Regional Focus: Birmingham

Thanks to its convenient geography, excellent transport links and competitive size, Birmingham is arguably one of the UK’s most important legal centres outside London. More to the point, the city has shrugged of its industrial image and become a vibrant playground for young professionals who want a good alternative to working in the capital.

Just like the city’s landscape the Birmingham legal market has also changed beyond recognition during the past decade. In the late-1990s, Birmingham was dominated by the so-called ’big four’ Edge & Ellison, Eversheds, Pinsent Curtis Biddle and Wragge & Co. But if you fast forward 10 years, thanks to a spate of mergers, the picture is very different.

The turn of the century saw the creation of national firm Hammonds Suddards Edge (now Hammonds) following the merger between legacy firms Hammonds Suddards and Edge Ellison (previously Edge & Ellison). The deal gave Hammonds and Edge Ellison, which despite being one of the oldest firms in the City was losing ground to Dibb Lupton Alsop (now DLA Piper), a much-needed leg-up.

The post-merger celebrations were,however, short-lived. Its marriage with Edge Ellison saddled Hammonds with a level of debt it was still wrestling with five years later. Thankfully, under the leadership of managing partner Peter Crossley, Hammonds is gradually putting its financial woes behind it. A sign of a tangible recovery came in the last financial year, when average profit per equity partner (PEP) rose by 23 per cent, from 328,000 to 404,000.

But Hammonds still has some way to go before it can completely consign its recent troubles to history. The firm is still embroiled in a dispute with a number of former partners, who are claiming it owes them money for overdrawings on anticipated profit during 2003-04 and 2004-05. As first reported by The Lawyer (20 August).

Hammonds has settled with at least four of the former partners, but claims are still outstanding with 14 others. Pinsents and construction outfit Masons merged in December 2004. Thetie-up resulted in the firms’ joint PEP rocketing by 70 per cent to 400,000, compared with the previous year’s 234,000. But the merged Pinsent Masons failed to sustain its astonishing 2005-06 growth last year, managing just a steady climb in both revenue and profit. Revenue is relatively evenly split between the firm’s main practice areas, with growth last year coming across the board. Employment, pensions and tax grossed 30m; UK and international projects business turned over some 30m (a figure which also includes some support areas;with pure projects earning around 22m); while the outsourcing and technology practice made 21m, just beating its record year in 2006.

The consolidation continued into2006 when the Birmingham legal market witnessed thetransformational merger between Midlands-based Gateley Wareing and Scottish outfit Henderson Boyd Jackson to create HBJ Gateley Wareing. The marriage was a triumph, with the merged entity celebrating a whopping 40 per cent jump in PEP from 200,000 to 284,000. But thanks to further rapid expansion, which saw the Anglo-Scottish firm take over Boyds Solicitors and London-based Shaw &Croft, its PEP remained static during 2006-07. Although HBJ has seen growth in its employment, shipping and transport groups, the firm’s largest group is still corporate, with 24 lawyers generating 33 per cent of revenue. This is followed by property with 24 per cent.

A national firm with its roots in Yorkshire, Dibb Lupton Broomhead, arrived in Birmingham in December 1993 when it acquired Needham & James, a second-tier firm that had been slipping further and further behind the big four. In 1996 Dibb Lupton merged with Alsop Wilkinson, which had offices in Manchester and London, to become Dibb Lupton Alsop. The firm’s hunger for mergers and its aggressive growth strategy continued well into the new millennium, but the emphasis quickly shifted to the overseas legal market. Known today as DLA Piper, the firm is one of the largest in the world, boasting a firmwide turnover of 446m.
Wragges and Eversheds are the only firms out of the big four that have not been sucked in by the merger bug.Wragges, which has the most sizeable presence in the Midlands, was historically famed for its one-office policy. But five years ago, Wragges ditched this strategy, announcing the launch of a London arm.The office initially focused on private equity, but has since expanded to include banking and finance, employment, intellectual property, pensions and real estate. Wragges also has a presence in Brussels and Hong Kong as well as an association with Germany’s Graf von Westphalen. Ranked 25 in The Lawyer 200 Annual Report 2007, Wragges had another okay year during 2006-07, with turnover jumping by a reasonable 11 per cent to 112.6m. Real estate, the largest single practice in the firm, accounted for nearly 34m, or 30.2 per cent of turnover. Historically the practice has been developer-led, but the increasing structural sophistication of that market has provided some interesting spin-off corporate and financial work. And much of that business is not tied geographically to clients day-to-day legal management of leases, for example, gets funnelled to Birmingham, where costs are lower. Litigation remains a large plank of Wragges’ business, generating 16.4 per cent of revenue, or 18.47m.

Eversheds, meanwhile, has done little to write home about in Birmingham, concentrating instead on its London arm and international coverage. For instance, last month (September) the firm, which is ranked number eight in The Lawyer’s UK 200, announced it has ramped up its Central and Eastern Europe capabilities by sealing an association with Czech law firm Balcar Polansky & Spol. The deal added two more countries, Slovakia and the Czech Republic, to Eversheds’ existing network of 32 international offices.

Eversheds’ focus on increasing revenue from corporate and finance in the past 12 months has paid off, with the combined team now usurping real estate as the firm’s highest-earning practice group. Corporate and finance now accounts for 30 per cent of total revenue, compared with real estate’s 24 per cent. The latter group continues to bring in more revenue per partner, however, with the team numbering just 79 partners, against corporate and finance’s combined 115 partners. While boosting corporate,however, Eversheds’ strategic plan also includes putting a significant emphasis on downturn-proof departments, such as public sector accounting.

Birmingham has also seen a explosion of mid-market competition in recent years, with Bristol-based Bevan Brittan, Beachcroft and Clarke Willmott, Nottingham-based Browne Jacobson, Leicester-based Harvey Ingram, Norwich-based Mills & Reeve and Northampton firm Shoosmiths having all announced, or demonstrated, their intentions for major growth there.

New challengers in the area include Harvey Ingram, which launched a Birmingham office in April last year, newly merged Putsmans and Shakespeares now a 20m player and Cheltenham-based BPE Solicitors, which moved into new Birmingham offices last November.

Meanwhile, Nottingham’s Freeth Cartwright is to open an office in Birmingham by the end of the year, and will offer a full service with a particular focus on real estate. It will be the firm’s fourth office in the Midlands, but Birmingham is widely seen as being the most competitive legal market in the region.

Additional reporting by Kylie Williams