Despite a lucrative year, North East law firms are being criticised for being all mouth and no action when it comes to souping up their practices. Gareth Chadwick reports
The legal market in the North East has had a good 12 months. Most major firms reported an increased turnover last year, with Dickinson Dees up 26 per cent, Ward Hadaway up 20 per cent and Watson Burton up 22 per cent. (Eversheds does not release regional figures.) "It's a sign that there's some good firms up here and that we're all making healthy progress," says Michael Spriggs, head of corporate and senior partner at Eversheds in Newcastle.
Dickinson Dees is the elder statesman of the region, long-time law firm to the local gentry and more recently home to one of the highest-profile corporate departments in the area. While many middle-tier London firms in the early 1990s found that combining a successful private client practice at the same time as a dynamic corporate/commercial practice is a tough job, Dickinson Dees has managed it very successfully - so far. According to Ashley Wilton, head of the law school at Newcastle University: "Dickinson Dees is managing to keep its position as a leading private client provider, while simultaneously developing an impressive commercial presence."
On Teesside - the base for much of the country's petrochemical industry - there were conspiratorial mutterings following Dickinson Dees' decision to open an office there at precisely the same time that Eversheds was closing its Middlesbrough office. An inside job, or a coup for the firm's burgeoning telepathy practice? Nobody is saying.
"It's a different view of the marketplace," says Wilton. "Teesside is thought by some to be up and coming. Eversheds believes that it can service that market from Newcastle, and presumably Leeds as well." Eversheds insists that it took all of its petrochemical clients with it, which is borne out by the fact that the Dickinson Dees operation has so far focused more on employment, commercial property and litigation work. Never likely to develop into a powerful centre in its own right, the Teesside office nevertheless consolidates Dickinson Dees' image as 'the people's law firm' in the North East.
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| | "Like Liverpool and Glasgow, two other great river-based cities once regarded as economic basket cases, the North East economy has proved more resilient than its critics" |
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Compared with other regions, the economy is relatively weak, but according to Spriggs, "it's been making good progress". The dismal days of the late 1990s, when both the Fujitsu and the Siemens production plants were shut down, the latter before it had even begun production, are long gone. Like Liverpool and Glasgow before it, two other great river-based cities once regarded as economic basket cases, the North East's economy has proved more resilient than its critics. The previously neglected quays and wharves of the waterfront are bustling with the buzz of regeneration and Newcastle's lawyers have been able to capitalise on this growing business confidence. "On the whole things are looking pretty good, and that's reflected in the way that law firms have performed," says Spriggs.
All three of the top firms have recently splashed out on new buildings. Dickinson Dees and Ward Hadaway opted for the regenerated dockside area, while Eversheds has a plum spot behind Newcastle's Central Station. The Eversheds deal was actually the largest property deal in Newcastle this year.
Ward Hadaway spent most of last year engaged in merger talks with regional rival Watson Burton. Since the talks broke down, it seems to be throwing its energy into expanding organically, although rumours remain over its merger intentions. Prior to the merger talks, it had announced ambitious growth targets in terms of both personnel and turnover. However, without the additional resources the merger would have provided, it will be difficult to meet its targets. That is not to say that growth has been unimpressive - indeed, turnover has been good and along with Eversheds it was one of only two firms in the region to make it into the slimmed-down National Health Service Litigation Authority (NHSLA) panel.
The NHS panel's restructuring and the squeeze in insurance work have hit some North East firms hard. There were a number of well-regarded smaller firms for which regular NHS and insurance-related work was the foundation on which their reputations were built. Crutes was well known for its Solicitors' Indemnity Fund and NHS work alongside its core insurance practice, and Jacksons had a well-respected personal injury insurance litigation practice. Jacksons seems to have bounced back straight away with a whole raft of new hires, whereas it appears that Crutes has struggled.
| Moves and mergers round-up |
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| "We've been rumoured as being a Ward Hadawaypartner. Perhaps they're building their new office for us"
Ian Gilthorpe, Robert Muckle
They are a loyal bunch, the Geordies, so much so that high-level partnermoves between local firms are still something of a rarity. The majorityof partner moves seem to come about due to firm restructuring rather thanpersonal ambition. The decision by Helen Tavroges, head of private clientat Eversheds, to head across town to Dickinson Dees, where she was joinedby Deborah Jude, formerly the head of the private client team at WatsonBurton, was seen as an implicit sign that Eversheds was following themoney and concentrating on corporate commercial work.
Eversheds' decision to close its Teesside officeperhaps reinforces this view, although Newcastle senior partner MichaelSpriggs is keen to stress that the firm will continue to act for all thepetrochemical companies that it acted for from that office anyway. Mostof the staff from Teesside relocated to Newcastle, with a few choosingto remain with smaller firms in the locality. It is telling that nonestepped directly across to the new Dickinson Dees office. That officedid, however, succeed in tempting highly-regarded commercial propertypartner Barbara Painter away from local firm Archers, where she was headof property. Working alongside her at Dickinson Dees is employment litigationspecialist Robin Bloom, himself recruited from Teesside-based Jacksonslast year.
