Mergers, money and machiavellian plots

What a difference a year makes. Fat City fees, crisis at Chancery Lane, warnings that the Bar's days are numbered and reform of the legal aid system. Chris Fogarty looks back on a legal year that packed plenty of punch.

The 1997 legal year has been bound together by three threads – mergers, money and machiavellian plots.

At the beginning of the year it was the merger of City firms McKenna & Co and Cameron Markby Hewitt that captured the attention of lawyers returning from their Christmas break.

The secret merger negations – known only to a few senior partners, their close acquaintances, the City legal community, the legal press and Mrs R Miggins of 12 Cotral Street, Devon – resulted in the formation of the grammatically challenged cameron mcKenna.

Other mergers, such as Fleet Street firm Speechly Bircham's swallowing of 20-partner Bailey Shaw & Gillett, and Eversheds' merger with 26-partner Newcastle firm Wilkinson Maughan, followed.

A stranger association emerged with estate agency Hambro Countrywide's linking up with law firms EDC Lord, Eversheds and Shoosmiths & Harrison in March to provide one-stop-shop conveyancing services. The practices were publicly condemned by many in the legal profession as having committed treason, while privately at least 50 firms implored Hambros to offer them a similar deal.

Lawyer-run interest groups were also imploring firms to come together – into the murky world of property selling. Despite their calls for unity, those promoting property selling split into a series of Bosnia-type factions, with marauding Scottish solicitors taking advantage of the situation and setting up their own property-selling centre in London.

The US firms also arrived in London in force during 1997, with Cadwalader Wickersham & Taft, Akin Gump Strauss & Feld and Paul Hastings & Walker setting up offices in the capital this year. The City is now seemingly awash with Hank Jnrs and T Arthur Samson Peabody IIIs.

Local firms have responded to the American threat with all the dignity for which the English are renowned, informing their senior staff that they would tell matron if they dared defect to the Yanks.

Perhaps 1997 was most notable for the merger that did not happen. Despite much fluttering of eyelids and plenty of come-hither looks, the widely-expected marriage between a law firm and a large accountancy practice has not occurred – yet.

Simmons & Simmons came closest with Big Six player Arthur Andersen, but the law firm's worries about possible loss of influence and income scuttled any possible union in November.

The second major thread – money – was, as ever, at the forefront of most lawyers' minds. To slightly modify the cliche that defined the year, it was New Labour, New Money, meaning that salaries soared and staff shortages increased.

As mega-merger followed mega-merger, the City firms piled up their fees, with total fees approaching an estimated £4bn for the top 100 firms – the highest since the 1980s.

But the City solicitor shortage became so acute that personnel directors started scouring the wilds of Australia and New Zealand for new recruits.

The bar took more than a few knocks from New Labour. “Solicitors have absolutely nothing to worry about,” said a Bar Council spokesman shortly after Labour's barrister-heavy legal team took office in May.

And he was right, of course, because the Lord Chancellor, Lord Irvine of Lairg, instead set his sights on barrister “fat cats” in July.

Once a pillar of the Inns, Lord Irvine seemed almost to delight in undermining the Bar.

More money problems for barristers emerged in October when the “people's” Government, committed to fair play and openness, announced to the press in a series of selected, off-the record briefings that it was withdrawing the bulk of legal aid from civil cases.

Barristers, in the best traditions of feudal England, made sure it was the clerks who suffered most. Chambers increasingly found that what they really needed to succeed in the new competitive environment were not fuddy-duddy clerks but specialised, well-trained, university-educated practice managers whose salaries were up to £200,000 less.

Internal wrangles over management structures and poaching and external changes to legal aid sum up a reasonably miserable 1997 for the Bar.

Barristers faced increasingly stroppy solicitors wanting coffee and someone to collect their coat at the chambers' door and a hostile government indifferent to the threat posed to the Bar by its reforms.

Geoff Hoon, Parliamentary Secretary at the Lord Chancellor's Department and a barrister himself, had little sympathy. “One of the problems of the Bar is that every change suggested tends to be greeted in apocalyptic terms,” he told The Lawyer.

