.
Zaldivar, who succeeded Steve Immelt as CEO after a six-year run in the job, said he’ll be concentrating on making the sure firm maintains a strong collaborative approach, and that clients stay as the firm’s primary focus.
“We want the clients to see us as the go to firm to navigate the intersection of business and government around the world.”
He said he aims to ensure increased internal collaboration among different practice groups and regions through new financial incentives for form attorneys who succeed in these efforts. “I really want to place a premium on partners” who can achieve this, he said.
Hogan’s cost cutting included reductions in U.S. equity partners’ monthly draws by between 15% and 25%, as well as base compensation reductions of 15% for non-equity partners, the equivalent of cuts of about 8.75% to their annual compensation.
At the same time, another key going forward will be to balance profitability with growth, and to “better manage profitability.”
Under Immelt, Hogan gained steadily in gross revenues and equity partner profits, but chose to do so through a less aggressive expansion approach than other, similarly situated “global” firms. Hogan grossed nearly $2.3 billion in 2019, and boasts more than 2,600 attorneys who work out of 46 offices.
Zaldivar began signaling in early April that he plans to simplify the firm’s management and practice group structures, in part to speed decision making, the firm said in an announcement.
Though Hogan’s “overall strategy” hasn’t changed because of the pandemic, Zaldivar said previously via email that he plans to bolster private equity and M&A groups in New York and London, which are typically among the most profitable practices at leading firms. The firm also will strengthen core offices in Washington, London, and throughout Germany, Zaldivar said.
In a broad sense, Zaldivar has said he doesn’t think Hogan needs to fundamentally change the strategic growth course set by Immelt in favor of of faster of more aggressive course. “I don’t see a need to alter our ‘slow but steady approach that has worked so well for our firm,” he said previously.
Zaldivar, who will serve a four-year term as CEO, previously worked as chief executive for Hogan’s Asia Pacific Middle East region. He has focused on international project development and finance, closing numerous multi-billion dollar transactions over the course of his career.
Zaldivar has facilitated several multi-billion-dollar investments to help spur Latin American development projects, including helping Ecuador secure a $1.7 billion loan from the Export-Import Bank of China for the construction of the Coca Codo hydroelectric project.
His clients also have included governments of the Dominican Republic, Panama, and Venezuela, as well as
Zaldivar said he plans to balance his time between his work as CEO, and his legal practice—which he said would not be easy to simply drop. But instead of working around the clock on individual client matters, he plans to monitor developments through his team, and continue serving as an advisor whenever needed.
He said he’s told his clients that, “I’m not the lawyer pulling the all-nighter for them anymore. It’s hard for me to say goodbye to the daily direct engagement with firm clients. But my main clients now are going to be my partners.”
Zaldivar said he moved to the U.S. from Hong Kong at the end of last month, and for now is splitting his time primarily between the firm’s Washington and New York offices. Before long, he said he plans to add London to the mix, and will spend about a third of his time in each of the three cities.