The past 18 months has been a much happier period than the preceding year-and-a-half for most lawyers in the South West. It seems that the regional economy has turned a corner and the legal market is following suit. Many firms are now looking to the future having taken some lessons from the past.
The South West covers a huge area, from Cornwall and Devon, through the south central area to Bristol, the major legal centre, and on to Swindon on the most easterly fringe. Not surprisingly, it is characterised by a diversity in business, infra- structure and wealth. The further west one moves, the more the region's economic health deteriorates. There is still a reliance in some quarters on fishing, tourism and agriculture, which has not escaped the effects of the BSE cattle scare.
The region's practices follow a similar pattern, with the major players located in Bristol followed by the other regional centres of Plymouth, Exeter and Southampton.
Summing up the region as whole, Matthew McKaig, regional secretary of the Law Society's South West office, says: “There are economic blackspots, but the story is more good than bad and, most importantly, the 'feel-good' factor seems to have returned. Unemployment is falling and receiverships are down, which is the result of a period of inward investment.
“There is a more optimistic feel, but it is important not to forget that if you go to Cornwall to speak to the fishermen, they will still be very angry at their situation.” He cites the relative unemployment rates in the region to further illustrate the disparities. Wiltshire, which is served by the infra-structure associated with the M4 corridor, has 4.4 per cent unemployment, while Cornwall's 8.3 per cent is slightly above the national average of 7.5 per cent.
According to McKaig, the legal community has seen a continuation of the polarisation between large and niche firms, which have become richer, and the smaller firms, which are “literally winding down”.
The worst effects of this will be softened by the general upturn, but there is still an overall mood of realism among the region's firms, which are just emerging from a particularly long recession.
“More firms are embracing modern management techniques,” continues McKaig. “They are more aware and involved in the local law societies and more receptive to issues such as IT, training and human investment. The firms which are most tuned in to this type of thinking will survive into the next millennium and be increasingly able to compete with London firms. Those that don't, will do neither.”
Foot & Bowden, which is based in Plymouth, exemplifies many of the virtues of a progressive firm as defined by McKaig. Senior partner Tony Holland warns that “there are no free rides anymore”, and that people will have to “work a lot harder to provide a level of service and turn a profit”. He says this is particularly relevant to legal aid, which in his opinion “can be profitable despite what most people think” with the requisite hard graft and commitment by a firm.
Working harder also means working smarter. Holland spends most of his time at his firm's London branch where it pays to keep a presence to compete for lucrative work, but there is a new direct landline to head office in Plymouth.This means many of the costs of operating in London can be laid-off to the less expensive regional centre. This approach seems to be working. “We had this new building, which was too big for us, but now we don't even have any office space to let,” says Holland. There has also been expansion into a new Exeter branch and Holland says that the firm is already experiencing pressure for salaries to compete with Bristol and London for new lawyers.
Simon Chadwick, of Bristol-based recruitment specialist Chadwick Nott, confirms the shortage of lawyers in certain core areas. “Within the last 12 months, our recruitment has doubled, which is the biggest increase in activity since the downturn started,” he says. “The key areas of demand are commercial property, corporate, company commercial and specialised areas, such as intellectual property. Traditionally, Bristol has not paid at the top end of the scale, because the quality of life is perceived to be higher than in London. But other regional centres have hiked up their salaries so Bristol is having to follow suit.”
Chadwick also points out that most large firms from the South West tend to recruit from top flight London law-firms, and, increasingly, the quality of work is comparable to that of a City lawyer.
Paul Cooper, head of corporate finance at Bevan Ashford, which has its head office in Bristol and a presence in Cardiff, Exeter, Plymouth and London, believes that the leading firms in the South West are pulling in enough high quality work at the moment to attract lawyers from London. “The region is more buoyant than I can remember,” he enthuses. “From my contact with partners at Osborne Clark and Burges Salmon, I can confirm they are going through a similar experience to our own.
“For example, in corporate work, this year we had dealt with 40 transactions by the end of September – more than the whole of 1995. We have taken four more people in the corporate group, including a new partner from Ashursts.”
Cooper says that there is still a bias towards London and City firms for the purely merchant bank work. But he is determined to break this trend and is prepared to be aggressive in order to wrest even more work out of London's grip.
Eversheds' new office in Bristol, which is integrated with the Cardiff branch to form a regional centre within the national firm, is also increasingly looking for work from further afield. Peter Morris, head of litigation, explains how the merger of Holts Philips with Eversheds Cardiff in 1994 has broadened his firm's horizons. “In litigation, there has been a 250 per cent increase in turnover since the merger. The client base we deal with has also shifted so that we are acting more for well-known national names. Many operations, such as insurance companies with regional or national networks, prefer to be able to go to one national firm for representation across the country.”
Morris has also noticed changes for others involved in the South West legal market over the last year. He claims there is more confidence in property and believes the major firms in the region are all developing their own strategies. “Osborne Clarke has its Bristol, London and international perspective and Burges Salmon seems to be content to stay as a strong force within the region, but the worry must remain for second and third-tier firms. One hopes they have a strategy, such as Wansbroughs with its insurance work.”
Chris Charles, chief executive of Wansbroughs Willey Hargrave confirms Morris' comments. “Our main specialism is insurance litigation, which forms about 70 per cent of our work and which goes from strength to strength in our Bristol office. Health work, both litigation and commercial, accounts for about 20 per cent.
“Our marketing strategy has several strands. We will be focusing more on the London market for insurance, where we plan to open a branch in the City in February. On the health side, we focus more on Bristol where we have already picked up one large trust. With regard to commercial work, we are looking more to the institutions for repeat business, rather than local owner-operated businesses.”
Another firm which has clearly thought out its strategy for the future is newly created Trethowans Woodford, formed from the merger of Woodford & Ackroyd and Trethowans on 1 October. Catherine Macrae, head of commercial practices, describes the merger as strategic and complementary. “There are now very few areas where we don't offer a high level of service,” she says.
It seems the recovery is finally well under way in the South West. Nigel Thayer, senior partner at Bond Pearce, sums up the mood of optimism: “Although Cornwall is still struggling, there is a feeling of confidence which wasn't present 18 months ago.”