Arthur Andersen may be the first big six accountant to move into legal services in the UK but Chris Arnheim likes to think it was he who kick- started the moves of the others.
His story begins early in 1995 when he and fellow partner Richard Kemp began to tire of the Hammond Suddards London office they had founded more than three years earlier.
The two had worked hard to build up the office to around 30 or so lawyers but they felt frustrated – the firm was run too much from Hammonds' head office in Leeds, Arnheim felt.
At first they decided to set up on their own, but then Kemp felt the venture would be too risky so they approached, through an agent, US law firms and the big six.
Price Waterhouse and Ernst & Young were particularly interested, Arnheim remembers, but then suddenly in July 1995 Kemp joined Arthur Andersen's law firm Garrett &
Co where he remains head of intellectual property today.
Price Waterhouse, nevertheless, was still interested and when Hammonds offered Arnheim a three-year part-time management training course, he gave the accountancy firm an ultimatum: “If you haven't taken me on by December 1995, then I'll take the Hammonds training offer.” Price Waterhouse capitulated shortly before the deadline.
Arnheim & Co was officially launched in March the next year. Arnheim works, now with 15 other lawyers, in a separate ground floor annexe at the Price Waterhouse headquarters at 1 London Bridge.
Arnheim has a strange relationship with his accountant hosts. He pays Price Waterhouse for the use of its support staff, IT, conference facilities and accommodation and reports on his firm's performance to the accountancy firm's tax head Bill Harrison Cripps, the man who backed him at Price Waterhouse's management board – “my sponsor”, as Arnheim calls him.
“It's a relationship based on trust,” says Arnheim. “There is no written agreement between us of any kind. I could go off to Ernst & Young tomorrow.”
Similarly Price Waterhouse could decide it no longer requires Arnheim & Co and is free to ally with another firm. “If we fail to meet Price Waterhouse's business objectives, there is every reason to think they will make other arrangements,” says Arnheim.
He says his firm became profitable in May last year and a “healthy” 30 per cent of the work comes from the accountancy firm's corporate clients – the rest is from independently generated clients.
Last autumn rumours circulated that Paul Downing – appointed in September from Pinsent Curtis as head of Price Waterhouse's European legal network – was involved in a power struggle with Arnheim.
There is no evidence to suggest this is true. Although the two men were recruited by different parts of the Price Waterhouse hierarchy, Arnheim says he was consulted over Downing's appointment before it was finalised.
Downing reports to the accountancy firm's European board, has an office separate from Arnheim & Co, and spends most of his time travelling around Europe co-ordinating the firm's many associated law firms and Price Waterhouse lawyers.
Back in London many rival law firms say that Arnheim & Co has yet to make a splash. But Arnheim insists that his firm is no smaller than Garrett & Co was after its first year. He claims to be well on course to exceed his business plan of having 50 lawyers by mid-1998.
His strategy, he says, is different to Garretts'. He does not want Garretts-style regional-based practices. He is keen to hire lawyers in the regions, but he wants them to be front men to introduce clients that can be serviced by the London office.
It is understood that before Pinsent Curtis's corporate Leeds star Sean Lippell joined Garrett & Co he had talked to Arnheim & Co. But Lippell did not join precisely because he wanted to build a Leeds-based practice.
The recent recruitment of Eversheds' IP star James Hodgson and other senior City assistants (see story, page 3) has helped Arnheim feel confident about his direction. “I think we've got the wind behind us now,” he said last week. Only time will tell.