The old order in Newcastle is under threat. More specifically, the firm that represents the old order, Dickinson Dees.
The quintessential ‘old money’ firm’s end of year has seen turnover rise by 11 per cent to £43.8m and average profit per equity partner (PEP) hit (provisionally) £336,000, up 20 per cent. After last year’s disappointing dip to £280,000, the healthy return to form will be a relief to managing partner Neil Braithwaite.
But the continued aggression of former Newcastle minnow Watson Burton is what dominates the legal market chat in the Quayside bars. And while most onlookers admire the brass neck of managing partner Andrew Hoyle, the smaller firm’s move also highlights Dickinson Dees’ determination to remain effectively a single-site outfit. Critics could call it complacent.
Watson Burton’s ambition to vault into the hugely competitive Leeds market can be seen as a direct snub to the larger firm’s determination to remain based in the North East. But Braithwaite denies that his firm’s style is being cramped. “We don’t feel limited at all,” argues Braithwaite as The Lawyer meets him and senior partner Robin Bloom at its flagship Newcastle office. “In every market in which we compete there’s a potential waiting to be tapped. Public sector work, for example. We’re winning work all over the country from out of the North East. There’s unlimited scope and location doesn’t seem a major bar to winning that work.”
Recent new instructions for Dickinson Dees include the London Borough of Croydon and the Arts Council. Both were tenders and were won without the need for a London office. Then there is the wider Northern market, which Braithwaite describes as “a huge untapped area”, saying that “some Leeds firms have taken their eyes off the ball on local plcs”. Naming no names, it is clear he is referring to DLA Piper. The global juggernaut’s neglect of its former homeland is a constant refrain in the North – and one vehemently denied by the firm (see Special Report on page 22).
The question for Dickinson Dees is whether it is thinking of a Leeds outpost. “No,” chorus Braithwaite and Bloom. “They’re very brave,” adds Braithwaite, “but how will they win the work to match the people they’re recruiting?”
Watson Burton’s senior partner Andrew Hoyle looks anything but a worried man as he shows The Lawyer around the firm’s purpose-built offices. Hoyle is currently splitting his time between the two offices, spending two days a week in Leeds. The office already has 22 people there and, according to Hoyle, “is attracting high-quality lawyers from Leeds, London and Manchester”. He adds: “Most of them wouldn’t have spoken to us when we were just in Newcastle.”
Hoyle claims to have seen some 200 CVs since the Leeds office launched with a platform of insolvency, banking and corporate. Not all will have been in response to the story broken by The Lawyer in August 2003 that the firm was by far the most profitable in Newcastle with a PEP of £420,000, but there is no doubt it raised the firm’s profile.
“We have a tight rein on the equity structure, reflecting the fact that that’s where the decisions are made, but it’s true that we reward very well at equity level,” admits Hoyle. Less so this year, however, as the cost of the firm’s Leeds adventure and its new offices in Newcastle bite. This year Watson Burton’s average PEP dropped significantly, from 2004’s PEP of £635,000 to £475,000. Still, the partners will not be begging for alms just yet. And the recruits, such as Pinsent Masons corporate veteran Andrew Walker, Cobbetts property partner David Bowden and Sharon Needle, head of corporate at Sheffield’s Keeble Hawson, keep on coming.
Eversheds continues to be a conundrum in Newcastle. The northernmost outpost of the national firm’s network has fewer than 10 full equity partners compared with Dickinson Dees’ 32 in 2004, yet the office turned over more than £20m last year. As the only national firm in the city, it operates on a different business model from those of its competitors. But as one of its rivals puts it: “Eversheds has the ability to take market share from Dickinson Dees and hasn’t done it.”
The fact that last year the firm consolidated the management of its Newcastle, Leeds and Manchester offices into one ‘North’ group, headquartered in Leeds, has increased this criticism. “The Eversheds issue continues to be that all or many of the partners only work part time out of Newcastle,” says another competitor. “The delivery of service is not focused on Newcastle. You can see that by the fact that the management for the North has been centralised.”
These are criticisms that Newcastle head Chris Hugill rejects. “We all compete over major projects and I like to think we do well,” he says. Recent deals for the Newcastle office include acting for 3i and Aberdeen Murray Johnstone on the £26m sale of Zero Waste Holdings, and for both the newco and management on Aesica Pharmaceuticals’ £22m buyout of BASF’s Northumberland plant. “We’re clearly doing the deals,” he asserts. “Look at the corpfin figures for deals done in the North East in 2004.” The stats show the firm with 28 deals against Ward Hadaway‘s 17 and just 15 by Dickinson Dees. “I think we do our fair share,” asserts Hugill.
In contrast to Eversheds’ perceived relatively low profile in Newcastle, and its subdued financial performance this year (turnover was up just 2 per cent, though PEP was up 6 per cent to £350,000), Ward Hadaway has blasted the market with news of a provisional 50 per cent hike (The Lawyer, 23 May). Average PEP jumped this year from £265,000 to an estimated £350,000, while turnover rose 17 per cent to £20.3m. “I think it’s the first time as managing partner that all groups hit target and have done so well,” says managing partner Jamie Martin. There has been a steady stream of AIM work, particularly in the technology sector, and solid performances from the firm’s projects, property and litigation teams. “We’ve also got a better grip on costs, although we haven’t locked down on salaries,” says Martin. “We’ve managed working capital, although it’s still not as good as I’d like.”
Newcastle’s fifth-largest firm Robert Muckle also had an impressive year financially. Turnover grew 27 per cent, taking revenues up to £7.5m. It also saw its usual quota of partner moves, with departures including Alan Fletcher to Eversheds and head of construction Neil Wilson to Halliwells, while arrivals included corporate partner Andrew Davison, who joined from Eversheds. However, managing partner Steve McNicol dismisses claims that the firm is a revolving door, pointing to the fact that total headcount this year is up 13 per cent. “It’s been a particularly good last six months,” says McNicol, “and property is going great guns.”
Watson Burton may have caught everyone on the hop with its Leeds move, but there is life in Newcastle yet. Good news for some.