The Spirit of Enterprise 25 years of Watson, Farley & Williams

1982
The Spirit of Enterprise
25 years of
Watson, Farley & Williams
2007

This history of 25 years of Watson, Farley & Williams is
based on the many stories of current and former partners
and members of staff.
It reflects our firm’s journey to date and encapsulates the
hard work and enjoyment we have all had serving our
much valued clients.
We hope you enjoy reading it.
Frank Dunne
Chairman
Watson, Farley & Williams LLP
www.wfw.com
London Athens Paris New York Singapore Bangkok Rome Hamburg

Contents
04 Chapter 1:
Breakaway
08 Chapter 2:
Off like a rocket
12 Chapter 3:
Creating the WFW network
16 Chapter 4:
Downside of success
22 Chapter 5:
Charting a new course
26 Chapter 6:
Looking forward

Chapter 1:
Breakaway
Martin Watson, Alastair Farley & Geoffrey Williams

1981
The Spirit of Enterprise
January
Greece joins the European Community.
January
Ronald Reagan succeeds Jimmy Carter as
US President.
February
Rupert Murdoch buys The Times and
The Sunday Times for £12 million.
March
The British Social Democratic Party is launched
at the Connaught Rooms in London.
March
The first London Marathon starts with
7,500 runners.
May
François Mitterrand is elected President of France.
July
Lady Diana Spencer marries Charles,
Prince of Wales.
October
Egyptian president Anwar Sadat is assassinated
during a military parade.
1982
February
Laker Airways collapses leaving passengers
stranded and debts of over £200 million.
25 years of Watson, Farley & Williams
“It was 8.30 one Friday evening. I was
working in my office when Alastair came in
and, in an almost casual way, floated the idea
of our setting up on our own.”
So Martin Watson recalls the exact moment
when Alastair Farley first raised the possibility
of creating the firm that would become Watson,
Farley & Williams. Given how low-key the
suggestion was, it is perhaps not surprising that
neither of them can remember exactly when this
evening meeting took place. They guess it must
have been some time in late 1981. At the time
Martin Watson and Alastair Farley were partners
of Norton Rose, a long-established City law firm.
Both were shipping finance lawyers, both had
developed thriving practices.
It was a heady time for the shipping
industry. Through the 1970s new, better and
bigger ships were being built to replace ageing
fleets. London was the centre of international
shipping: the UK government of the day was
providing extensive assistance to the domestic
shipping industry and the availability of
investment grants and generous capital
allowances encouraged foreign shipping
companies to set up in the UK. Japan was in the
course of developing a shipbuilding industry.
The bankers financing the transformation were
pioneering new instruments and techniques.
The first ever multicurrency shipping loan (in
which Martin Watson was involved) and the
first ship lease were both products of this era.
However, the more that the shipping lawyers
within Norton Rose capitalised on the surge in
what was in essence an international business,
the more their energy and enthusiasm stood
them apart from those whose businesses were
domestically focused. “The bright sparks in
05

06
Chapter 1: Breakaway
Norton Rose were those doing foreign deals,”
remembers Martin Watson. “From that came the
thought that, maybe, we could do something
ourselves.” That of itself might not necessarily
have been reason to leave what was an excellent
firm but Alastair Farley, who sat on one of
Norton Rose’s planning committees, found
himself increasingly frustrated by the views
of the firm’s partners who were reluctant to
countenance significant overseas expansion.
“We were failing to exploit what I could see
from an international shipping point of view
were fantastic international contacts. That
certainly precipitated our leaving.”
Geoffrey Williams, an aviation specialist at
Norton Rose and six months Alastair Farley’s
senior, was also sounded out about whether he
might be interested to come with them. In the
same casual way as he had done when floating
the idea to Martin Watson, Alastair approached
Geoffrey Williams with the proposal to leave
Norton Rose and set up a new firm. When he
received no immediate response to the idea, he
assumed the latter was not interested. It later
transpired that Alastair Farley’s suggestion had
been, in his own words, “so Delphic that it
completely passed Geoffrey by!” Only at the
very point of their departure did Geoffrey
Williams come to understand what was being
proposed. He readily agreed to join the new
venture, by which point Watson and Farley
(the order of names chosen by the flip of a coin)
became Watson, Farley & Williams. The two
primary movers (Alastair Farley and Martin
Watson) gave themselves a year to make a
success of the new venture, to which end each
took out second mortgages on their homes to
finance a year’s worth of overheads, which they
estimated would be £180,000. If the new firm
didn’t succeed, they reasoned, they could
always find work elsewhere.
Once their decision had been announced,
they certainly had support from colleagues to
come with them. David Warder, Chris Preston
and, after some persuasion by Martin Watson,
Andrew Pouteaux all joined the new firm as
salaried partners. Frank Dunne started as an
associate but would become a partner within a
year. Secretaries and support staff were also
happy to hand in their notice and make the
move, among them Fiona Wood, Alastair
Farley’s secretary, on whose organisational
skills the new firm would depend. Procuring
the most advanced IT systems was a priority –
each secretary had access to a Wang word
processing station, then considered to be the
height of technological advancement.
David Warder

