Feathering the magpies' nest
30 August 1999
Andrew Facer, a partner in Newcastle firm Ward Hadaway, has very particular views on the North East economy. "In my opinion, the economic climate seems to be linked to how the football club does."
Newcastle United fans would like to agree. Because while the Magpies are struggling, the Newcastle economy is thriving and the legal market is enjoying a period of growth on the back of it.
Newcastle-born Helen Ager, a partner in Crutes' professional indemnity practice, came back to work in Newcastle four years ago, after a six-year spell practising in London.
She believes Newcastle and its legal market has been going from strength to strength during the 1990s. "When I came back I was concerned I would take a drop in the quality of work but that was not the case at all. On the work front, the market is a sizable player now and we do not need to feel down-played because we are from the North," she says.
The area has a strong tradition of private client work. Both Dickinson Dees and Ward Hadaway have major private client practices.
Facer says: "Historically it comes in three parts. Landed money, the traditional money made by the metal bashers last century and new money. It is the new money that is expanding entrepreneurial, owner/manager work."
Recruitment is not a problem for firms, which believe they can offer interesting work but with the bonus of a more relaxed way of living away from the pace and cost of London.
Dickinson Dees, the largest firm in the region with 46 partners, has just taken on an entire financial planning team from Arthur Andersen to bolster its growing private client practice (The Lawyer, 16 August).
George Lyall, head of the firm's private client services group, says the move was driven by the increasing need to offer clients a more integrated service: "This is as close as you can get to a one-stop shop for asset protection and wealth management services."
34-partner Ward Hadaway, Dickinson Dees' main rival, is also looking to grow. The firm has outlined some ambitious expansion plans, including raising the total amount of staff from 210 to nearly 400.
National and City firms also have a presence in the area. Eversheds and Davies Arnold Cooper both have small offices in Newcsastle and Berrymans Lace Mawer has announced that it is looking to expand into the area by taking over niche insurance specialist Linsley & Mortimer (The Lawyer, 21 June).
Local firms are unfazed by the growing interest that City and national practices are showing in the region. Ward Hadaway's Facer believes the competition will in fact be good for local firms. "I think it will kick up more work rather than less. It will kick up more opportunity," he says.
Dickinson Dees and Ward Hadaway stress that they have no plans to compete with national firms by re-launching themselves as UK-wide brands. Dickinson Dees partner John Flynn says: "There are firms who see themselves as part of a multi-office group and there are other organisations which decide to focus very much on the principal office. We are very much in that category.
"What we need is the reputation of being able to handle the work. If you set up in London you lose the advantage and the competitive edge," says Flynn.
Ward Hadaway agrees with this sentiment. It plans to double its capacity through merging with a local firm. Jacksons has also been looking to expand through bolt-ons and mergers, and although it has previously been in discussions with non-Newcastle firms, including Liverpool firm Weightmans, Bill Goyder, managing partner of Jacksons, now concedes merger with non-local firms is not something it is actively pursing.
"The thinking at that time [of the discussions] was that insurers were interested in firms that had national coverage. [But] we have survived considerable panel reviews so are taking a fresh look at the situation."
Jacksons is now focusing more and more on technology in order to overcome any perceptions of geographical isolation. Goyder adds, though, that regardless of distance, IT is something no firm can afford to underestimate.
"IT is going to change the way things are done. Our customers no longer want to find us on a cosy high street but through the internet. We believe that for certain types of work, this is the way forward," he says.
North-east firms are still tapping into the huge amount of work generated by the insurance industry in the region, despite many insurers slashing their panels recently. Both Jacksons and Crutes are on the panels of national insurers. Crutes has been retained on insurance giant CGU's panel and also has Zurich, the NHS Litigation Authority and SIF in its portfolio.
Peter Collins, associate director of Eagle Star, believes the relationship Newcastle firms have built up with insurers makes companies more willing to retain them on national panels.
He says: "We have had a history of being represented in Newcastle for decades. However, we are really a national operation so we certainly look to a more national base. But we have kept some of our firms in Newcastle because they have got the knowledge and we had the relationship already in place."
Crutes' Ager says: "Our clients are mostly national. It depends on the insurers and how they select their panels but geography has to be a factor. The panel firms of many major insurers are spread across the country. Insurance companies are very cost aware and north east firms have lower overheads. Very attractive rates make the market very attractive."
The region has not escaped knocks to its economic stability. Recent high-profile economic concerns for the North East include Wilkinson Sword and Fujitsu shutting down major manufacturing plants.
Goyder agrees the air of prosperity in Newcastle and the surrounding areas cannot last forever. But he adds that established law firms should not have a problem riding out the rough with the smooth.
"I am old enough to recognise the cycle but I believe firms that are in tune to the external business environment will always be okay. That is the key to it. Times of economic downturn are not nice but the profession can often survive the worse times," he says.