The recession begins
With only 38 per cent of the top 100 firms having vacancies for newly qualifieds trained elsewhere, the position for March qualifiers in 1991 was grim.
The Trainee Solicitors’ Group revealed that 50 students who were due to start as trainee solicitors in September had had their articles deferred or withdrawn.
DJ Freeman (now split into what became Kendall Freeman – itself now merged – and partly into Olswang) deferred 21 trainees’ articles – the first firm to confirm it was doing so. It went through very tough times, shrinking by 20 per cent in six months, losing 42 fee-earners. Revenue slumped from £24m in 1990 to £20.5m in 1991.
Even in a pre-internet age, City rumours that the firm was in receivership were so rife that chief executive David Solomon and three of his colleagues personally telephoned 38 prominent lawyers, accountants and surveyors to inform them the rumours were untrue.
Wace Morgan, a seven-partner firm in Shrewsbury, was the first firm to face a threat of legal action from a student whose offer of articles was withdrawn. Other firms deferring articles included Howes Percival.
Of the top 20 firms in 1991, only two had 100 per cent retention rates: Freshfields and Norton Rose. The firms in that band with the lowest trainee retention figures were Turner Kenneth Brown (37 per cent), Theodore Goddard and Clyde & Co (both 50 per cent).
The Lawyer’s research in April of that year showed that there was a 10 per cent fall in the number of graduates sought by the top firms. And yet trainee salaries held up well. The best-paid trainees were paid £12,000 in September 1987. Within just four years this had risen to £18,500.
City assistants were also doing better than more senior lawyers in the regions. The Centre for Interfirm Comparison revealed in 1991 that at least half of the partners in small- to medium-sized firms outside London were earning £35,000 or less. “In many cases they would be better off being assistant solicitors in a large London firm,” said the centre’s project director Mike Moffat.
In-house departments were not immune from the slump. Private equity house 3i made 27 redundancies in its legal department, of which nine were qualified solicitors.
Conflict of the year
Freshfields denied it had a conflict over Bank of Credit and Commerce International (BCCI) after it emerged that it was acting as advisers to Touche Ross, the liquidators to the failed BCCI, as well as to the Bank of England.
Freshfields subsequently withdrew from the liquidation job, but kept a long-running role for the Bank of England on the litigation.
Ill-fated romance of the year
Theodore Goddard (now Addleshaw Goddard) and Dewey Ballantine form an alliance with a view to merger in the medium term. Theodore Goddard senior partner Stuart May said: “It starts as an alliance. If it develops it could become a marriage.”
The two firms targeted Eastern Europe with a string of joint offices, but the relationship foundered in the latter part of the decade and Theodore Goddard eventually sold its part share of the offices to Dewey.
US firms still City minnows
The biggest US law firm in London was Jones Day, with 10 partners and 21 other fee-earners – with no UK-qualified lawyers. Next was Mayer Brown & Platt, with four partners, 11 fee-earners and two UK solicitors, followed by Wilmer Cutler & Pickering, with three partners, 14 US lawyers and three UK solicitors.
Unexpected heroine of the year
Sally Knight, assistant at Kingsford Stacey (now KSB Law), was involved in an armed siege but talked her way out of danger after a man drew a gun on her. The man, who was involved in the liquidation of a company in which the firm had acted, doused himself in petrol and was later charged with possessing an imitation firearm.
Move of the year
The Barlow Lyde & Gilbert banking team, led by Stephen Mostyn-Williams, leaves for Ashurst in one of the first major team moves of the decade. The team would build up one of the City’s leading leveraged finance practice at Ashurst before moving on to Shearman & Sterling in 1999.
Most predictable opening of the year
Hammond Suddards opened in London, with hires Richard Kemp and Christopher Arnheim. Kemp later went on to found his own IT boutique Kemp Little, while Arnheim became the man to front Price Waterhouse’s legal arm.
Legal aid shrinks
More than five million people ceased to be eligible for advice under legal aid between 1987 and 1991, according to Law Society and Legal Action Group research.
Most baffling office opening of the year
Three-partner media firm Stephens Innocent opens a Moscow office focusing on copyright.
Alan Keat, Travers Smith Braithwaite
Travers Smith Braithwaite corporate partner Alan Keat saw a two-year ordeal come to an end in 1991.
He had been arrested in 1989 along with 11 others
following the Department of Trade and Industry’s (DTI) report into the Blue Arrow rights issue in 1987, on
a charge of an alleged conspiracy to defraud. Keat had advised County NatWest on the deal.
The charges had shocked City lawyers since the DTI had never criticised him in the report. In late September 1991, Mr
Justice McKinnon dismissed all charges against Keat, saying there was no case to answer.
Keat resumed his full role at the firm, where he continued to work as a partner until his retirement in 2002.