Rolling with the punches

In the past few years the bar has faced growing criticism, a drastic drop in workload and the increasing threat of solicitor-advocates. Matheu Swallow reports on how the commercial bar is fighting back

The commercial bar is attempting to fight back against the tide of criticism and apocryphal tales of woe that it and the bar as a whole has faced in the last year.

The bar is finally coming to terms with the need for aggressive marketing and is prepared to compete with solicitors head-on.

But it has been rocked by a stymied workload and on 24 May, The Lawyer reported on the crisis facing commercial practitioners.

Statistics from the commercial court indicate that since 1997 there has been a massive 44 per cent drop in the number of claims being issued. Bullish solicitors have propagated the consumption of the bar within a matter of years, and a mass of anecdotal evidence portrays a helpless future.

Six months on, the number of claims being issued in the commercial court continues to fall and solicitors are noisier than ever about their one-stop-shop litigation services and the rise and rise of solicitor-advocates.

But at the top end of the commercial bar at least, there are fewer such stories than one might expect. Indeed, one of the four so-called magic circle sets, One Essex Court, reports a record turnover for this year. Senior clerk Paul Shrubsall refuses to reveal details, but estimates from legal commentators put all four leading commercial sets well inside the top 100 solicitor's firms for annual revenue.

Generally, estimates place the leading chambers at somewhere between number 50 (DJ Freeman – gross fees of £27.7 m) and number 75 (Farrer & Co – gross fees of £16.9 m).

Coupled with the fact that their overheads are significantly lower than their solicitor colleagues, tenants' profitability has not sunk below the “seriously wealthy” line.

Unlike Shrubsall, most are cautious about the last year's financial performance.

Ric Martin, chambers director at Fountain Court, concedes that the market has been quieter. He says: “Fortunately, this week everyone is very busy. Two weeks ago, there were pockets. I cannot believe the position is any different at other sets.

“Firstly, because of the state of the economy there are not so many big commercial cases about. They are there but not in the same number. It's not like the halcyon days of Lloyd's and BCCI and other major collapses.”

Mark Hapgood QC, a senior tenant at Brick Court Chambers, agrees that there is not as much major litigation as there was in the early 1990s, but argues that there will be a substantial amount of major litigation next year stemming from the collapse of Barings Bank.

The Woolf reforms and the consequent explosion of arbitrations and mediations is another obvious cause for levels of work to suffer.

“There is no doubt that mediation is reducing the number of actions that ultimately go to a full trial,” says Hapgood.

Not only has this meant a squeeze on rates but also a change in the nature of work. Diaries are no longer booked up three years in advance, but instructions are received for shorter pieces of work at much less notice, and barristers are much more flexible.

Martin says this means that unlike two years ago when clients would ask who was available, the question now is: “Is Mr X or Mrs Y available?”

Although there has been a general reduction in the number of cases reaching trial post-Woolf a lot of work is simply taking longer to trickle through to the bar. Pre-action protocols, for example, are taking three or four months to complete.

Evidence of a marked improvement in November and December for several commercial sets gives some credence to this theory.

Ian Moyler, joint senior clerk at Brick Court Chambers, says: “If you'd asked me in October I would have said we were down on the previous year. However, November and December are looking extremely buoyant.”

And many chambers are training their barristers to handle the mediations that are replacing trials.

Although the collapse in the number of claims being issued in the commercial court indicates a reduction in the amount of advocacy work available it does not show the boom in work of a different nature. Hapgood says that many specialist practitioners receive a great deal of advisory work, which is increasingly coming direct from in-house counsel, and there has also been a growth in international work.

“Ten to 15 per cent of my practice is international or comes direct from in-house, which means a slight slackening of the work in London doesn't have an impact,” he says.

The explosion in the importance of European law has been the catalyst for a growth in work from in-house counsel, and if the bar is to survive it must be more bullish about competing directly with solicitors.

The bar is finally, if reluctantly, accepting this argument, although the sentiment is not yet universal.

Christopher Symons QC, joint head of chambers at 3 Verulam Buildings, says: “There are some who are prepared to take on solicitors, but others who are more cautious. We have no wish to tread on solicitor's shoes.”

BarDirect is a scheme set up to allow public authorities and in-house counsel direct access to the bar without having to go through solicitors. Of the bar's push on direct access, Hapgood says: “Certainly some at the bar see it as the first step to conducting litigation.”

Banking litigation, says Hapgood, is one of the areas where a barrister would be able to conduct the litigation alone because most of the evidence is documentary-based. There is therefore no need for a solicitor's greater resources to collect and collate masses of witness evidence.

Hapgood says solicitors should be compelled, by changes to the professional conduct regulations, to inform their clients of the availability of a replica service to the one they offer and the fees charged by barristers.

According to Shrubsall direct access remains largely an “untapped market”.

If the playing field is levelled to allow barristers to conduct litigation, just as solicitors have been permitted an easier route to gaining higher rights of audience, then Hapgood believes most areas would be open for direct competition between the two sides of the profession.

“Essentially, it's the nature of the case rather than the field of law. You can find a heavily documented case in insurance, shipping or entertainment law,” he says.

Having already reined in expert witness evidence the Government's next step, predicts Hapgood, might be to curtail the massive use of witness evidence which would open up new areas for the barrister to offer his services.

“Some jurisdictions, such as Switzerland, hardly bother with witness evidence,” he explains.

But Hapgood rejects the proposition that the bar is on an inexorable roll towards partnership and the replication of solicitor's practices. “I could make a great deal more money than I do if I set up as Hapgood & Co with 10 assistants. But I wouldn't be interested in that unless things were absolutely desperate,” he says.

But partnership is an option. Last week The Lawyer revealed that a movement within the bar is emerging that would like the concept turned into a reality.

Even though commercial sets have to fight harder for work and look for alternative sources of instructions, the picture for the commercial bar remains fairly static and even optimistic.

Symons, for example, is concentrating his efforts on regional firms and foreign law firms, both in London and overseas.

But those in the commercial bar are among the best prepared to deal with any shift in work patterns.

They are the most financially secure, have the most proactive clerks and chambers directors and some of the most sought-after names in the legal world.

They are facing pressure on fees but are not being forced to take on the risks of conditional fee agreements in any great quantity, as the commercial world does not see conditional fees as a great alternative to traditional methods of payment.

The story seems to be, more of the same next year, please. A little more work, a little less change, but no mega-mergers and no capitulations. Steady growth and a steady income.

Well, that at least, is the theory.