Life and times of Andersen's offspring

Garrett & Co celebrated its third birthday last week. Robert Lindsay looks at how the link with Arthur Andersen has worked

When Arthur Andersen appointed Colin Garrett to set up the first British law firm associated with an accountancy firm, Garrett told The Lawyer nervously: “I think there is some danger that this move might be over-emphasised. It is a very small move indeed.”

Even Garrett, who retired because of ill health shortly after the firm was set up, didn't realise how quickly things would change.

Three years later the firm has about 40 partners and 105 assistants and has just been placed 49th in Corporate Money's top 100 law firms by value of its deals involving UK companies.

It has offices in London, Birmingham, Leeds, Manchester and Reading, associated offices in Glasgow and Edinburgh and is looking to open in Hong Kong (see front page story).

It is still expanding and recruiting heavily: this week it is advertising for a tax, a pensions and a telecoms partner in its London office, which is on the second floor of Andersen's headquarters in The Strand.

But its expansion has not been without hiccups.

Garretts' corporate side in Leeds received a set-back this spring when corporate finance partners Richard James and Karen Jarvis defected to Hammond Suddards.

Later, James sued the firm for £14,000 he said he was owed. Garretts recently settled out of court.

James said he had left Garretts because its association with Andersens had been deterring referrals from rival accountancy firms.

Jarvis said: “Garretts had expanded fast and at that time things seemed to have slowed. There was a general acceptance that to expand further the firm would have to merge with a good London practice. Andersen's people thought they could get their clients to use Garretts, but it wasn't as easy as they thought.

“During their appraisals Andersen's managers were being asked to show how many clients they had introduced to Garretts.”

But in practice, Andersen's clients tend to agree merely to include Garretts in beauty parades; there is no guarantee Garretts will win.

In any case, says managing partner Julia Chain, only 40 to 50 per cent of work now comes from Andersen referrals – the other clients are self generated.

Garretts balk at talk of mergers. Chain says her firm will grow by poaching talent from rivals.

Marcus O'Leary, who was the first partner to leave Garretts in spring 1995, said the Andersen's connection had undoubtedly helped the firm.

“At first people were a bit reluctant to join – there was a lot of press about the Andersen connection.

“But the firm is quite open about it. On all its literature it says it is associated with Arthur Andersen and now people have got used to the idea.

“I know its lawyers are always busy. But they are not visible to many regional practices because they work for the international blue chip firms, the Andersen clients,” he said.

Chain says: “Let's not pretend, we wouldn't have done all this as just Garrett & Co.

“Any potential client who walks through the door must want to be part of the Arthur Andersen organisation. That is a part of our strength and we are proud of it.”