The answer to the changing world of media law: go niche

Has the creation of M-Law signalled a sea change in the provision of legal services? asks Matt Byrne

Carlton and Granada’s merger stole the media market headlines last week – no doubt Lovells and Slaughter and May are already mentally spending the fees. But at the other end of the money scale there are equally interesting developments afoot.

Last Monday (6 October), the two-man media outfit M-Law was born. The boutique is evidence that the shake-up in the media sector has implications at all levels.

M-Law, as reported last week in The Lawyer, is the baby of two former Charles Russell media lawyers: libel partner Chris Hutchings and music specialist Matthew Higden. Their platform is publishing. Hutchings’ key client is Hello! (he has handled the magazine’s libel work for more than 10 years and brought it to, and took it away from, Charles Russell). Hachette, which boasts titles such as Elle and Red, is the boutique’s other major publishing client. Higden’s main market, meanwhile, is music (he was the former head of the team at Charles Russell and boasts a stint as the managing director of a music tour producing company).

The message this development sends is obvious: providing a proficient service at a low cost is the bottom line for publishing clients. It is what they want and what they require. And the media sector, more than any other, is fertile ground for boutiques. It requires more flexibility than other industries, mainly because the clients are less ‘nine to five, Monday to Friday’ than most others. The news, after all, doesn’t stop at six on Friday evening.

Now, there is nothing particularly new in that, but you might have noticed a few changes and shake-ups in the media sector recently. Granada and Carlton’s deal is just the biggest example of the changes over the last few years. Media groups are going through a state of flux and so too are the lawyers who serve them. Inevitably it comes down to costs. Going back to publishing, anything over £300 per hour is considered too high a rate for a libel lawyer these days. The maximum charge publishers will stand, even from an experienced partner, is around £350, but most newspaper publishing companies are looking for rates in the hundreds that begin with a two. The hourly rate charging structure itself is looking outdated, with success fees, blended rates and deep discounts becoming common. Peter Carter-Ruck and Partners and David Price Solicitors & Advocates offer conditional fee arrangements for libel, while capped fees are surely only around a fairly small corner.

M-Law, at a stroke, is going to have a major advantage over its rivals. With its tiny overheads, it is going to be able to provide the same specialist skills at lower rates than any larger firm could bear. At Charles Russell, Hutchings is believed to have been charging Hello! £220 per hour. (Incidentally, that is the same rate Bird & Bird is thought to have been billing Associated Newspapers on the Evening Mail trademark infringement case earlier this year.) It is a compelling reason for publishing clients to go to boutiques.

Northern & Shell’s group legal director Maninder Gill sums it up when he says: “There’s a feeling in-house that prices are getting out of control.” That message, he reveals, has been “communicated” to the media giant’s solicitors. One imagines that this particular message came through loud and clear. Having much more flexible fees is, after all, how Reynolds Porter Chamberlain managed to carve out such a good slice of the defendant market.

“They [Northern & Shell’s legal services providers, which include Ashurst Morris Crisp, Davenport Lyons and Richards Butler] have been trying their best to provide us with lower rates,” adds Gill. “But many are handicappeed by their large overheads. I wouldn’t be surprised if more lawyers innovate to tap into this potentially lucrative market.”

In other words, more boutiques.

Cheaper overheads means lower rates. There is also going to be pressure on the media partners from within the bigger firms to move. It doesn’t take a genius to figure out that when your corporate partners are charging £400 an hour (assuming, of course, that there’s any work around), then no matter how cool, funky and high-profile your clients, the pressure is going to be on. For those willing to take a risk on jettisoning the safety net of a larger firm’s resources, and for those with clients they consider rock solid, the obvious option is to set up on your own.

Hutchings denies that the move is “risky”. He claims it is a “very carefully calculated risk”. True, M-Law has a solid bedrock of publishing clients on which to build the defendant side. But it is actually a fairly small basket with not many eggs. That said, there’s plenty of gossip among libel lawyers about other well-known libel specialists who may or may not be about to do an M-Law.

With rationalisation across the whole media sector, company boards now treat lawyers in the same way as the suppliers of any other services or goods. They are demanding greater value for money and transparency from their lawyers, just as they do from their distributors and printers.

But it’s not just cost. It is levels of service and expertise as well. It is having solicitors that provide the normal standards one would expect, for instance timely and commercial advice.

As another partner who made the leap of faith from a City juggernaut (SJ Berwin) to a media boutique (The Simkins Partnership), Peter McInerney puts it: “You’d be a fool to always, or only, try to compete on price. You have to convince them that by going niche they’ll get a different sort of service.”

But, of course, for the boutiquists themselves, there’s another, maybe even more compelling, reason for going niche. It gives the partners more control over their own destinies and more ability to put in the hours on lengthy lunch meetings if they feel like it and, as Higden puts it, “more opportunity to wear my holey jumpers to work”.