Game set and mismatch
27 March 2000
18 October 2013
23 July 2014
16 December 2013
18 November 2013
13 January 2014
As an increasing number of sets decide that if they do not unite, divided they will disappear into mediocrity or worse, the bar is fast resembling a Moonies mass marriage ceremony. But with the cult of personality so strong at the bar, what drives different types of sets to merge? Are the most successful unions arranged between relatively unfamiliar partners like Reverend Moon's proteges, or is it the real love matches that will win the day?
The latest merger announcement, between 4-5 Gray's Inn Square and Monckton Chambers, comes as no surprise, but according to some observers is a rather strange match which looks as if it may have been imposed upon at least one party. While those involved in the merger say quite the opposite, of course, many around the Inns have difficulty seeing the sense in it. As one senior clerk said: "It looks like 4-5 Gray's Inn Square panicked after it lost a couple of good public law people, and with Michael Beloff QC threatening to leave too, it approached Monckton."
As a combined force, the new set, yet to reveal its new name or office location, will sell itself as a specialist in public law and judicial review, European Community and competition law, commercial law and planning - Gray's Inn's great special- isation. Due to start operating as one in May, the new set has also to decide who will be the joint heads of chambers and which of its respective chambers directors will become chief executive.
Commenting on the solidarity of the deal as it now stands, Peter Roth QC, a senior tenant at Monckton Chambers, says: "I don't think there's any risk of it falling through, we have spent a lot of time working out the detail - there is a great determination to make it work. We have a very similar culture and the extent of that similarity has become more apparent as talks have progressed."
Two sets which have most definitely gone for a love match are 2 Crown Office Row and 1 Paper Buildings, both heavy insurance and professional negligence sets. As head of 2 Crown Office Row Christopher Purchas QC pointed out, mergers are going to affect most of the bar, and the two sets wanted to be out there in the forefront choosing who they teamed up with before having another set "thrust upon them".
Both sets knew they had to increase their offering in depth and strength of numbers, both had other suitors, but the two heads had been friends in the courtroom and on the golf course for many years. Purchas decided he wanted to merge, approached Michael Spencer QC, head of chambers at 1 Paper Buildings, on a strictly confidential basis, and mooted the idea. His friend was keen and proceedings soon got under way. These two sets, due to become one next month under the banner of Crown Office Chambers, are fairly evenly matched in terms of numbers and breakdown between silks and juniors.
But other sets with more of a mismatch in what they can bring to the table can achieve new synergistic heights on the basis of mutual admiration. The obvious example is 1 Hare Court and Serle Court, whose reincarnation as Serle Court Chambers has finally allowed its members to achieve the recognition they have deserved for a long time. Here, a top-heavy nugget of a commercial set teamed up with a well-regarded chancery set which, although very well-regarded, contained few silks.
Michael Briggs QC explains that neither party was in the merger market, but both saw the sense in it. "There's a common perception now that a commercial dispute will involve a broad range of issues, particularly because of the increasing internationalisation of business and trade. There are certain advantages in being a certain minimum size - you have strength in depth across a broad range of common experience and it means that someone of the requisite calibre and experience is always available," he says.
According to Briggs, there were some long-standing friendships between various members of both sets and "a high level of mutual respect". But most important of all, he says: "We share basic vocational ideas. It's not just about clubbability, it's sharing the same professional ideals at a deep level."
Strength and breadth in numbers and enhanced client service are not the sole reasons given by barristers around the Inns for the spate of recent mergers. The more cynical, and possibly more realistic among their number say sets may merge as a defensive move to insure themselves against the shock of big earners leaving. "If a small set has a high earner leave, they tend to be a bit buggered," one honourable gentleman puts it. Another reason is prestige and finally, to achieve economies of scale - the more people in chambers, the less they all have to pay towards chambers expenses. But it would seem that safety is not necessarily found in numbers. As another barrister, who wished to remain anonymous, says: "Some chambers, they've got 70 barristers but they're still in trouble. Being big doesn't save the day if you're no good."
There is a sense that, as solicitors carry out more and more of the work that barristers used to, barristers are trying to compete with them on their own terms by developing corporate images and marketing gimmicks, for which size is important. "But in a way they have the worst of all worlds. Barristers will never be as good at this as law firms are, and it's not what people want anyway," says one practitioner.
