Rising dampener

It may have been tough at the top in the last financial year, but as the statistics for the full UK 200 show, it was even tougher at the bottom.

John Cahill

John Cahill

It may have been tough at the top in the last financial year, but as the statistics for the full UK 200 show, it was even tougher at the bottom.

Firms in the second half of the 200 have a narrow client base in comparison to their top-100 counterparts, meaning they would need the cooperation of the whole partnership and strong leadership to come out of the recession with a firm that looks anything like the one that appeared in the UK 200 12 months ago.

In 2007-08, many of the Rising 100 firms had record years, shooting up the table with strong financials. But the ­economy was already well on the way towards choppier waters, and the smaller firms were questioning whether ­expansion plans should be shelved or ­continued with regardless.

For most, the plans were put on hold then scrapped as firms that were heavily exposed to the property and corporate markets had to make redundancies.

There was little consolidation between firms in the second 100 during the 2008-09 financial year, although a number did take the opportunity to bolt on additional resource. South West firm Withy King merged with Oxford-based Marshall & Galpin in September last year, while ­Milton Keynes firm EMW Law merged with London international corporate ­boutique Picton Howell to emerge as EMW Picton Howell.

Some also managed to hire from much larger firms. Litigation boutique Edwin Coe hired Eversheds group financial ­controller Tim Nash as chief executive in October 2008; Stewarts Law hired ­partners Debbie Chism, Clive Zietman and Andrew Shaw from Manches; and Michelmores raided Foot Anstey, which is also in the Rising 100, for its insolvency and childcare teams, including partners Vanessa Priddis and Gillian Smith.

There was plenty of bad news among the Rising 100, with two firms in particular becoming casualties of the recession. Fox Hayes and Hextalls both went into administration, although Hextalls did ­re-emerge as a limited company with streamlined business interests.

Other firms saw their fee income diminish significantly, including Finers Stephens Innocent, which saw £5m wiped off its turnover over the course of the year.

That said, for some firms it was ­another great year. For the second year running Stewarts Law experienced the highest growth in turnover in the lower 100, with plateau partners taking home £963,000 – £200,000 higher than magic circle giant Clifford Chance’s average profit per ­equity partner (PEP) figure.

The aviation, commercial litigation and divorce firm went headlong into an expansion plan in 2008 and has not looked back.

New offices in London and Leeds and a number of high-profile laterals, such as those mentioned above, have all helped bulk up this super-boutique.

The firm’s managing partner John Cahill describes Stewarts’ 2008-09 fees of £15.4m, up 29 per cent on the previous year, as “good”, although he adds that he is under no illusions about the cyclical nature of the firm’s core practice.

“We’re a litigation firm undertaking a substantial amount of contingent work and so we can expect revenue to move up and down to a greater extent than firms undertaking more transactional work,” says Cahill. “That said, we’re confident that all our practice areas are performing sufficiently well enough to provide a stable platform for ­further planned growth over the next 18 months.”

Weathering the storm

Another firm that has avoided the ­economic storm impacting on its South West rivals is Michelmores. Under the watchful eye of new ­managing partner Malcolm Dickinson, the firm achieved one of the biggest growth figures in the South West with an 11.8 per cent increase in turnover from £16.9m to £18.9m.

Dickinson says the results are down to “good financial hygiene”, as well as the firm’s property and corporate teams ­taking on a high volume of central and local government work.
Dickinson hopes this steady growth will continue, predicting an ambitious turnover target of £50m within five years.

Litigation specialist Edwin Coe has also seen turnover increase, rising by 6.2 per cent from £13m to £13.8m in 2008-09. Given that the firm has taken on five new partners and extra office space, Nash says he is “quite pleased” with the results.

Litigation remains the largest practice in the firm, led by star litigation partner David Greene, who won the Editor’s Award at The Lawyer Awards 2009.

According to Nash, the firm will ­continue to grow in the coming year, with the management team looking to expand with lateral hires.

One firm also ­looking to the future is Ipswich-headquartered Birketts, which is on the look-out for firms to absorb.

Chief executive Alistair Lang has presided over double-digit growth for the past five years, with turnover up from £6.3m to £17.2m over the five-year ­period. That translates to an overall growth of 173 per cent.

Although at 4 per cent the firm’s 2008-09 growth rate fell well short of its ­forecasted 17 per cent, Lang says he is pleased with the result.

With the relocation of the firm’s ­Norfolk branch into a new building in the city and the opening of its first Cambridge base, as well as the continued success of its shipping team, the firm is optimistic about the current year.

Like Michelmores, Plymouth’s Foot Anstey is another South West firm to make moves over the past 12 months.

Last year turnover at the firm rose by 4 per cent, from £19.4m to £20.1m, although profit fell, largely as a result of two rounds of ­redundancies and a move to new premises at Salt Quay House in ­Plymouth.

Foot Anstey ­managing partner John Westwell brands the year as “difficult” in terms of trading conditions, but he adds that the firm has already started to see some return on its recent investment in its ­corporate and commercial ­departments.

Tough times

There were plenty of Rising 100 firms for which 2008-09 was far from a good year, with the majority being forced to ­undertake redundancy programmes and cost-cutting schemes.
For some, the changes either came too late or were not far-reaching enough; Fox Hayes, which went into administration in January, being a case in point.

Property and corporate firms in the South East were particularly hard hit, with Taylor Walton seeing the largest turnover decrease in percentage terms. The firm’s revenue dropped by 23.1 per cent from £10.8m to £8.3m.

West End firm Finers, which is larger than Taylor Walton with 77 lawyers against 49 but is similarly weighted towards property and corporate ­commercial, saw a 22.7 per cent fall in fee income, down from £22m to £17m.

The firm’s managing partner Paul ­Millett says various practice areas were affected by the recession. “It isn’t just property. We’ve been affected across the ­corporate department and in some parts of ­litigation,” he says.

Midlands firm ­Needham & James, Guildford’s Barlow Robbins and ­Glasgow’s Semple Fraser were also hit, with each seeing a turnover drop of around 18 per cent.

Another South East firm, ASB Law, which has offices in Maidstone and ­Crawley, embarked on an overhaul just as the recession hit. Some 38 redundancies and a continuing realignment of its ­practice areas did not save it from a slump in fees, which decreased by 17.9 per cent to £14.7m, while its lawyer numbers decreased by 12.

Memery Crystal, the City-based ­commercial firm often singled out in ­previous years for its impressive growth, became a victim of its fast expansion, making 16 redundancies and recording a revenue drop of 15.4 per cent to £12.6m – below the firm’s 2006-07 result.

And London firm Wedlake Bell fell out of the top 100 after seeing £2.5m knocked off its turnover, bringing the ­figure down to £19.8m.