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12 December 2013
The "Celtic tiger" is still roaring. Or so it seems for Irish law firms both north and south of the border. According to everybody in the industry, there is no let-up in the work and the pressure is now on the individual firms to keep up with the pace of demand.
The main effect of this upsurge is the rush to attract and keep a feasible workforce. Declan Moylan, managing partner at Mason Hayes & Curran, says: "The legal market reflects what's happening in the economy as a whole: that there's a shortage of labour in Ireland generally. In legal terms, it seems as if there simply aren't enough lawyers to go around. It's a real challenge."
The growing need for an increasing number of lawyers has led to a huge rate of wage inflation. Young Irish lawyers who have traditionally left the island to make their reputations abroad are returning in droves, tempted home, it seems, by a lower cost of living, competitive salaries and quality law work with sophisticated clients. "Historically, there were many disincentives: problems such as a perceived lesser quality of work or a smaller remuneration package," says Moylan. "Now, though, it seems the trend has reversed. We as a firm have had a major influx of people, both Irish lawyers returning home but also English lawyers coming to work here."
Practically all the firms have expanded in the last few years, culminating in what amounts to a distinctly different legal market than that which existed five, or even just a couple, of years ago. Dublin firm Arthur Cox, for example, last year appointed 10 new partners, increasing its partner count from 38 to 48; and 80-partner firm A&L Goodbody has realised a 90 per cent growth in the last five years.
The truth is that this is just the tip of the iceberg. The majority of firms on both sides of the border have been involved in a spate of recruitment, whether laterally from other Irish firms, or from City and US firms. And this is simply a reflection of what has been happening in the booming Irish economy, which has seen unemployment in the Republic fall to less than 4 per cent in the past year.
The mood is undeniably buoyant, particularly in the Republic, where the drive towards development and expansion in the economy is now taking the form of public private partnerships (PPPs). William Fry partner Brendan Cahill says: "This is a means of funding the development of state infrastructure. An IR£50bn (£38.7bn) programme will be implemented over a seven to 10-year period, of which this PPP element will be a major part. This will mean huge business for law firms in terms of details like contractual papers. It certainly is something to keep an eye on over the next few years."
Moylan believes this growth in PPP's will prove a windfall for more than just the Dublin firms. "There's been interest from the UK in this market development," he says. "There are obviously businesspeople in the UK who will come in to seek a piece of the action, and this includes UK law firms which already have PFI experience and that are keen to seek a slice of the lucrative PPP market here."
But this predicted mass movement into the Irish legal scene has failed to materialise in the last 12 months, Masons being the only UK firm to establish an office in the Republic. But according to Frank O'Riordan, managing partner of A&L Goodbody, this does not mean that their presence has not been felt in the legal market. "The international firms strong in this or other fields will always be comfortable pitching for work from their home base, whether that be New York or London. They can and do tender for work from their bases, and we're regularly approached to join teams putting in tenders for work here," he says.
Associations have become in many ways part of the landscape in Ireland. Most of the major Northern Ireland firms have formed alliances with their counterparts in the Republic, and even those that have up to now restricted such a move admit to having close working relationships with one, if not more, of the Dublin firms.
Cahill at William Fry believes that the continuous growth in cooperation since the Good Friday Agreement in 1998 will only improve these links. He says: "The level of cross-border activity will only increase. Business in Northern Ireland is continuing and these alliances are real relationship-building exercises." This belief is reflected in William Fry's decision, made with its sister firm in Belfast Tughan & Co, to begin a joint marketing campaign in the US and London. Tughans partner John George Willis says: "We're presenting ourselves as an all-Ireland firm." And although Willis rules out any suggestion of the two firms merging, he does reveal that they have direct IT links between the Belfast and Dublin offices, as well as a common library and document database.
