17 April 2000
The North West has traditionally been seen as a centre for litigation work, but with a boom in property development and the new economy, it is fast becoming a desirable area for law firms to pick up work. Dearbail Jordan reports
Asking lawyers why it is important to have an office in the North West is like questioning them about why they became a lawyer in the first place - it seemed a good idea at the time but they just cannot recall exactly why.
Responses to the sixty-four thousand dollar question vary. While scratching his head, Tim Hamilton, senior partner at Garretts' Manchester office, says: "That's a good question."
Another lawyer waxes lyrical about the local golf facilities and the quality of the gentlemen's clubs.
Addleshaw Booth & Co senior lawyer Mark Jones sums it up more succinctly. "If you are looking to build a law firm in the north of England then you have to look at the M62 corridor as an area of economic activity," he says.
But sitting in DLA's Manchester base, it is hard to reconcile the idea that this is an area in the throes of an economic boom with the view outside.
While the firm's Barbirolli Square office is as plush as any City of London headquarters, outside, cranes loom large over a vast expanse of urban wasteland as a lone tram snakes its way into the distance.
However, this eyesore will become a retail and leisure complex known as "The Great Northern Experience" - a sure sign that investors are pumping money into the area.
DLA regional managing partner Roy Beckett says: "Compared to 18 months ago if you look at the market now there is a new economy. It is a very buoyant market where there is a high demand for legal services.
"There is an awful lot of mopping up of old office space which is driven by what people are prepared to pay for land." Which by all accounts can be a lot of money. Beckett says that one property company recently paid £3.8m for just a third of an acre in the city centre.
Cobbetts managing partner Michael Shaw argues that this type of spending is not confined to Manchester. He says: "In terms of commercial property Manchester is becoming so expensive that developers are starting to go to Liverpool."
Liverpool City Council, for example, is pum-ping £800m into a retail park situated on the aptly-named Paradise Street with major players such as Hammerson, Grosvenor Estate and Henderson Investors vying for the business.
Beckett says that there is also evidence of a boom in residential property work, where investors such as Crest Nicholson are beginning to look at Liverpool in the search of cheaper land.
Bullivant Jones & Company senior partner Pamela Jones says that developments such as Paradise Street are heightening the image of the Liverpool property market. However, she adds that her own firm has always competed with the larger London firms for work. She says: "We have some development clients in Liverpool but more often we come up against the bigger London practices."
The specialist property firm counts Iceland, which it has serviced for 30 years, and Kwik-Save among its list of clients. Jones says that the firm likes to keep its number of clients to a minimum. "With the clients that we have, we like them to feel part of the service so when they grow, we grow," she says.
Despite the boom in property work the North West is still a centre of litigation.
Among the major North West players in litigation are heavyweights Hill Dickinson, Beachcroft Wansbroughs, Weightmans, Davies Wallis Foyster and DLA.
Nigel Roden, senior partner at Berrymans Lace Mawer's Manchester office, says: "It is a hotbed of litigation. I think that if you look at the history of the legal profession, litigation has subsidised corporate lawyers for many years."
It seems that Davies Arnold Cooper agrees. Last year the firm made 90 people redundant in its Manchester office by closing its corporate department. It subsequently closed its North West corporate, property and construction departments to focus on litigation.
But is the move a wise one?
There has been a large number of firms dropped from the panels of insurance companies and North West firms are not immune to the trend. Keogh Ritson was recently dropped from Royal & SunAlliance's legal panel (The Lawyer, 10 April 1999).
Phil Jepson, managing partner at Davies Arnold Cooper's Manchester office, says: "The type of work we do in Manchester is litigation and dispute resolution, which has historically been for the big insurance companies."
He says that the firm is now branching out into areas such as professional indemnity for companies. And it is hoping to set up an employment unit to feed off the work it is generating in its litigation department.
David Evans, senior partner at Berrymans' Liverpool office, says: "The standard of litigation is higher in the region and we are extremely aggressive. But once an action has started everyone knows where they stand."
Both Liverpool and Manchester boast busy Crown Courts and Roden says that the size of the medical profession ensures a steady influx of medical negligence work.
But while a number of firms specialise in litigation, North West practices also have a strong presence in the corporate and commercial sector.
Garretts' Hamilton says: "Over 10 years ago, a £30m buyout would have been unusual in Manchester. It would have been big news. But we have moved on from that. The average deal now is about £40m and can range up to about £100m. There is a new economy."
This may be because many major clients in the region prefer to use local firms. For example, travel giant Airtours outsourced its corporate work to its long-standing legal adviser Addleshaw Booth & Co when it attempted to take over First Choice Holidays last year.
However, Halliwell Landau lost out to magic circle firm Slaughter and May on advising its long-standing client Kwik-Fit on its sale to Ford Motor Company (The Lawyer, 19 April 1999). At the time, the firm claimed that the company had been advised to go to a big City hitter by its investment bank.
So in terms of major corporate work, have things changed that much in the region?
Halliwells senior partner Roger Lancaster believes that they have. He says: "There are different firms for different clients. We have a general spread in that we act for quite a lot of private companies and banks. There is a lot of good work in the region."
Cobbetts' Shaw says that while Leeds has historically been seen as a centre for financial services, with giants such as Halifax and Bradford & Bingley based in the region, Manchester is well placed to usurp that position.
He says: "Manchester is on a real roll. You can tell from the work around town. There is loads of development and when the Royal Bank of Scotland's takeover of NatWest becomes official its headquarters will be based here."
Lancaster believes that internet companies are among the key conductors of corporate and commercial business within the "new economy".
Beckett agrees: "Historically, technology companies have been based in areas like the North West. You can compare the area to the Thames Valley where there is also a high number of these kinds of companies.
"If you look at Manchester it has got one of the largest university campuses in Europe - a lot of business has grown out of that and businesses sponsored by the university."
The market has been buoyed by success stories such as the recent multimillion pound flotation of lastminute.com and in January, DLA advised Spring Group on setting up its website, spring.com which offers online IT training and recruitment.
However, North West firms are also aware that there are risks involved in relying on work of this kind. Just as lastminute.com showed that millions can be made through the internet, once it began trading, the company's shares dropped well below the original offer price of 380p.
Hamilton says: "There is more concern at management level. Investors are beginning to be very choosy and are not just going for a bright idea."
Beckett adds: "A lot of these firms are trading at the full value of the business but investors have to accept that this is what the gamble is about. These businesses have no track record and no asset record. They are a bit of a first and are driving the economy at the moment."
How long this can last is anyone's guess. A number of lawyers refer to an expected downturn in the economy, while litigators, specifically in the insurance area, are being slowly eroded as insurers cut costs and the Woolf Reforms take hold.
But for the moment firms remain upbeat. Hamilton says: "The market will turn down this calendar year - you can feel transactions getting very frothy at the moment.
"But people out there are doing the work, and most importantly they are making money."