The South East is one of the most fragmented legal markets within the UK. There is no single dominant business centre outside London, but rather a collection of law firms serving the area from the Thames Valley, through Guildford, Kent and Sussex, down to the South coast and stretching north around the M25.
While the region’s proximity to London throws up unique opportunities and challenges, Law firms based in the region have had to grapple with the common dilemma of how best to achieve growth and financial success. Is it possible to grow organically despite this fragmentation of the market? Is it necessary to have multiple offices to thrive? Is it essential to have a London office in order to tap into London-based work? Is consolidation the answer?
These strategic issues are now being considered against a backdrop of a worsening economy, likely increased competition for work and a more flexible market for legal services – driven by clients’ demands in the commercial sector and by the Clementi reforms at the volume end of the market.
David and Goliath
The path chosen by the South East’s leading law firms to meet increasingly sophisticated client demands for quality and service, strength in depth and value for money are perhaps as diverse as the legal market itself!
Some firms are following a multi-office approach to achieve geographical spread, accelerated growth and profile. Just as these firms consolidate and open new offices, there are others who believe in the benefits of a substantial, single office location, backed by strong organic growth and bolt-ons of key lateral hires in strategic areas. This strategy brings the benefits of retaining better control and consistency of culture and quality, essential factors for clients and potential hires. However, organic growth requires intensive management time in recruitment and the ability to consistently attract star talent.
Whatever strategic approach regional firms may take, recruitment of high-quality lawyers is paramount; major players recruited to the firm improve the general pool and will in turn act as magnets for other talent. Law is a people business and the South East region is a highly competitive recruitment market. While this may ease if the London market pulls in its horns to ride out the economic downturn, the region has suffered from a lack of supply, particularly in the corporate sector. In the fight to attract the best talent, regional firms have to demonstrate attractions across a number of fronts. Top quality associates and lateral hires will be interested in the firm’s strategic plans for the future, financial success, pay and benefits, culture, staff and partner retention rates, commitment to training and of course the quality of clients, work and lawyers. Often a more balanced blend of these factors will be attractive compared to a more brutal, albeit more highly paid, life in the City. Firms who enjoy a strong track record in recruitment and retention of lawyers are able to attract a majority of the top talent coming to the region, mirroring the dynamic of the magic and silver circle firms in London.
To attract top talent, it is also essential to make a long term investment in infrastructure and support services to enable lawyers to work efficiently and to high standards. An increased use of technology enable ambitious regional outfits to compete with much larger, often London-based, firms.
The South East market has a David and Goliath relationship with the London firms. In our experience, firms in the region who have made the investment in quality, and managed to achieve the required strength and depth, benefit from their proximity to London. There is a growing trend of leading South East firms competing more aggressively with London firms than with each other and successfully increasing their market share. Here there is a large, soft under-belly to attack, because of client appetite, even among the largest corporates, for greater value for money and a more consistent, personal service. Being near London makes it possible to win London-based work and do London-based deals from a regional base without setting up shop in the City.
With its fragmented base, the South East has arguably been slower than other regions around the UK in producing substantial, high quality law firms able to offer a wide range of specialist services to larger commercial clients and wealthy individuals. Whether through consolidation or by cracking the challenges of organic growth, the next few years are likely to see the growing recognition of a small number of quality firms equipped not only to be leading forces across the region but also to play a larger national and even international role.