However, only apocalypse can be the right word for the situation confronting many high street solicitors, who as well as the legal aid problems are facing increases in insurance contributions of up to 50 per cent in a bid to make up the £450m shortfall in the Solicitors Indemnity Fund.

Taking the swift action and employing the intellectual rigour for which it is renowned, the Law Society set up no less than three committees to examine the SIF problem following the announcement of the shortfall in June. The society also looked at opening a bereavement-type telephone line informing solicitors how they could get out of the profession other than from the fourth-floor window of their office.

Unhappiness about SIF saw 35 of the country's top firms band together to become the November Group. This started not so much a grass roots campaign but an expensive suits initiative to rid the profession of SIF's mutual fund.

“We want out,” said Hammond Suddards senior partner and November Group member John Heller. He is still waiting to be reprimanded by Chancery Lane for conveying an idea in a short, precise and exact manner, thereby bringing the legal profession into disrepute.

Meanwhile, Irvine's proposed legal aid reforms were sparking off the “battle of the brain-damaged baby”. An invention of the Law Society's spin doctors, the mythical baby was held up as a reason why the Government's plans to restrict legal aid funding would not work, because lawyers would turn down such high-risk, labour-intensive cases.

Both the Bar Council and the Law Society agreed that the Lord Chancellor's plans stank, although they were divided on what was a better solution.

Their opponent, Lord Irvine, has so far proved a formidable, if slightly elusive, opponent with all the cunning, guile and power of Cardinal Wolsey – or so he tells us.

While the Lord Chancellor committed the cardinal sin of bringing the wrath of the tabloid press down upon him this month, machiavellian manoeuvres in the flock he governs have also been exposed this year.

In June, The Lawyer broke the story that presidential contender Phillip Sycamore had been party to discussions about a negative campaign against electoral rival and former president Martin Mears.

Minutes prepared by council member and Sycamore campaign manager Simon Baker revealed that during a meeting it had been suggested that a private detective should be used to dig the dirt on Mears and his one-time colleague, Robert Sayer.

In July, Baker resigned from the Law Society Council by reading to fellow councillors (without any irony) an extract from Primary Colors – a book about dirty tricks in the US presidential campaign.

With Baker still freshly impaled on his sword, Sycamore went on to win the presidency, replacing a dynamic, outspoken leader whose name escapes us.

While Sycamore tried to increase his profile by telling staff to get him on Radio 4's Desert Island Discs, a new crisis emerged when the Law Society's spin doctors plotted to shave the lamb chop whiskers off his deputy, Michael Mathews, a partner at Clifford Chance.

In October, evidence emerged in The Lawyer that another Clifford Chance partner, Andrew Wilkinson, was being tailed by a private detective after he decided to leave for rapidly-recruiting US firm Cadwalder Wickersham & Taft.

“There are some wild rumours going around the City – probably in bars,” said Clifford Chance managing partner Geoffrey Howe of the situation, thereby explaining why legal journalists spend so much of their research time drinking.

Of more concern was the uncovering of increasing violence against members of the profession, including the taking out of a contract on the life of a leading London solicitor.

Away from the mergers, money and machiavellian plots, the legal landscape in 1997 was dominated by two lawyers closely connected to the Prime Minister, Tony Blair.

Days after her husband was elected as to the top political post, Cherie Booth left Number 10 and ran into a media scrum at the Royal Courts of Justice, where the 1997 The Lawyer/ Hifal legal personality of the year was taking a rather unremarkable case.

“I'm glad you are all so keen to learn about employment law,” Booth told waiting reporters.

Less enamoured with the press was Lord Irvine, whose notorious reluctance to speak to journalists, coupled with his own lack of modesty and self-portrayal as Tony Blair's right-hand man has made him many powerful enemies.

“It is simply unacceptable in a democratic country for power over so much that is politically sensitive to be held by a man who has been elected to nothing,” stated The Economist.

Yet in 1997, not only was a lawyer – Tony Blair – elected to run the country, but an unelected one – Lord Irvine – has made it clear that in 1998 and beyond the legal system will be run as he sees fit.