Midlands market is ripe for rich pickings
4 May 1999
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The Midlands legal scene is acknowledged as a dog-eat-dog world. And, with 480 law firms, Birmingham eclipses provincial rivals like Leeds and Manchester.
As one managing partner says: "Birmingham's profile has risen dramatically by hosting events like the G7 summit, the Eurovision song contest and Gladiators."
Despite the region's manufacturing industry - the traditional bread and butter work of Midlands lawyers - still recoiling from two years of surging sterling, corporate lawyers have rarely had it so good. As Gateley Wareing's senior partner, Brendan McGeever, bluntly puts it: "If you can't make money in this market now, you never will."
One of the most striking changes is that quality corporate work is no longer the exclusive preserve of the big four - Wragge & Co, Eversheds, edge ellison and Pinsent Curtis. Many medium-sized firms are also cashing in on this area of work with a vengeance and most plan partner and staff growth in the next year.
Andrew Sparrow, director of Birmingham City 2000 - a body representing the interests of 260 of the city's firms - claims the recession allowed medium-sized firms to recruit first-class corporate solicitors who would ordinarily be entrenched in leading firms.
"This has given a number of emerging commercial firms in the region a technical strength and dynamism which has so often previously eluded them," he says.
Another significant factor is that nowadays the big four are increasingly looking for work nationally and internationally, giving medium-sized firms a bigger piece of the Midlands corporate action.
Medium-sized firms are employing radically different methods of approaching the market, with varying levels of success. Gateley Wareing, a 13-partner firm with offices in Birmingham and Leicester, has chosen not to compete head-on with the big four, and instead pitches for work on a slightly lower tier. The firm has even cultivated a policy of co-operation with the big four who regularly push work Gateleys' way.
McGeever says: "We are a comfort zone for the bigger firms. We don't look to compete head-on with them. We take that second tier off which satisfies the guilt of some of the big firms. They can say to clients whose work they don't want: 'I know this great firm which can do this for you'."
About 80 per cent of Gateleys' clients are Midlands-based and McGeever claims there is much more business ripe for the picking as the larger law firms pull away from the traditional Midlands client base and go for more national and international work.
"You've got to learn to stick with what you know best and what you're good at. As long as there is capacity for us to improve and move forward, the fact that we will never act for the Hanson group doesn't cause me problems."
The policy is obviously a winning one - in the past five years the firm's income has doubled and a turnover increase of 30 per cent is expected this year.
Lee Crowder, a 14-partner outfit with around 40 fee earners, has also seen rapid growth since it moved back to Birmingham from Edgbaston two years ago. It expects a 30 per cent increase in turnover for the second successive year.
Senior partner Stephen Gilmore says: "Corporate is very much the engine of the firm. It does very well for us." He says the firm's greatest ability is advising owner-managed businesses and smaller plcs. "There is plenty more work to go for," he adds.
However, the firm is hedging its bets and is stepping up efforts to increase its range of services, with social housing its latest target. "We're moving away from entirely transactional-related work towards contract type work. It's good because it provides a steadier, and more predictable income stream," he adds.
Yet another approach is employed by Martineau Johnson, a 34-partner player in utilities, education, tax, private finance initiative (PFI) and venture capital trust work, and a firm with more national aspirations than its Birmingham peers. It has taken the slightly unusual step of recruiting specialists who aren't necessarily lawyers. Yvonne Redfern, for example, was brought into the corporate tax department from the Inland Revenue. A turnover increase of just 10 per cent is expected this year, but managing partner David Gwyther is quick to point out that extensive IT training has taken up a lot of staff time and he expects an increase of at least 25 per cent next year.
Gaining Pinsent Curtis partner Paul Mountain has boosted Martineau Johnson's construction department, says Gwyther, particularly with regard to PFI work, while bringing in partner Helen Readett from edge ellison has paid dividends in banking and insolvency. In the past two years, the firm has bought up the private client practices of both edges and Eversheds, putting the firm in a strong position in that area.
Gwyther strenuously denies accusations by his peers that his firm lacks focus. "We have a wide range of specialist expertise. Some may say that we lack focus but we are market leaders in a sufficiently large number of practice areas to show that isn't the case."
Although accused by some as "lacking direction", Shakespeares has radically reorganised its departments recently. Managing partner Andrew Argyle says: "We've unified elements of the practice that serve core business clients. We now have litigation, employment, property, company and commercial all under the Business Services umbrella.
"We have physically moved people to improve cross-fertilisation. It's the way to go because a lot of firms organise themselves for the benefit of the lawyers whereas it should be for the benefit of the clients."
Shakespeares gained company and commercial partner Richard Baizley from edge ellison in February which was seen as something of a coup for the firm. But, an undoubted fly in the ointment was the investigation by West Midlands Police Fraud Squad into former consultant to the firm, John Vernon, over alleged theft. Argyle refused to confirm the exact loss, but an interim payment order of around u350,000 is believed to have been obtained against Vernon. "It came like a bolt out of the blue. The positive thing to have come out of it is that it reaffirmed to us the loyalty of our clients because no-one went running to the press and no-one withdrew instructions as a result.
"It's interesting when you speak to other lawyers how much it has gone on in other firms. One firm I spoke to had a partner, a consultant and a legal executive doing it. It doesn't help us but it's reassuring that it happens to others."
Despite the marked success of some making in-roads into the corporate jungle, most medium-sized firms have experienced some problems persuading clients that they are a viable alternative to the big four or to City firms.
As McGeever puts it: "With the bigger ticket stuff there is a perception that we don't have the resources. We combat it by telling people that if they want the job done, we'll make sure it's done well."
In-roads are, however, clearly being made and perhaps there is more than a grain of truth in Sparrow's assertion: "Now that medium-sized firms have sufficient numbers of fee earners to deal with any crisis or crises, next time clients need a corporate finance lawyer, they may be spoilt for choice."