Hill Dickinson has cited government spending cuts affecting the NHS as the reason for making two fee-earners and five secretaries redundant in its health team.
The redundancies were made following a firmwide review, which concluded at the beginning of September. Four of the secretaries who lost their jobs were based in Liverpool, while the two fee-earners – a legal director and an assistant solicitor – and the remaining secretary were based in Manchester.
In a statement, a spokesperson for Hill Dickinson said: “We’ve had to adapt our business model to meet changing client requirements in light of government spending cuts. This has resulted in two fee-earner redundancies and five secretarial redundancies. We remain focused on ensuring that excellent service remains accessible to clients against a challenging economic backdrop.”
“It’s all about costs and price,” confirmed the firm’s managing partner Peter Jackson.
News of the redundancies comes as Hill Dickinson announced that it has been reappointed to healthcare services purchaser Health-Trust Europe’s panel along with the likes of Berrymans Lace Mawer, Capsticks and Mills & Reeve.
HealthTrust Europe provides legal services to around 60 NHS trust sites across London, the West Midlands and parts of southern England. The value of the work generated for the firms that landed spots on the panel is expected to be around £20m.
Despite the impressive headline figure, however, The Lawyer earlier reported (1 August) how low partner rates had emerged as an issue during the purchaser’s panel review.
“They’re using classic procurement tactics to encourage low pricing, so the question is where you price yourself to get onto this panel and still keep the work profitable,” commented one source close to the panel review.
One healthcare lawyer at a large firm confirmed the dire mood; he claimed he had seen a number of firms pulling out of similar panels in the health sector due to fee constraints.
“We’ve certainly seen in some areas firms coming off the panel because they knew they wouldn’t be able to get the fees they need for the work they do,” explained the lawyer. “Other firms have become so desperate for work that they pitch very low. We lost out on one tender and discovered the firm that won had undercut us by 25 per cent.
“Firms that focus on commoditised work such as clinical negligence have been the hardest hit by the price sensitivity in the NHS.”
Compounding the intense competition and fee sensitivity, the NHS Litigation Authority has in the past couple of months stopped accepting bills from lawyers based on hourly rates in clinical negligence cases, insisting that firms working for the NHS set fixed fees.
“I think it’s fair to say that the NHS has always been very price-sensitive,” said Bill Gilliam, a commercial disputes partner at Eversheds, which is advising on the Mid Staffordshire NHS Foundation Trust Inquiry. “But the effects of the proposed Health Bill and the Government’s spending cuts have all been subsidiary to the Nicholson Challenge [named after NHS chief executive Sir David Nicholson], which is intended to save 20 per cent of the NHS’s billings, in our view.”
The redundancies made across Hill Dickinson’s health team are not the first at the firm this year.
In July Hill Dickinson made five secretaries redundant across its London corporate and shipping departments (TheLawyer. com, 7 July) following a decision to outsource duties to Liverpool secretarial company Document Direct.