Bar suffers knock-on effects of fees squeeze

Growth at the bar has slowed over the past ­financial year as a result of litigators piling pressure on fees to get the best deals for clients.

Scott: firms are negotiating ‘much harder’ on fees
Scott: firms are negotiating ‘much harder’ on fees

Matrix Chambers chief executive Lindsay Scott said firms were becoming “much harder” at negotiating.

“They’re driving down rates and want to get value for money,” she adds. “We’re seeing many more conditional fee arrangements and they don’t get counted in our annual billing.”

Scott said it had been a “steady year” for Matrix with an 8 per cent rise in turnover, from £17.2m in 2009-10 to £18.6m in 2010-11. This is a significantly lower rate of growththan the previous year’s, when turnover rose by 26.5 per cent, from £13.6m in 2008-09.

Also, although caseloads have increased in the past financial year, bills are not being paid as quickly.

The drop in rates is a common theme at the bar, with sets feeling the pinch experienced by their instructing litigators a year before.

11KBW’s turnover rose by 3 per cent, from £16.67m to £17.15. Senior clerk Lucy Barbet said that, although instructions were up ­slightly, rates were under pressure andsolicitors were taking longer to settle outstanding bills. “It’s been more difficult to get the money in,” Barbet admitted.

Another clerk said: “It used to take three months to get paid , but now we’re ­having to wait five or six months – in some instances it can be seven months. It’s not the fault of the solicitors, the same happened to them a year ago. It’s just coming down the line to the bar.”

Public sector work has been hit hardest by the cuts, but sets operating in the market said recovery was starting to shine through.

“We’re starting to see more public sector work,” Barbet said. “There’s been a lull while the cuts came in, but there are now starting to be cases against those cuts.”

For Monckton Chambers, the past financial year brought a reversal in fortune. Turnover dipped during 2009-10 from £17.2m to £17m, but it has climbed back to £17.25m, with deputy senior clerk Tony Burgess predicting a ­significant increase next year.

“This year we’ve ­stagnated, but given the ­levels of turnover we’ve seen in recent years the sustainability is pleasing” he said.

The set has grown its membership from 38 in 2006 to 52 at the end of 2010-11. It also benefited from three new silks in March, with Daniel Beard, Tim Ward and Paul
Harris all becoming QCs.

“We had a round of stellar juniors all coming up at the same time and we’ll benefit from that next year,” enthused Burgess.

Although growth has slowed at the majority of sets, Hardwicke and 4-5 Gray’s Inn Square have seen revenues fall, reflecting the wider challenges facing mid-tier chambers. With rates already under ­pressure, mid-tier sets are being squeezed on all levels.

Hardwicke posted a 5 per cent drop in turnover, from £15.8m to £15m. In the ­previous year the set rode the litigation boom to post a 14 per cent turnover rise, from £13.9m to £15.8m.

The same can be said of 4-5 Gray’s Inn, where turnover grew by 9.5 per cent in 2009-10, from £14.6m to £16m, before shrinking back to £15.7m in 2010-11.

Sets will now be looking for ways to respond to fee pressures while also dealing with the impact of the Legal Service Act. Caseloads may be up, but the budgetary pressures are here to stay.