The Spirit of Enterprise
Flying start
Alastair Farley and Martin Watson had already
handed in their resignations when a chance
meeting at a Sunday lunch led to a totally
unexpected turn of events. Alastair Farley
takes up the story:
“At this lunch another lawyer asked whether
I had contacted the Law Society to ask about the
rules for taking clients. I had been to see the Law
Society about setting up on our own but had not
asked this very question. At that time we had not
approached our clients and did not expect to be
able to do so until we had actually left Norton Rose.
What I discovered was that, under the rules,
the existing firm had to give their clients the
opportunity of going to the new firm, to ensure
fair competition. The Law Society sent me some
pro forma letters, which I took along to the
managing partner and explained – slightly
shamefacedly – that the letter needed to be
sent out by Norton Rose. You can imagine the
reaction. In the end, a much longer letter was
sent to some, but not all clients, which referred
to a number of partners retiring, others being
made up and then, almost as a kind of PS, the
fact that Farley, Watson and Williams were
leaving the firm. The responses, all very positive,
started coming in a month or so before we left
and suddenly we had a law firm and a business
in the making.”
This was all at a time in the City where moves
such as this were almost unheard-of; a mouldbreaking
move was afoot.
25 years of Watson, Farley & Williams
Chris Preston
Frank Dunne
07

Chapter 2:
Off like a
rocket
Cotts House, 1982

1982
The Spirit of Enterprise
April
The Falklands War begins.
June
Prince William is born at St Mary’s Hospital, London.
October
Helmut Kohl replaces Helmut Schmidt as Chancellor
of Germany.
October
Sony launches the world’s first Compact Disc player.
November
The fourth terrestrial television channel, Channel 4, is
launched in England, Scotland and Northern Ireland.
November
Soviet invasion of Afghanistan.
1983
June
Margaret Thatcher wins a landslide victory to secure
her 2 nd term as UK Prime Minister.
September
Korean Airlines Flight 007 is shot down by a Soviet
Union jet fighter over Sakhalin Island.
Dramatic the effect may have been in the City
but outside the Square Mile the world had its
attention on other matters.
In response to the invasion of the Falklands
by Argentina on 2 nd April, a task force was being
assembled to set sail to the south Atlantic to
recapture the islands. Without great fanfare
25 years of Watson, Farley & Williams
Watson, Farley & Williams opened for business
on 1st May 1982. Apart from the machinations
involving The Law Society rules, there was also
a change of plan forced upon it when it came to
finding office space. Everything was all set for
offices in Devonshire Square but another
company came up with a higher bid for the lease
and secured the space. “The irony was that it
was a client of mine, who had not realised they
were bidding against us,” recalls Alastair Farley,
“and then they asked me for a reference!”.
Instead, offices were found in Cotts House,
off Camomile Street, and – perhaps most
awkward of all – literally on the other side
of the road from Norton Rose’s offices.
The three founding partners, three other
partners, two assistant solicitors, four secretaries,
one IT expert, a part-time telex operator and
an office boy got down to business in these
somewhat cramped offices. “It was chaos,”
remembers Andrew Cunningham of Moore
Stephens, the auditors for both Norton Rose
and Watson, Farley & Williams, “with papers
stacked high on the floors and people running
around.” Frank Dunne and Chris Preston shared
an office in what was really a storeroom in the
basement, adjacent to the car park, and Kim
Walkling, who joined soon after the start from
Slaughter and May, worked from a window
ledge! But that did not matter: there was work
to be done right from the moment the firm
opened. Most of those contacted came over to
the new firm and, within a month, the firm
had 19 financial institutions as clients.
That they and other shipping clients switched
their custom to a small, untried firm over a longestablished,
major City law firm was due to a
number of factors. The first was the nature of
shipping law practice, in which individual
09

10
Chapter 2: Off like a rocket
relationships, rather than institutional ties,
were the norm. Whether shipowners, many
of which were family-run businesses, or the
banks financing shipping business, it was with
individuals that the lawyers dealt and with
whom professional relationships were forged.
They were set apart from their competitors by
a deep understanding of the shipping industry,
from all angles.
Secondly, the founders of the firm and those
who joined them had established a formidable
reputation. Andrew Cunningham remembers
the founders making an excellent combination:
“Geoffrey had gravitas, an expert in aircraft
leasing, Martin was a workaholic dealmaker, and
Alastair the best commercial shipping lawyer I
have ever come across, someone with enormous
intellectual capability, very deep knowledge of
the law and, professionally, cold as ice. In a crisis,
you would never want him on the other side.”
Their reputation was such that when David
Osborne sounded out some partners of Linklaters
(where he was then working) about the wisdom
of leaving to join the new firm, he was advised
that he had nothing to fear. Indeed, he handed
in his resignation at Linklaters before Watson,
Farley & Williams had even come into existence,
starting a couple of months after it opened.
It may also have assisted the decision that
Watson, Farley was offering a 20 per cent higher
salary for its new recruits than they could
expect to receive from the big City firms.
Thirdly, the energy and enthusiasm of the
founders, allied to determined entrepreneurialism
helped to convince the owners, banks and other
clients that their faith in the new firm was wholly
justified. The start-up finance, augmented by a
loan provided by another firm of solicitors to
whom Watson, Farley & Williams undertook to
refer private client work from their corporate
clients, was soon superseded by a regular bank
facility from Hill Samuel, as the new firm was
able to show work-in-progress and a healthy
cash flow.
“We went off like a rocket,” says Frank Dunne.
“There was a mountain of work. For the first
year at least, and probably longer than that, I
and everybody else worked seven days a week.”
The new firm was underpinned by a spirit of
enterprise, something that is frequently referred
to by law firms today but highly unusual in the
early 1980s. As Martin Watson puts it, “We
wanted a niche firm, and we wanted people to
be successful and to enjoy themselves. We felt
that if we found the right people and worked
incredibly hard, everything would fall into place.”
It certainly did. By the end of the first year the
new firm had brought in some £840,000 in fee
income. By April 1983 there were six partners,
13 other fee-earners and a total staff of 27. Even
before the end of the first year, in March 1983,
the firm had outgrown the basic accommodation
of Cotts House and moved to Navigation House
in Aldgate.
The practice divided, broadly, between
shipping and shipping finance (Martin Watson,
Alastair Farley, David Warder and Frank Dunne),
aviation and leasing finance (Geoffrey Williams),
offshore oil and gas contracting (Andrew
Pouteaux) and tax (Chris Preston). Others soon
joined. “Word got out around the City that we
were rather dangerous to have meetings with,”
jokes David Warder, “in case we approached
the young associates on the other side after
the meeting and offered them a job!” It soon
became clear that the new firm would need