Cooperation seems to be the buzzword. And even these moves towards harmony have been lucrative for law firms inundated with ever-increasing amounts of work. It is hardly surprising that firms all over the 32 counties would look to take advantage of work created by the peace process. Attention is focused specifically on the cross-border institutions that are beginning to operate. Richard Grey, partner at L'Estrange & Brett, believes that it has been a good year in terms of legal work. He says: "There's been some movement towards implementing cross-border bodies, which will inevitably lead to more work for lawyers." And according to Neil Faris, managing partner of Belfast firm Cleaver Fulton Rankin, the law has a big part to play in the process. He says that there are still matters being determined on the constitutional front as well as things that have to be addressed over a period of time, and adds: "Many of these matters are being resolved in the courts, and other issues of contention, such as parades, will probably end up there."
But as the expansion of the Northern Ireland market continues, more firms want a piece of the action. This year saw the much-heralded arrival of Scottish firm McGrigor Donald. Grey admits that its arrival caused a stir. He says: "The jury is still out about what impact this will have on local firms, but it has increased competition in Northern Ireland."
But for McGrigor Donald, Belfast is just the first port of call in its invasion of the Irish market. According to partner Alan McAlister, the firm is looking south with a view to making its name in the buoyant Irish economy. "We're using Belfast as a starting point; ultimately we'll look to have a proper McGrigor presence in Dublin, just as Arthur Cox did with their move into the North," he says. McAllister also announced his firm's move into Ireland's IT, e-commerce and intellectual property (IP) realms. He says: "We've noticed that this area is particularly lacking. We feel like we can bring something to it and are making efforts to attract that kind of work."And now is definitely a lucrative time to move into the Republic's legal market.
Lawyers are also kept busy by the Republic's numerous tribunals, an almost eternal series of investigations which have become part of the legal landscape in Ireland. The investigations look at matters as diverse as payments to politicians, contaminated blood products and child abuse. While this is obviously more profitable for the barristers involved, there is still a sizeable amount of work up for grabs in all four of the ongoing sessions. O'Riordan at A&L Goodbody, who worked on the earlier beef tribunal, says: "Why do we have so many of them? On many levels these are political creatures: they get to a level of information that the conventional system doesn't." Although O'Riordan does admit that the public is expressing some "weariness" at the investigations.
Another feature of the Republic's political and legal landscape is the increase in public-to-private transactions. There have been moves towards privatisation of state bodies by the Irish government, with the Aer Lingus, Trustee Savings Bank (TSB) and Aer Rianta privatisations already underway and due to be completed by the end of the current government's term. Others, such as Industrial Credit Corporation (ICC), Coras Iompair Eireann (CIE) and the national train service are also rumoured to be facing privatisation. O'Riordan says: "The current government is committed to privatisation. The last major-profile one was Eircom [the national telephone network]. The market is likely to see full or partial disposal of the government's interests in selected state companies."
But work is up in almost all areas. Up to 40 companies, mainly e-commerce-linked, are tipped for initial public offerings at the moment, while the trend of old economy industries is to move towards restructuring. Willis at Tughans says: "We have the best of both worlds - working for IT in upcoming companies and doing corporate work for the older industries."
With the new Equal Status Act in the Republic and a host of new legislation on e-commerce and financial services expected, the next 12 months are going to be a busy time for Irish lawyers. Liam Quirke of Matheson Ormsby Prentice believes that it is a "booming economic time here". He adds: "To run a successful firm, it is not a case of doing just anything that comes through the door. We have to be strategic and not all things to all men. You need to read the economy and go with its principal flows rather than picking up any work that's available."
The economy of the Republic has certainly had an extraordinary few years. Moylan says: "The big issue is how long we can keep this going. We've had 7 per cent year-on-year growth for the last number of years, but this growth is unsustainable in the long term. The trick for government policy will be to gain a soft landing in the economy." But he remains upbeat. "I have faith in the market. The economy has made great strides - it may slow down, but it won't return to poor conditions," he says.
Any control of the economy, though, is difficult for the Irish government to guarantee since the launch of the euro, which was partially introduced on 1 January this year. The Irish government handed over control of its fiscal policy to the European Central bank. And while growth in the economy has not been affected adversely by its involvement, inflation in the Republic remains high. The next 12 months are key to the continued growth and development of the Irish economy and to the success of the law firms working within it. Ultimately, they will answer the question as to whether the Celtic Tiger can continue to stalk the economic markets of the world.