22 September 2008
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16 September 2008
Kennedys" /> To work in insurance you have to have a personality, a sense of humour – and be able to hold your ale. No matter how professional the financial market portrays itself as being, it is still a sector that is fundamentally based on having good and convivial relationships.
No one is more convinced of this than Kennedys senior partner Nick Thomas. As far as he is concerned, the firm’s new building underpins this philosophy.
Kennedys – formerly scattered around horribly tatty offices near Moorgate – has taken five floors of a building across the road from Lloyd’s of London and the Swiss Re building. "It’s important symbolically because it shows we’re in the insurance market,” says Thomas.
But Thomas is sensitive to any jibes that the building is swish. So, for the record, Kennedys’ new office is not ‘swanky’, but – to quote Thomas – “a nice professional environment” with “flexible working space”. (That’s open plan to you and me.)
The new office is not the only coup Kennedys has pulled off this year. First it opened in Manchester in February after raiding Halliwells for a team of three and merging with Kershaw Abbott Solicitors. Then in June it announced the takeover of Davies Lavery, which took the firm into Birmingham and Maidstone and gave it a larger base in Chelmsford. And in quick succession it broke into the West Country after taking on the Tiverton (soon to be Taunton) office of Reynolds Porter Chamberlain (RPC).
It has been a busy summer for Thomas, in which he only took a short break to see his daughter get married. A lot of his time has been dedicated to overseeing the Kennedys move as well as the rebranding of the firm’s new regional network – above and beyond which he has been working on the Buncefield litigation.
The litigation is due to launch in October. The insurers of the businesses affected by Europe’s biggest postwar explosion at the oil depot in December 2006 have instructed Kennedys to lead their liability case against Total and Hertfordshire Oil Storage Depot, a joint venture between Total Ltd (60%) and Chevron Ltd (40%). The claim is for an estimated £1bn, but at the moment, says Thomas, it is unclear which oil company will be liable.
The fact that Kennedys has been chosen to act on the case highlights the insurance market’s enormous confidence in the firm’s lawyers. But Thomas recognises that insurers are changing the way they work with firms, which requires many of them to have regional networks.
“You’ve got to be a leader and you have to have a dialogue with a network of insurance contacts,” he says. “Historically, we as lawyers are almost like doctors – clients only see us in bad times. As far as insurers are concerned, they see that you’re interested in what makes them well.”
Thomas says there is beginning to be a sea change in what work the underwriters will hand out to firms. "Most in-house insurance departments originally set themselves up to supervise and manage lawyers who were dealing with bigger claims and setting up their own machine to deal with volume work,” he says. “Some insurers are turning that on its head and saying that we’ll give someone else the job of doing volume and multitrack in-house.
“At one stage, whenever you heard of insurers setting up their own volume legal department, that was to stop them spending lots of money on lawyers and dealing in fast-track.”
Yet Thomas cautions against the world of targets and cost-cutting. In volume work, where margins are being squeezed tighter than ever before, he says some insurers could end up with bigger bills if they concede liability where they would normally fight claims.
“I think you still need good claims handlers, but I think some insurers are forgetting that,” he says. “There’s a serious risk of everything being driven by timetable and legal spend – which is easy to measure if you’re a measurer, but you can throw the baby out with the bathwater very easily because it’s very difficult to track over a period of time.”
Insurance firms handling volume personal injury claims, such as Irwin Mitchell and Russell Jones & Walker, recognise that there is a benefit in having economies of scale. Beyond strong staff bases, firms need to invest in technology to ensure systems are streamlined and effective enough to deal with mass volume claims spinning out of road traffic accidents, professional liability and employers’ liability claims.
The demand being placed on lawyers by insurers is expected to drive a further raft of consolidation through the legal sector. Kennedys has set the consolidation trail ablaze with its takeover of Davies Lavery and RPC’s Tiverton office, but it is unlikely that the firm will remain a lone consolidator in the sector for very long. Just last week DWF snared a six-partner insurance team from regional rival Weightmans for its fledgling London office (TheLawyer.com, 16 September), and further moves are anticipated.
With his contacts in the insurance market, Thomas is well positioned to monitor how the financial sector has slimmed down as a result of super consolidators emerging. It is a model that insurers are likely to force on the legal profession as they look for better value for money. No wonder Thomas recognises that Kennedys has to be super-visible. And how better to be visible than move into an iconic building?