The Spirit of Enterprise
a litigation capability, and that gap was filled
with the arrival of Charles Smallwood in
January 1983 from Holman, Fenwick & Willan
in Hong Kong and shortly after that by Simon
Curtis from Ince & Co.
Strength of a handshake
The manner in which Charles Smallwood joined
Watson, Farley & Williams shows the confidence
that people had in the new firm, as Alastair
Farley relates:
“Charles was working at Holman Fenwick
in Hong Kong. He phoned up, and expressed
interest to join us, after seeing an ad we had
placed advertising for litigation lawyers. Some
time in late 1982 I stopped off in Hong Kong on
my way back from the Far East on one trip and
arranged to have dinner with him. By the end of
the dinner we had agreed terms, and Charles
had mentioned that he would be free to start at
the beginning of January. On my return to
London, I wrote Charles a letter confirming
the terms we had agreed. I never heard back
so I assumed, much to my regret, that he had
changed his mind. Then, on 2 nd January, Charles
turned up in the office. I was astonished, and
told him that I had not heard from him since our
meeting, to which Charles replied that he had
never received the letter that I had sent him!
My letter had gone by sea mail. So Charles joined
us on the basis of a handshake in a Japanese
restaurant in Hong Kong at midnight.”
25 years of Watson, Farley & Williams
Watson, Farley & Williams became
renowned as outstanding lawyers, problem
solvers, commercially astute and, vitally, well
versed in the sectors in which they operated.
More than this, however, “the founders inculcated
in us all a gold dust mentality,” as Frank Dunne
recalls. “That was one of the huge differences in
culture between WFW and the firms we had
left. In this new small firm we had a relatively
small number of core clients, who, of course,
meant a huge amount to us. They were the ‘gold
dust’ and the absolute need to give them an
outstanding service was deeply ingrained in
all of us. Because of our commitment, the
clients were extraordinarily well served.”
The firm’s lawyers travelled incessantly to
ensure that their clients’ needs were attended to,
Martin Watson concentrating on his clients in
northern Europe and Scandinavia and Alastair
Farley on his clients in the Mediterranean.
“Shipping is a very personal business,” Alastair
Farley explains. “Many of the shipowning
businesses were family-owned, passing down
from generation to generation. Even on the
financing side, because of its specialist nature,
shipping business was dealt with by a certain
coterie of individuals, who would stay in that
line of work even when they moved banks. We
served them well and believed that, as a result,
they stayed loyal to us. At the time, I remember
people coming up to us and saying that we
must have had the most marvellous marketing
operation because of our top clients. But the
truth was, it was all word of mouth, being in
the market place and doing the deals.”
11

Chapter 3:
Creating the
WFW network
The partners of Watson, Farley & Williams, New York office, 1990

1984
The Spirit of Enterprise
October
The Grand Hotel, Brighton, is bombed during the
Coservative Party Conference.
November
US presidential election: Ronald Reagan defeats
Walter F. Mondale.
1985
March
Mikhail Gorbachev becomes leader of the Soviet Union.
1986
April
Chernobyl nuclear disaster.
October
‘Big Bang’ deregulation of the London Stock Exchange.
1987
June
Margaret Thatcher wins a 3 rd term as Prime Minister of
the United Kingdom.
October
‘Black Monday’ stock market levels fall sharply.
1988
January
The Soviet Union begins its program of economic
restructuring – perestroika.
1989
January
George H. Bush is elected President of the United States.
25 years of Watson, Farley & Williams
For an internationally minded group of
practitioners doing international work in a
global business, it was always the wish –
if not the stated strategy – to open offices
outside London.
London remained the principal centre for
international shipping but other centres also
existed and were attracting the involvement of
the many and varied component segments that in
total made up the worldwide shipping business.
Greece and Norway were natural jurisdictions
in which first to look to set up overseas offices.
Greeks and the shipping business are virtually
synonymous, added to which Alastair Farley
had several prominent clients in Greece. Frank
Dunne had lobbied to open up in Greece for
some time, dating back to his time with Norton
Rose. The clinching factor was a request by an
American banking client for Watson, Farley to
have a local presence to handle loan financings
to its Greek customers. And so it was that, in
March 1984, Frank Dunne took up residence in
the Piraeus offices of a local lawyer, Theo
Sioufas, to open Watson, Farley & Williams’s
first overseas office.
It was not a moment too soon, but not for
the expected reasons. Frank Dunne’s arrival
coincided with a catastrophic decline in the
shipping market, a consequence of serious overordering
of new tonnage in the late 1970s and
declining charter rates, resulting in customers
getting into cash-flow difficulties. Instead of
handling new loans, as he had anticipated,
Frank Dunne was immediately advising on
workouts, restructurings and the occasional
business collapse. Not good for the shipping
sector, but undoubtedly good for the new office.
As it happened, too, WFW was able to capitalise
13

