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16 April 2001
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Workload and staff numbers at Eversheds' Cambridge office have increased so much since the firm's arrival in November 1998 that it has outgrown its current offices. By January 2002, Eversheds plans to move its 30 Cambridge lawyers and support staff closer to the city centre, and by next April it aims to have doubled the number of its Cambridge staff.
Untapped markets, new clients - particularly younger companies - and burgeoning knowledge-based industries have made the city a potential success story to rival that of fellow university thoroughbred Oxford. "Cambridge is a city of growth, particularly in the knowledge-based industries such as the life sciences sector," says Ian Shann, managing partner of Eversheds' Eastern England offices.
Despite the downturn in the high-tech market and the uncertainties surrounding the biotech industry - including how much related legal work is really worth - Cambridge firms are not being put off from expansion.
Besides Eversheds' ambitious, although by its own admission risky, investment in Cambridge, the US firms are also on the move. In February, Cambridge-based Mills & Reeve set up a strategic alliance with US intellectual property (IP) and IT firm Trask Britt. It intends to take in new partners from the US firm each month, with a programme of permanent exchanges to follow. Meanwhile, Mills & Reeve, which has 59 partners and 250 lawyers and is the largest firm in the East Anglian region, reports a doubling in the size of its high-tech and life sciences department in the last two years.
Silicon Valley giant Wilson Sonsini Goodrich & Rosati is planning to launch itself into the UK market with offices in Cambridge and London (The Lawyer, 5 February). Chairman Larry Sonsini says: "We're currently evaluating the market, and we're very interested in Cambridge, but [the first move] will probably be to London." Sonsini hopes to put his plans into action within two years and says moves to Cambridge and London will help it to service its French client base, which includes Atmel, Dassault Systems and Ilog.
In addition, Cambridge-based Hewitson Becke + Shaw is talking to a number of US firms about strategic alliances.
However, Joe Pillman of the Oxford office of US joint venture Brobeck Hale and Dorr says he would be surprised if Wilson Sonsini actually takes the plunge into Cambridge, as it has been talking about doing so for a decade. It is also unlikely that his own firm will move to the city in the foreseeable future, despite reports last spring that it was considering such a move.
Pillman says: "Cambridge may have a strong US element, but if you're a US lawyer in London, you're more likely to look north-west rather than north-east of the capital. Cambridge is in the middle of nowhere - it has nothing around it for 30 miles. Oxford's not a centre on its own, but it is part of the Thames Valley, where there are so many perfect clients. Osborne Clarke has hit the Thames Valley very well, and the same for Manches."
Pillman finds the so-called "Silicon Fens" war between Oxford and Cambridge mildly irritating. Principally, he does not see the two cities as being in competition. "If Oxford lawyers compete against Reading lawyers, in Cambridge they're not competing against anybody," he says.
Eversheds Cambridge-based partner Patrick Farrant, head of its national biosciences group, addresses the Oxford versus Cambridge issue by pointing to Lord Sainsbury's Department of Trade and Industry report, "Biotechnology Clusters", published in August 1999. "In the report, Oxford has more public limited companies coming out of the university; but fewer younger companies have come out [compared with Cambridge] in the last few years," he says.
A spokesman for Hewitson says: "Both Oxford and Cambridge are technological hothouses, although Oxford's slightly behind Cambridge in terms of growth in science parks. There's an elegance about having a presence in Oxford in terms of the skills package and businesses, from corporate finance to biotech."
Even if lawyers deny that the standoff exists, the issue does inspire territorialism. Isabel Napper, head of high-tech and life sciences at Mills & Reeve, claims: "We're definitely the best firm in this region, and Oxford companies are coming to us for advice. I don't think [firms] are developing in Oxford because they don't have the client base, and we don't see the need to move to Oxford. We're not ruling it out of hand, and we're keeping an eye on it all the time, but we have clients all over the country."
Cambridge has the largest cluster of biotech businesses in Europe, numbering between 112 and 200. Lawyers say this figure varies according to one's definition of biotech. IP/IT departments are growing in many Cambridge law firms, in turn bolstering related departments such as corporate finance and property. Many firms are on a recruitment drive, particularly for scientists-cum-lawyers who, as Napper says, "can talk dirty to the clients".
Hewitson reports a boom in IP and non-contentious corporate work, and a steady flow of corporate finance and commercial property work. The firm hopes to transfer the lessons it has learnt in Cambridge to Oxford, where it is committed to moving to in June. A spokesman says: "We've learnt the need for a user-friendly package. In relation to university spinouts, we need to provide commercial advice and corporate financing, as well as an IT team that fits into the corporate elements of the law." The firm has broad horizons. Seven years ago it created the Law Exchange, an information and work-sharing organisation which now has 16 international members, including three US firms, and is soon due to take on members from firms in Portugal, Hungary and Poland.
