Caution on the road to peace
27 May 1997
As the good times roll south of the border, there is a more cautious outlook from Northern Irish lawyers. Despite the fact that they are enjoying one of their busiest times in years, there is little evidence of bullishness, and the shadow of the faltering peace process haunts the business environment.
"There is a question mark over the continuation of the current growth," says Ken Rutherford, a partner at C&H Jefferson. "The peace talks have not been a success and a recent CBI report says business confidence is dipping."
This gloomy prognosis has not yet been borne out in the marketplace but, says Brian Stewart of O'Reilly Stewart, there is a feeling that the market has peaked.
Despite this, commercial and corporate work has been particularly busy over the past year with firms reporting increased activity all round.
O'Reilly Stewart has seen an increase of about 25 per cent in its commercial work and believes its future lies in this sector. "We have repositioned and got rid of our branch offices," says Stewart.
The firm is cementing its relationship with City firms and, without overlooking private client work, will focus more on commercial and insurance defence work.
Rutherford also claims that C&H Jefferson's commercial work has increased by 60 per cent year on year. "It's a combination of the market and the firm concentrating on this area," he says.
Property is booming with prices in the residential and commercial sector rocketing. However, many firms are questioning whether the boom in the residential conveyancing market is as real as it appears.
Harry Coll of Elliott Duffy Garrett says: "It is not as buoyant as you might imagine. There are not as many deals taking place." He says there are many factors to explain this - the end of the ceasefire is not the only reason.
According to Mary Frances Kearney, a partner at McManus & Kearney, the little conveyancing work that does exist tends to be "cut throat". She says some solicitors have been undertaking conveyancing for very little despite scale fees of 1 per cent of the value of the purchase being the norm.
On the commercial front, UK retailers are still investing in Northern Ireland. Belfast is undergoing major redevelopment especially the area around the River Lagen. Office space is at a premium and in short supply.
But Rutherford says that there is a question mark over how long rental prices can continue to rise. In the meantime, Tesco is providing a lot of work locally, while Sainsburys has also been keeping the market active.
The banking sector is also providing work for firms in Northern Ireland. Before the ceasefire, the province was a closed shop with the four main banks carving up the market. Post-ceasefire, a number of secondary banks, such as HFC and ICC, have sprung up. Barclays is also planning a move into the region.
There has been a degree of innovation from the main banks. Elliott Duffy Garrett acted for the AIB Group in its joint venture - a construction project involving 100 residential units - with Morrison Homes, advised by L'Estrange & Brett.
"It was a first for the bank to be involved in the equity of such a project," says Laurence Mahood, partner at Elliott Duffy Garrett.
Mergers and acquisition work is buoyant. Deals last year included the acquisition of the Northern Ireland business of the Cheltenham & Gloucester by the First National Building Society, and the takeover of CEM Computers by ICS Computing.
Employment law is one of the fastest growing areas of work with many top firms setting up employment departments. The Fair Employment Agency, which monitors religious discrimination, and an active Equal Opportunities Commission have ensured that the province has been active in employment law.
Changes are taking place in insurance defence work as the Lloyd's market moves in and threatens the major compositive insurance companies such as Commercial Union and Eagle Star.
"In the past, Northern Ireland wasn't as attractive to Lloyd's as it is now," says Grahame Loughlin, partner at Tughan & Co. There is plenty of competition for insurance defence work with London firms such as Kennedys waiting to snatch up what is on offer.
Insolvency work is not on the up with economic conditions militating against it. Insolvency practitioners are making a living, though. Kearney says that there has been work from the increased number of voluntary arrangements and that her firm's work comes mainly from UK finance companies.
Conditional fees have not yet been introduced in Northern Ireland with the result that practices are looking for alternative ways of funding litigation. Over 70 per cent of the firms surveyed by The Lawyer say they are interested in such schemes, which explains the recent success of Greystroke Legal Services in the province.
The company, which provides LawAssist, a cheap "after the event" legal expense insurance policy, saw 200 firms attending its Northern Ireland seminars. Business Development manager John Woolcotts says the company has been "really surprised" by the interest expressed at such an early stage.
The Legal Protection Group, which provides litigation policies, has also been involved in Northern Ireland. Spokesman, Brian Raincock, says that although the company has "not done a lot to date" in Northern Ireland, about 25 firms have expressed interest in its products.
The Private Finance Initiative (PFI) is beginning to take off in Northern Ireland, and all the major firms are tendering for jobs. A number of English firms are, however, getting a slice of the action, much to the locals' chagrin. Michael Johnson of Carson & McDowell says: "There is a perception in the public sector that you have to have an English firm because they have track records."
So far, one PFI project has taken place - the Royal Victoria car park - which saw Lovell White Durrant acting in conjunction with L'Estrange & Brett. The Department of Education is also involved in a number of projects, as is the City Hospital. Northern Ireland firms are finding that pricing is a major factor in the tender process. "The emphasis seems to be on fees. Having PFI experience seems to be the second criterion," says Johnson.
Competing with London firms is a problem which crops up time and time again for Northern Ireland firms. While practices want to keep on the right side of their English counterparts who can pass on such work, there are occasions when Northern Ireland firms could handle the transactions themselves. But Northern Ireland lawyers tend to be fatalistic about the possibility of escaping from this bind.
Rutherford says they are more defensive in the face of large commercial transactions. "It's a protected market here," he comments. "When the doors are flung open there is a tendency to say 'we'll see what happens'."
He says firms benefit from their English counterparts when such deals are on the cards. However, he concedes: "We should be doing more."