14
Chapter 3: Creating the WFW network
on some advanced communications technology
to its distinct advantage: a fax machine, which,
astonishingly, no other law firm in Greece then
possessed, and an electronic link to the firm’s
computer database in London, an almost
unheard-of, and very expensive, thing in
the 1980s.
The success of the office in Greece gave
the firm confidence to open elsewhere. Peter
Cull was sent out to open an office in Oslo,
in September 1986, making Watson, Farley &
Williams the first foreign law firm to open in
Norway. The decision was taken purely to
practise English law, and not to take on
Norwegian qualified lawyers – so as not to
upset the many Norwegian law firms from
whom the firm received referrals – which was
later to prove a disadvantage. But the move
was certainly vindicated. As in Greece, the
business flowed in and, as with the Piraeus
office, the timing of the move was propitious.
Norwegian ship owners started to register
their vessels with ‘flags of convenience’ in
Liberia, Panama and other tax-friendly
jurisdictions. At the same time as Nigel
Thomas took over from Peter Cull in 1988,
the Norwegian government introduced socalled
‘KS’ schemes, which permitted limited
partnership ownership of vessels. WFW’s
practice flourished; the firm had originally
anticipated that Oslo might serve as a base for
Swedish business, but it turned out to be a big
enough market in its own right.
At the same time the London office was
developing fast, and diversifying. As well as
litigation, the firm built its company and
corporate work (recruiting William Fossick
from Norton Rose, much to the relief of those
who had been advising on PLC matters before
his arrival) and general banking and finance
(taking on Geoffrey Wynne and Neil Cuthbert,
both from the Royal Bank of Canada). Geoffrey
Williams expanded his practice to start doing
film finance (“Geoffrey was our leasing guru,”
says Alastair Farley). Specialists were recruited
to meet the demands from clients for a broader
range of services – Maria Llewellyn to develop
a property practice, Richard Whish to provide
competition law expertise and later Liz Buchan
on employment and immigration, “We never
had ‘departments’, and in fact Alastair forbade
us from using the term,” remembers Frank
Dunne. The focus of the firm’s energy was
entirely on servicing existing clients in a
booming market and winning new business.
No unnecessary time was spent on management.
“We had a very simple philosophy, that no feeearner
should spend more than 10 per cent of
his time on management,” jokes Alastair Farley.
Even when William Fossick became the firm’s
first managing partner in 1987, that was on the
basis that he would not spend more than a
quarter of his time on management.
A simple philosophy, and a very successful
one. Fee income rose to more than £2 million at
the end of the second year, £3.5 million at the
end of the third and £4.6 million at the end of
the fourth. By the end of the decade, fee
income would exceed £10 million. After the
first couple of years, more were brought into
equity partnership (another seven by 1985 and
a further 10 by the end of the decade). There
were five times as many fee earners in 1990 as
there had been in 1983. To accommodate all
these extra people, the firm moved from its
Navigation House offices to Minories House,
in January 1988. To begin with one floor (out of

The Spirit of Enterprise
five) was not occupied in anticipation of
subletting it; that never happened since
the space was soon needed and continued
expansion led to an annex in Leadenhall Street.
In 1991, less than four years after moving to
the Minories, the London office moved again,
to the current premises in Appold Street.
Watson, Farley & Williams had established a
formidable reputation in the world of shipping,
and found itself the subject of some welcome
approaches by others to join forces. In Paris,
Marie-Josée Heitzler, with whom the firm had
had many dealings as a lawyer at the French
export credit Banque Francaise des Commerce
Nationwide publicity
Immediately after the New York office was
established, the United States Congress passed
the Oil Pollution Act in 1990. This had been
passed in the wake of the Exxon Valdez oil spill
the previous year. This legislation was given
nationwide coverage on US television. One of
the experts upon whom the networks called
was Thad Miller, one of the seven partners who
had joined from Burlingham Underwood &
Lord. Martin Watson, who was in New York
for the opening of the office, was thrilled at
the publicity:
“I was watching television in my hotel room,
when Thad Miller came on the screen and, under
his picture, our name, Watson, Farley & Williams.
We couldn’t have hoped for better publicity.”
25 years of Watson, Farley & Williams
Extérieur, was on the point of retiring. She was
keen for the firm to take over her work, and
Watson, Farley & Williams, for its part, was
only too keen to do just that. The solution was
to open an office, in which Mme (as she was
always respectfully known) Heitzler took
some space as she wound down her practice.
The firm turned to Nigel Moss, then an inhouse
counsel at BSFE (Banque de la Société
Financière Européenne) and previously a
colleague at Norton Rose, to do the honours,
at the end of July 1989.
Across the Atlantic, too, an opportunity for
expansion landed on the firm’s plate. Seven
partners of the New York law firm, Burlingham
Underwood & Lord, looking to internationalise
their practice beyond New York, saw in Watson,
Farley & Williams just the sort of practice that
could offer that. For WFW, having its own New
York office offered the prospect of capturing for
itself the million dollars plus of business that it
was referring to Burlingham Underwood and
other law firms in New York each year. It also
presented a golden opportunity to follow
important US banking clients to their roots.
The seven partners, whose practices covered
ship finance and litigation, led by John Osborne,
accordingly joined the firm and set up the New
York office in January 1990. With this move, the
firm had the distinction of becoming one of the
first English law firms, if not the very first, to
have US lawyers as partners. David Osborne
moved to New York from London to integrate
the new office into the firm and to provide
English law advice.
15