Whether for love or money, mergers over the past couple of years have fallen into two main camps: those between sets carrying out the same sort of work, generally seen to be the easier ones to pull off, and those between sets which bring complementary types of work to the table, such as Serle Court/1 Hare Court. They have also mostly involved chancery and commercial related practices.
There are still several small chancery sets left, all of which are no doubt wondering when and if they are going to get snapped up, and possibly worrying that they won't be. But small is not necessarily vulnerable.
One area of the bar which has so far remained immune from the whole messy business is the tax bar, thanks to its high-earning capacity and extremely specialised, niche status. But aside from the two largest sets, Pump Court Tax and Gray's Inn Tax chambers, there are several smaller sets which would in fact suffer greatly if one of their stars retired, left or fell out of the picture for some other reason. Without John Gardiner QC, for example, 11 New Square might find itself in a spot of bother. 3 Temple Gardens has been attempting to solve the problem by building up in size via lateral hires. None of the new recruits has shone through yet within the tax arena, but hopefully their stars will begin to ascend in time and provide the set with the protection it needs.
Whoever is merging with whom, there are many problems inherent in the process, not least the question of keeping the whole affair secret until it is agreed. With the bar being such a small community, rife with intermarriage and inbreeding, this is not always easy.
Purchas and Spencer were pleasantly surprised that news of their merger did not leak out until the week before it was officially announced, despite several members of chambers having spouses practising elsewhere around the Inns. "If we finally decided not to merge, and the merger had been public knowledge, it could have been very damaging to both sets," says Spencer.
Choice of name and building are also psychologically important, particularly when one of the merging parties is smaller than the other or making more of a geographical upheaval. Despite being around half the size of its partner, 1 Hare Court has adapted well to losing its name and situation, largely thanks to the fact that both sets moved into a new building under a new name which, although used by Serle Court for a while beforehand, had been chosen specifically with merger in mind.
"One anticipates that losing the name is going to be a problem, but in actual fact it wasn't at all," says Spencer, whose idea it was in fact to rename his joint enterprise Crown Office Chambers, making the most of the royal tag. "Our admin will be carried out from 1 Paper Buildings," he explains, adding: "Ours is a true merger, we're going to mix everyone up and all the sub committees have mixed membership. That's done the bonding process a great deal of good."
But what turned out to be most crucial, according to Purchas and Spencer, was the intensive spade work before putting the merger to the final vote. According to Purchas, it was vital that members of chambers knew exactly what they were voting for so there was no room for doubt later. "We didn't envisage that it would be as much work as it was, but it has paid dividends. The work we did is worth its weight in gold," he says. Spencer adds: "We identified the pitfalls before we decided to make the decision to merge. Without the study, we wouldn't have automatically identified cultural differences and been able to come up with solutions to them."
In order to help them through the process, Purchas and Spencer brought in merger expert David Temporal as "an insurance policy". "We wanted to make sure we were asking ourselves the right questions," says Purchas. "If you have identified the reason for the decision to merge, you will pull through it."
No doubt there are more unions on the way but the old argument about whether affection or pragmatism forms the best foundation for any partnership will no doubt lumber on. Of course the answer is obvious - neither are necessarily the right or wrong way, and only time will tell.
10 steps to merger
Stage 1: Confidential chat between heads.
Stage 2: Take select handful into confidence to get their opinion.
Stage 3: Rest of set asked, sworn to secrecy.
Stage 4: Advisability study, looking at pros and cons.
Stage 5: Chambers vote on whether to go ahead in principle and set up steering committee to carry out feasibility study.
Stage 6: In-depth, due diligence exercise looking at all aspects of chambers from finance and accounts, staffing to professional and cultural differences. Senior clerks brought in at this time. While heads of chambers, treasurers and senior clerks have access to who earns what, this information is not specifically looked at. Books opened. Clients are not researched at this point - would lose secrecy.
Stage 7: Full chambers vote.
Stage 8: Critical path mapped out, setting out realistic completion date and everything
that needs to be done before final merger can take place.
Stage 9: Steering committee goes about dissolving constitutions, sub committees set up with mixed membership to carry out various tasks such as: marketing; legal issues such as new leases for premises; setting up a new service company; building works and technology matters such as networking chambers and setting up website. Chambers finance committee starts forming new way to charge rent based on agreed criteria.
Stage 10: Clients and press informed, launch party arranged, information sent out.