Here is the news: Big Law is doing fine. Factory Law is doing even better. This special edition of The Lawyer is a preview of The Lawyer UK 200 Annual Report 2011, published next month.
We usually have way too much material to fit into the supplement, so this year we have decided to release the headline findings early and devote more space in the UK 200 to an analysis of the management and strategy of every firm.
In this issue you will see all the data on the top 100 firms along with an exploration of key developments in the past financial year. There are plenty of trends to examine, but there’s been one standout theme: the dynamism and consolidation within the insurance sector.
Look at the volume players that have risen from nowhere in a decade: Parabis Law, Minster Law and Optima Legal. Add the fearsome engine that is Irwin Mitchell and you have a group of firms whose combined revenues reach £377m and whose growth spurt shows no signs of stopping. Making a direct comparison between these and traditional insurance outfits is tricky, since these firms do not operate on a traditional partnership structure and the career structure for lawyers and paralegals is different too. Take Minster Law: it turns over £82.2m, but has only 25 qualified lawyers and 155 fee-earners. Support staff outnumber fee-earners by 2.5 to 1. These operations may be classed by other lawyers as factories, but their success is a threat to certain business lines within Beachcroft, Kennedys, Berrymans Lace Mawer and BLG.
We all know about the game-changing merger activity at the traditional end of the insurance sector: Clyde & Co with BLG, Beachcroft with DAC, but the persistence of the traditional high-profit partnership and the rise of the factory shows the two structures can coexist. The commoditising logic that underpins the factory firms has taken root in City practices, with varying degrees of disaggregation at Herbert Smith, CMS Cameron McKenna and Addleshaw Goddard, to name but three. At the same time, Irwin Mitchell is looking to launch a higher end practice in the City. Welcome to the era of cross-fertilisation.