Chapter 4:
Downside
of success
Partner retreat 1982
Minories House, 1988

1990
The Spirit of Enterprise
August
Iraq invades Kuwait, leading to the Gulf War.
1991
June
Boris Yeltsin is elected President of Russia.
1992
April
John Major wins the UK General Election.
1993
January
Bill Clinton is voted President of the United States.
1994
May
The Channel Tunnel opens.
1995
May
Jacques Chirac is elected President of France.
1996
August
The Prince and Princess of Wales are divorced.
1997
May
Tony Blair wins a landslide UK General Election.
2000
January
Y2K passes without widespread computer failure.
25 years of Watson, Farley & Williams
“We were riding the crest of a wave.” As
Watson, Farley & Williams entered its second
decade, this was the assessment of the firm’s
position by founding partner Alastair Farley.
It seemed too good to be true, and it was.
The heady growth of the 1980s and the early
1990s, which saw fee income double in the
space of two years to reach £28 million, was not
matched by attention to the firm’s direction or
financial foundations.
The background to the opening of a Moscow
office showed the firm at its best and its worst.
A high-level contact within the Soviet shipping
ministry cultivated over many years by Alastair
Farley yielded rewards in the late 1980s as the
Soviet Union, in the process of collapsing,
endeavoured to commercialise its fleet. That
resulted in the financial independence from
the Ministry of Merchant Marine of the USSR’s
international shipping organisation and the
ship-operating companies located all over the
USSR and in the newly emerging republics.
Almost overnight, there were more than a
dozen potential new clients. Watson, Farley
shipping partners took off to the far corners of
what had been the Soviet Union, from Riga in
the west, to Murmansk in the Arctic north,
Vladivostock in the far east and Odessa on the
Black Sea, in pursuit of new business. “It was
an excellent example of our buccaneering
spirit,” says Alastair Farley.
It seemed only natural that this would be
followed up by creating an office in Moscow.
Other foreign law firms were falling over
themselves to open in the Russian capital.
Watson, Farley & Williams followed suit,
opening in October 1993. It was not an
17

18
Chapter 4: Downside of success
illogical move, since there were long-standing
Russian contacts who could be serviced, but the
fact of the matter was that Moscow was not a
shipping finance centre. The loans and deals
associated with shipping were done by Russian
deal makers who chose to use London.
“Our clients moved out, as we moved in,”
remembers David Warder. Michael Greville,
who went out to open the office, did more
corporate and securities business than shipping
work. Opening in Moscow was borne more of
impulse rather than careful consideration.
The collapse of foreign investment to Russia
following the 1998 financial crisis led to
the demise and ultimate closure of Moscow
in February 2002, when the lease on the
office expired.
Indeed, there was a sense in which the firm
was being too unconstrained in general. There
were continuing efforts to break into new areas
of practice, particularly general banking and
finance, which were not successful and not
helped by the recession in the early 1990s. The
firm was moving out of its specialist fields of
practice, where it had established a formidable
reputation and could charge commensurately
high fees, into areas dominated by others, where
it had to rely on other means to penetrate the
market. That meant, in effect, competing on
price rather than expertise.
As David Warder explains: “We found it
difficult to get the right people, especially after
the first wave when we all had the shared vision
of the new venture. It was the old conundrum:
the people you want don’t want to move, and the
people who want to move aren’t necessarily the
people you want. But a partnership depends on
personalities and people getting on with and
integrating into the existing group. For some
it worked, but for too many it didn’t. It was
an error-prone business, at which we have
become more astute.” However, the firm’s
entrepreneurial instincts did serve it well in
the creation of a central and eastern European
practice out of which would emerge a
flourishing energy practice.
There was some disquiet about the way
in which the firm was being managed.
Disagreements surfaced about the direction
in which the firm was heading, eventually
developing into a full-blown rift between
those who believed that the firm should
stick to its core strengths (shipping and
asset finance), and those who argued for a
diversification and expansion into new areas
of practice. Matters reached a head when two
litigation partners in the first group, Simon
Curtis and Mark Davis, left in 1996 to create
their own firm. Their departure was a serious
blow, as many people today freely admit.
“Simon was one the best lawyers we had,”
reflects Alastair Farley, “brilliant at getting
across, simply, complexities to clients. We
were all sad to see him leave.”
The ship needed steadying. Earlier, a
management consultant had been appointed
to advise how the firm should go forward.
Among his recommendations was the need
for stronger management, including a practice
group structure organised across offices.
A management committee of three was
formed, followed in 1995 by an election, for
the first time, of a managing partner, David
Warder, who divided his time equally between
management and client work. Professionals
were hired to take control of the firm’s support