Eversheds' Cambridge office reports increases in its range of work. In March it completed an international corporate transaction for Celsis International, a large biodiagnostic Cambridge company, which followed on the heels of its advisory work for Cambridge's CeNeS Pharmaceuticals on its purchase of the drug Zefo from Nycomed, and on the sale of its sophisticated technology to Glaxo Wellcome. Last year Eversheds was added to the panel of law firms retained by Catalyst BioMedica, the business transfer arm of the Wellcome Trust, and acted for the £50m Babraham Institute, the world-leading centre in genetic technology research.
Gerry Fitzsimons, senior partner of Garretts' Cambridge office, which has five corporate and two IP lawyers, highlighted the firm's strength in private equity work in the technology sector. Prominent clients within the fundraising side include a spinoff from the Generius Group, Cambridge-based Imerge, Inca Digital Printers and Thames Valley's Metris Therapeutics, the result of £11m of investment from a syndicate led by Schroders Ventures.
Mills & Reeve, East Anglia's largest law firm, has been on a hiring spree since the late 1990s. Its IP/IT team expanded threefold between late 1999 to the present, and by May it will have nine lawyers, including two partners. Principal hires include Napper, who joined in 1998 from rival Cambridge firm Taylor Vinters. Her husband, Herbert Robinson, followed in 1999, and Herbert Smith's most highly-rated planning partner David Brock joined in December 1999.
In mid-1999, Mills & Reeve's managing partner Duncan Ogilvy was expounding on Cambridge's biotechnology boom. Today he is no less optimistic. "Over the last 10 years, law firms, accountants and banks have focused on Cambridge, and there have been spinoffs of high-tech and biotech work from the university, so Cambridge is getting a labour pool related to the university. We've also invested particularly in IT work," he says. In addition, the firm's traditional work, comprising indemnity, higher education, agriculture and NHS work, remains sufficiently buoyant for it not to have to tender for other work.
For many Cambridge lawyers, a good gauge of a firm's success is the volume of work it can handle rather than it being decanted to other parts of the UK, in particular London. Ogilvy says: "Generally, the local firms are getting an increased market share against London, which is a feature of the growing maturity of the biotech market."
Garretts' Cambridge office is increasingly keeping its own work rather than handing out the main aspects to London. In October, it carried out the initial public offering (IPO) of Cambridge company TTP Comm, which is one of the leading suppliers of software to mobile phone manufacturers and is valued on the UK Stock Exchange at £542m. The Cambridge office also did the private equity work on the new life sciences fund Technomark. Traditionally the bulk of it would have been handled elsewhere, but London did only the funds arrangement side.
Fitzsimons at Garretts, who was responsible for exploiting the East Anglian market during the late 1990s, says: "There's been growth in private equity work, although a lot's still being done by the leading London firms, meaning there's a lot to play for." However, he adds: "We're not intending to replicate a full service model in Cambridge. I can't imagine having a litigation practice there. We're a national practice, and we want to use those resources in Cambridge."
Stopping leakage of Cambridge-driven work to London is one reason for Eversheds' decision to double the size of its Cambridge office by April 2002. "Hitherto, Cambridge hasn't had the expertise to deliver, and according to our research, half of all legal spend generated by Cambridge is spent in London," says Shann. He hopes to double the size of the Cambridge office by hiring rather than relocating existing lawyers to provide a one-stop shop for regional clients and maximising the largely untapped local suppliers.
In contrast, Taylor Vinters' Cambridge office, specialising in high-tech work, reports no specific plans to stop the transferral of parts of its work to London. Barrister David Rainsford, the firm's head of innovation and technology, says: "Everyone assumes that we have a large biotech practice, but that's mostly handled by London. Maintaining and enforcing patents is done outside this office, and flotations and listings are done largely by the London firms, which have the contacts."
Expansion and snatching London work aside, one would expect the impact of the high-tech downturn to have hit "Silicon" Cambridge. According to Farrant at Eversheds, this is not the case. "Evaluation issues have hit UK companies, but those in Cambridge are not just glorified sales firms with dotcoms added to the end, they have sophisticated IP," he says.
But Rainsford says that while Taylor Vinters robotics and electronic software industry-focused work has been buoyant, the future is uncertain because of recent hits to the high-tech industry. However, even in this climate, he still sees room for growth. "At present, we're not interested in linking up with high-tech centres like Oxford. We'd rather have a big US link-up, largely because when businesses are looking for investment and to sell, at the front of the queue are US investors and buyers."
Biotech, like high-tech, is far from being a risk-free market. Napper at Mills & Reeve says: "The nature of biotech is that there's not much money floating around in it, and there's a lot of nervous investors who need to spend their money wisely."
However, there is an array of Cambridge-based investment companies specialising in biotech, in particular Prelude, CRIL and Avlar BioVentures. Farrant points out that new investors may be put off because of the state of the financial market, but adds: "As there's a wealth of knowledge about biosciences, they can tap into that."
Maybe the time has come, then, for the area to be listed on maps as the "Silicon Fens".