Wales & the Midlands

Abooming market for firms in the Midlands and Wales during 2006-07 was typified by a major recovery for Hugh James and the rise of a new star in the form of Freeth Cartwright.

Hugh James emerged as the firm with the highest revenue per lawyer (RPL) for the year, with its 115 lawyers bringing in £278,000 each. However, this equates to just 3 per cent more than its previous year’s RPL of £271,000, which was generated by 124 lawyers.

Cost per lawyer (CPL) at the firm inched up by slightly more than 1 per cent to £197,000 for the period.

Revenue and costs for Hugh James were skewed by its claimant litigation work. Recovery from claimant litigation cases can take between five and six years, meaning that there is not always a steady stream of income.

Last year, however, revenue was fortified through the recovery of fees from the miners’ compensation scheme, on which Hugh James has been working for the past eight years.

Freeth Cartwright took the second spot, with the 147-lawyer firm posting an RPL of £212,000 for the year. The firm’s chief executive Peter Smith attributes the strong RPL to investments made in lawyers and supporting infrastructure, which is expected to continue in the future.

“We have a clear focus on our business areas and the new Manchester operation has got off to an excellent start,” says Smith.

Freeth Cartwright’s CPL for 2006-07 increased by 3 per cent over the year to £157,000, an illustration of the investment management has made in an effort to focus on efficiency and costs.

“In 2006 we launched a browser-based software for our lawyers that we believe will considerably enhance productivity in the firm in the years ahead,” adds Smith.

Mills & Reeve took the top spot for fees. The firm raked in £56.4m, with HBJ Gateley Wareing taking a distant second, bringing in £35m in fees. Geldards posted the secondlowestRPL figure with £160,000 (bottom was Howes Percival with £134,000). This was a drop of 8 per cent from 2005-06’s £173,000. Geldards’ average profit per equity partner (PEP) was also among the lowest of its peers’ at £196,000, £1,000 above Morgan Cole’s and £20,000 above Martineau Johnson’s. The firm’s CPL, however, remained unchanged at £129,000 and is among the lowest of its peers’.

Commercial director at Morgan Cole Tim Pashley claims that its PEP was skewed due to the firm’s relatively high proportion of equity partners – more than 70 per cent. Morgan Cole’s CPL also illustrated a significant degree of reduction in CPL, with the figure falling by 7 per cent to £142,000.

“We’ve focused business on core practice areas and engaged in some property rationalisation activities to increase efficiency,” says Pashley. The firm reduced its number of Reading offices from three to two during the year as part of stricter financial management and also reduced the number of fee-earner secretaries in its offices.

Hewitsons experienced a significant 23 per cent leap in its costs, with CPL shooting up to £143,000 from £116,000 for 2006-07. Hewitsons lost its entire employment team save for one partner following a raid by Charles Russell last November. Managing partner John Dix says the firm was looking to hire lawyers into its employment, charities and public sector practices.

HBJ came second to Hugh James on PEP last year, with its equity partners taking home £248,000. This was a drop on 2005-06’s performance, however, when PEP stood at £280,000, itself a 40 per cent improvement from 2004-05. HBJ merged with Scottish firm Boyds in May and London boutique Shaw and Croft in April. Furthermore, HBJ is planning to open its Dubai office this September.

The year also saw a number of firms succumb to the pull of Birmingham, with Freeth Cartwright’s Birmingham office slated to open at the end of the year. Norwich-based Mills & Reeve and Nottingham-based Browne Jacobson also expressed intentions of tapping into the burgeoning Birmingham market.