The Spirit of Enterprise
The seeds of the energy practice
In the summer of 1993 Martin Watson and
Charles Walford approached Douglas Wardle,
then at McKenna & Co specialising in
privatisation and corporate work in eastern
Europe, to see if he would be interested in
moving to WFW as a partner. He agreed,
bringing with him a small team from McKennas.
The next three years were spent working on
a variety of corporate privatisations in a number
of eastern European countries including the
Baltics, the Balkans, Bulgaria and Romania.
Indeed, for a couple of years the firm headed
Privatisation International’s league table as the
international law firm with the highest number
of privatisations in eastern Europe.
One particularly important deal was the
acquisition of one of Hungary’s largest power
groups for a US power developer in 1996. The
successful privatisation spawned power-related
financings and work on new power projects in
Hungary, Croatia and the Czech Republic.
Between 1996 and 2001 Watson, Farley
expanded its power business into several
countries in the region, acting for various
different clients, predominantly from the US
or the UK.
25 years of Watson, Farley & Williams
functions. Michael Reid was recruited in July
1995 as a finance director, and subsequently as
chief executive. His experience both inside and
outside law was invaluable, as David Warder
explains. “I knew very little about management,
and the sum total of my reading was a book
about management, appropriately titled
Herding Cats! Michael helped not just me, but
all of us, to get the business back on track.”
Alastair Farley also sings his praises:
“Michael had his detractors, because he was a
hard-nosed businessman, but he knew about
financial management and saw us through a
difficult time.”
For a brief period, Watson, Farley &
Williams had the distinction of having
two offices in Scandinavia. After a two-year
secondment with Danish firm, Bech-Brunn &
Trolle, Chris Lowe – as much for personal as
professional reasons (he met his wife there)
– persuaded the firm to open an office in
Copenhagen in March 1994. The office stayed
open for nearly six years, and might have
continued but for a disadvantageous tax
position. The office in Oslo had by then also
come to the end of its useful life but, in this
case, for very different reasons.
It had been a deliberate policy not to take
on Norwegian lawyers, so as not to compete
directly with the many Norwegian law firms
from whom the firm had been referred work,
but over the years those very same Norwegian
firms had learnt how to draft English law
agreements.
“We taught them how to write those
contracts, and then they found they could
provide the same service to our clients, but at
lower cost,” remembers Martin Watson. That
19

20
Chapter 4: Downside of success
made the maintenance of an Oslo office less
than cost-effective and, after much agonising,
it was closed in the summer of 1996. Mike
Vernell, who had been the resident partner
since 1993, returned to London. However,
the firm did not lose out because the principal
clients continued to use the London office.
The late 1990s was a critical time for the
firm, during which it was required to take
some difficult decisions about the relative
contributions of partners. The upshot was
that a number of them agreed to leave the firm.
A new and radical profit sharing scheme was
introduced in 1999, which involved bringing
the junior partners fully into equity.
The firm’s founders also moved on: over
the course of the next two years, Geoffrey
Williams retired from practice, and Alastair
Farley and Martin Watson stepped down from
the partnership, although both remain closely
associated with the firm today. Later still,
Alastair Farley became the Prime Warden of
the Worshipful Company of Shipwrights and
(at the time of writing) Martin Watson the
Vice-President of the Chamber of Shipping,
the first time an individual not from a shipping
company had been elected to the post in the
organisation’s history.
Despite these significant changes the firm
continued to grow: in April 2001 Watson,
Farley & Williams had 51 partners and,
in all, 190 lawyers.
15 Appold Street

The Spirit of Enterprise
25 years of Watson, Farley & Williams
Partners’ Weekend, Chelsea Harbour, 1995
21

Chapter 5:
Charting a
new course

2001
The Spirit of Enterprise
January
George W. Bush is elected President of the
United States.
June
Tony Blair wins a 2 nd landslide UK General Election.
September
September 11 th attack at the World Trade Center
in New York kills almost 3,000 people.
2002
January
Euro notes and coins are issued in 12 member states.
2003
March
Coalition forces invade Iraq.
2004
May
10 new member states join the European Union
– the largest expansion to date.
2005
January
Pope John Paul II dies; over 4 million people
travel to the Vatican to mourn him.
July
The International Olympic Committee awards
the 2012 Summer Olympics to London.
August
Hurricane Katrina strikes the US Gulf Coast
causing widespread damage.
25 years of Watson, Farley & Williams
Amid all the openings and closings of offices,
there was always one conspicuous gap in the
network: Asia.
Why was it that Watson, Farley & Williams,
a top international shipping firm, did not have
an office in Hong Kong, an international
financial centre, a major trading outlet for
China’s fast-growing economy and one of the
world’s largest container ports? “We discussed
the possibility of opening in Hong Kong at
regular intervals,” says Frank Dunne. “As a
shipping finance centre, Hong Kong is clearly
the type of place where we really should have
had a presence. However, turning that into
reality has been very difficult.” Many factors
militated against Hong Kong: the expense; the
inability to identify suitable local lawyers to
join the firm; and the difficulties of breaking
into a mature market, in which there were
many long-established domestic and foreign
firms. Underlying all these considerations was
the uncertainty about what would happen to
Hong Kong after sovereignty in the territory
reverted to China in 1997. Despite these
obstacles, the firm still came close to taking
on a team in Hong Kong in the early 1990s
but decided against at the last moment.
As it turned out, this was not such a
disadvantage. For if Hong Kong didn’t work out,
another Asian financial centre, Singapore, did.
This came about after the firm was approached
by a partner with the Singapore office of London
rival Sinclair Roche & Temperley, who expressed
interest in a move to New York. In the ensuing
discussions, he was persuaded to stay in
Singapore and, furthermore, to bring the whole
Sinclair Roche office with him in order to create
a Watson, Farley & Williams office in the citystate.
After a tense negotiation with Sinclair
23