The partnership restructuring at Eversheds has seen a few names leave,some expected, some not. Inward and outward investment specialist NicholasCraig's departure was a particular blow. One of the most significant partnermoves of the year, Craig had been at the firm for a number of years andwas particularly close to Spriggs. His defection, though, was a coup forhis new firm, Watson Burton.
Watson Burton itself was all set to merge with Ward Hadaway until talksbroke down last year. Since then the firm has carried out a rapid recruitmentand expansion programme. As well as Craig, the firm pulled off anothercoup in poaching commercial litigation partner Julian Gill and constructionlitigator Roddy Gordon, both from Robert Muckle. This was an interestingmove for Gill and Gordon, given that Watson Burton's litigation departmenthas just lost a large professional negligence case brought against itby a former client, represented by the very same Robert Muckle. RobertMuckle swiftly plugged the gap, however, luring commercial litigationpartner Paul Johnson from Pinsent Curtis (now Pinsent Curtis Biddle) inLeeds.
The failure of the merger talks did not seem to deter Ward Hadaway, whichwent ahead and merged anyway, but with a different firm: it merged with,or more accurately took over, four-partner Gateshead practice Keenlyside& Forster. It was the latest in a succession of mergers as Ward Hadawayaggressively established a formidable presence in the region. It is rumouredto still be on the lookout for potential marriage partners, Robert Muckleand Jacksons both being touted.
Robert Muckle is everybody's favourite potential bridesmaid. If ever afirm is rumoured to be looking to merge, the name of Robert Muckle issure to crop up. According to managing partner Ian Gilthorpe, however,the firm is not in the market for a merger. "From time to time we'vebeen rumoured as being a Ward Hadaway partner. Perhaps they're buildingtheir new office for us," he laughs. "My partners, though, wouldfind it difficult to halve our profitability, and we don't see what'sin it for our clients."
Jacksons, too, has been on a bit of a merger odyssey over the past threeyears. It was linked with both Weightmans and Kennedys in 1998, but neithercame to anything; and then talks with local rival Crutes broke down in1999. According to managing partner Richard Clarke, the firm "isstill interested in finding the right merger partner. We're not desperateto merge, but we're open to the opportunities." Has he told WardHadaway? In the meantime, the firm has been on a recruitment drive, takingon 20 fee-earners in June alone. |
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| Spotlight: Deas Mallen and Blackett Hart & Pratt |
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| All talk and no action would seem to sum up the mergers scene in the North East. Somebody is always rumoured to be looking to merge with somebody else, but more often than not it comes to nothing.
But one of those that did come off, which was more of a merger as opposed to a takeover, was that of Deas Mallen and Blackett Hart & Pratt.
Deas Mallen was a small but highly-regarded Newcastle firm consisting of six partners. It had been approached twice before by potential merger partners.
The firm was set up in 1989 as a niche litigation practice - indeed, 90 per cent of the firm's work was litigation, with the highly-regarded insurance and clinical negligence teams being kept busy (see our litigation top 10) and the personal injury (PI) team being involved in several £1m-plus damages awards.
As with many smaller litigation practices, restructuring in the insurance sector was having an effect, and Woolf was looming on the horizon. The firm was hit particularly badly by major client Royal & SunAlliance's decision to take its PI work in-house.
Based in the city of Durham, and with further offices throughout the county, Blackett Hart is well known in County Durham.
The firm itself was the result of several local mergers that had been carried out since 1993. The oldest constituent firm dates back to 1830, but it did not have a presence in Newcastle.
Blackett Hart was looking to establish a base in the city and strengthen its commercial litigation practice. "We'd reached a size within our current structure where we felt we needed to get bigger. Newcastle is the regional capital and it was the obvious place to go," says Blackett Hart's managing partner John Pratt.
Shunning the idea of opening an office from scratch, a longstanding relationship with Deas Mallen, which had smart new offices on the redeveloped quayside in Newcastle, meant that talks began and were concluded fairly quickly. "We first sat down in February 2001 and opened the new firm on 1 July," says Pratt.
The new firm, Blackett Hart & Pratt incorporating Deas Mallen, now has 16 partners and a total of 37 fee-earners spread across seven offices in the region. Deas Mallen's core area of litigation is complementary to Blackett Hart's general commercial and property work, and the combined firm already has an impressive client list, including Royal & SunAlliance, Axa Insurance, Eaga Partnership, Bar Mutual and Admiral Insurance. According to Pratt, it means that the firm does not "really need more clients, we just need to do more things for those that we've got". The practice also employs two full-time in-house independent financial advisers, who advise both the private and business client-bases.
The merger does not mark the entry of a new firm at the top table in Newcastle, but it will certainly give the mid-tier firms something to think about. Pratt, though, is realistic about the firm's potential. "There's a niche in the market for a firm that can handle £20m-£30m turnover companies," he says. "We don't see ourselves competing with the Dickinson Dees or Ward Hadaways of this world, but we're large enough now to specialise and still give that partner-led service from a regional base." |
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