24
Chapter 5: Charting a new course
Roche the entire practice was taken over in
September 1998. “Such was our concern about
confidentiality that we obtained approval from
the WFW partnership to take on the SRT
partners and to open the new office without
disclosing their identities or that of their firm”,
recalls Nigel Thomas, who led the negotiations
and moved out to Singapore to be the head
of the new office. The practice expanded
rapidly and over time its focus shifted, in
particular developing a regional corporate
practice and moving away from shipping
litigation. Steven Burkill, one of the original
partners, handled some major arbitrations,
including two Thailand-based arbitrations
that resulted in him moving to Bangkok and
opening an office there in October 2001; he
remains there today, as the office has thrived
on a steady stream of regional and domestic
arbitration and corporate work.
Meanwhile, in Europe, dramas were
happening in the Paris office. In 1992 a young
and energetic lawyer, David Syed, had joined
from Baker & McKenzie, bringing with him
some top French clients. On the back of this
practice, the Paris office developed rapidly,
growing in size to some three dozen lawyers
by 2001. This expansion, impressive though it
was, was not enough for David Syed, who felt
the firm was being held back by a lack of capital
markets capability, particularly in the New York
office. He had for several years been an advocate
for merger with a US firm to which end several
options were considered. After this failed to
progress, David Syed led a mass breakaway
in Paris to a US firm and, in October 2002,
the Paris office was reduced from almost 40
lawyers to two (Nigel Moss and one assistant).
On a larger scale, David Syed had replayed
what Alastair Farley, Martin Watson and
Geoffrey Williams had done nearly 20 years
before. “Live by the sword, die by the sword,”
Frank Dunne jokes. The office has since reestablished
itself on a smaller scale and indeed
the partners today include Laurence Martinez-
Bellet, who left with David Syed in 2002 but
rejoined the firm two years later.
At about the same time, attention turned
to Italy and in particular to the fragmented
power sector which was offering increasing
opportunities for foreign involvement. One of
these was a power project on which WFW
worked with a young Italian lawyer at the
Rome office of Carnelutti, Eugenio Tranchino.
He then floated the idea of leaving Carnelutti
with a small team to establish an office for
Watson, Farley & Williams in Rome. This duly
happened in October 2002. Better was to come
the following year when he was joined by Carlo
Galdo, an Italian ship finance lawyer already
well known to WFW and a regular correspondent
of the firm. A thriving finance and corporate
practice has since developed, combining locally
won business with referrals from London.
Energy continues to be a mainstay of WFW’s
Italian business.
Germany was another market that was
becoming increasingly of interest to the firm.
By 2003 German banks, mostly based in the
north, had established a substantial position
in the global shipping industry. Not having
a presence in Hamburg was beginning to
resemble a gap in the network – Frankfurt,
a possible alternative, was saturated with
English firms. In early 2005 two German finance
partners, Thomas Hollenhorst and Maren
Brandes, were recruited to open the office.

The Spirit of Enterprise
Focus on sectors
“We have learnt from our past mistakes,”
believes Michael Greville, who succeeded
David Warder as managing partner in 2001 –
also becoming the firm’s first full-time
managing partner.
“In the 1990s, as we moved out of our niche,
we were entering markets already well served
by other firms. We had nothing special to offer
so it was difficult to compete other than on
price. This time around, as we expand, we
have concentrated on maintaining competitive
advantage through expertise, and have quite
deliberately chosen to focus on sectors of the
market that relate to, and can enhance, the firm’s
reputation in asset finance. Through this Watson,
Farley & Williams has evolved from being a ship
finance boutique to an international firm which
advises owners and financiers of large capital
assets – not just in the shipping industry but
also aviation, energy, oil and gas, natural
resources, telecoms, utilities, and real estate.
In all these areas we offer a high-value, highquality
practice across our offices which has
diversified mainly through focused expansion
of our corporate practice and through that our
finance, litigation and tax practices.”
25 years of Watson, Farley & Williams
At around the same time the firm became
active in the renewable energy sector in
Germany, advising on acquisitions of
wind farms for UK investors. As the final
arrangements were being put in place to open
the office in October 2005, negotiations began
with the Hamburg corporate firm of Wegener,
Bechtel Schmidt, who had been working with
WFW on the renewable energy transactions.
Six months after opening in Hamburg, in April
2006, the firm had to move to new offices in the
docklands as the two firms merged – actually
the first merger that WFW had done – to create
not just a shipping firm, but an all-round
shipping, corporate, private equity and tax
practice. “The Hamburg office put a new
complexion on our business in Germany as
well as opening up more avenues in Europe,”
observes David Warder. “We have there a
young team of people, who fit culturally
very well with the rest of the firm.”
The practices in Hamburg and Rome
say much about how the practice of Watson,
Farley & Williams has developed and changed.
Founded as largely a shipping finance practice,
the firm has built its expertise and reputation
in asset finance and that expertise has been
applied, in more recent times, to other sectors.
It is the firm’s corporate practice, as much as
its finance practice, that has acted as the
springboard to these new practice areas.
The firm’s financial position has benefited
accordingly. Fee income for the 25 th year ended
April 2007 was £53 million, the highest it has
ever been, and there are now 67 partners and
more than 200 lawyers in eight offices.
25

Chapter 6:
Looking
forward
Hamburg office, 2006

2006
The Spirit of Enterprise
January
Russia cuts natural gas to Ukraine over a
price dispute.
April
Romano Prodi narrowly defeats Silvio Berlusconi
in the Italian parliamentary elections.
April
Queen Elizabeth II celebrates her 80 th birthday
at Windsor Castle.
December
Saddam Hussein, former Iraq president,
is executed in Baghdad.
December
England experiences its warmest year since
records began in 1659.
2007
January
Bulgaria and Romania join the European Union.
March
15 Royal Navy servicemen are seized by
Iranian authorities.
April
The Pound hits a 15-year high against the US dollar,
breaking through the US$2 level for the first time
since 1992.
May
Tony Blair’s 10 th anniversary as UK Prime Minister
and confirmation that he will stand down.
25 years of Watson, Farley & Williams
As the firm enters a new phase of its history,
it can reflect on an eventful first 25 years, which
has been full of adventure, drama and some
disappointments. If the firm had things going
its way in the early days, it certainly has
challenges in the current market.
Some recent developments have been to the
firm’s definite advantage. The shipping industry,
which long provided the core of the firm’s
practice, has consolidated and grown with
the expansion of world trade and continues
to offer business opportunities.
Even so, competitive pressures on established
market positions continue. The maturing of the
shipping industry has taken deals to the capital
markets (albeit still to a surprisingly small extent),
and specialist expertise is easily copied by others.
As David Osborne notes, the business has
changed significantly over the life of the firm:
“What we now regard as ‘plain vanilla’ shipping
finance transactions used at the time we started
to be regarded as an obscure black art, for
which we could charge quite a lot of money.
The market for that sort of work has become
much more commoditised and therefore
more competitive.”
The key to success remains keeping ahead
of the competition as new markets open;
a good example of this was UK tax based
leasing in the late 1990s. The challenges have
been compounded by the transformation of
communications, which make it near-impossible
to protect intellectual know how. “We can
draft a document incorporating all our shipping
expertise and knowledge, developed over
decades, circulate it to a banker or a borrower,
and the next thing it has become a market
standard, to which anyone has access,”
27

28
Chapter 6: Looking forward
notes Frank Dunne. “That barrier to market
entry has simply gone.”
Yet at the same time new avenues for
capitalising on expertise are emerging. The
rapid growth of the LNG sector, fuelled by
the need to bring natural gas to western Europe
and the USA, has provided a perfect bridge
between the firm’s shipping, oil and gas and
energy practices which could not have been
predicted when the decision to focus on those
industries was made. Similarly, the growth in
wealth and influence of the private equity
industry has enabled smaller firms, without
strong positions in the capital markets enjoyed
by those close to the large investment banks,
to obtain investment and acquisition work
particularly suited to specialist areas.
So what does the future hold? “We are at an
interesting point,” reflects Frank Dunne. “For
the last 10 or so years we have been very happy,
very successful with what we are, our position
in the world, what Watson, Farley & Williams is
in the great order of things. We have an inner
strength stemming from the satisfaction with
the business which we are in. But there is
pressure to grow, especially in a world where
being big counts for much. We have grown,
maybe less than other firms, but importantly
we remain distinct. Against this backdrop,
our top objective is to maintain our unique
position in the market, founded not on size
but on the quality of service in our chosen areas
of practice. Our founders created this firm in
the spirit of enterprise, and we will carry that
spirit forward.”
Ebbs and flow
In the mid 1990s leasing techniques which had
been developed in the aviation industry began to
be used for high-value equipment in the offshore
oil industry, financing floating production units
and drillships.
The firm’s maritime and tax expertise led it
into some very large transactions of this nature
and it was able to strengthen its practice in the
offshore industry as a result. A change of tax rules
concentrated the focus of UK tax leasing onto
conventional shipping and the firm developed a
premier position in ship leasing, from container
vessels to the most modern cruise ships.
A further radical change in tax rules in 2005
reduced the flow of deals – but other opportunities
always present themselves and the firm continues
to be involved in developing new techniques
and structures.

The Spirit of Enterprise
25 years of Watson, Farley & Williams
Partners’ Weekend, Tower of London, 2006
29

London
15 Appold Street
London
EC2A 2HB
UK
New York
100 Park Avenue
New York
NY 10017
USA
Rome
Via Vittorio Veneto, 96
00187 – Rome
Italy
www.wfw.com
© Watson, Farley & Williams 2007
Athens
8 th Floor – Ionian Building
2 Defteras Merarchias Street
Piraeus 185 36
Greece
Singapore
16 Collyer Quay
#12-02 Hitachi Tower
Singapore 049318
Hamburg
Van-der-Smissen-Straße 9
22767 Hamburg
Germany
Paris
150, avenue des Champs Elysées
75008 Paris
France
Bangkok
Unit 902, 9 th Floor,
GPF Wittayu Tower B
93/1 Wireless Road
Patumwan
Bangkok 10330
Thailand

Author: Humphrey Keenlyside
After qualifying and practising as a commercial litigation
lawyer, he moved into journalism and then into full-time
professional writing.
Print: Sumfield & Day
Design: GHSM Ltd

1982
London
2007
London
Athens
Paris
New York
Singapore
Bangkok
Rome
Hamburg