Newcastle firms content to retain north-east focus

Are north-eastern firms restricting their options by failing to look beyond their region? asks Abigail Townsend.

When Ward Hadaway announced its merger with fellow north-east firm Keenlyside & Forster last month, it was not quite the marriage everyone was expecting.

Ward Hadaway says the tie-up was a vital part of an on-going plan to boost revenue and double its size within the next three years.

But Newcastle insiders argue that Keenlyside is only a five-partner property firm and its most rated partner, Ian Waites, retired just as the merger agreements were signed. In other words, for “merger” read “group lateral hire”.

There is also speculation that the merger was a knee-jerk reaction to the collapse of talks between Ward Hadaway and 19-partner Watson Burton a matter of weeks before.

Ward Hadaway certainly appears to have cut its options short. When the firm unveiled the expansion plans last August, it firmly ruled out the possibility of spreading its wings beyond the region – leaving it with only a limited pool of firms to chose from.

This regional loyalty is echoed by leading practice Dickinson Dees, which also has no intention of setting up outside these boundaries.

One senior lawyer believes Dickinson Dees’ and Ward Hadaway’s decision to resist national coverage is foolish because as business and industry adopts a more international reach the Newcastle firms risk being left behind.

The lawyer says: “I am stunned that Ward Hadaway and Dickinson Dees have not done something. They may have missed the boat by now. They need to be expansionist to maintain growth and profits per partner.

“To be king of a small pond is fine but the businesses in our pond are global, big players and there will come a time when they will not be able to service them.”

Even Eversheds north-east managing partner Nigel Robson, who benefits from being part of a national partnership, says the bigger firms could end up “scrapping over the main clients”.

Newcastle is home to only a handful of firms. Dickinson Dees is the largest with 48 partners. The two other big players are Eversheds, which entered the market in 1997 after merging with Wilkinson Maughan, and 38-partner Ward Hadaway.

But Ward Hadaway commercial partner Colin Hewitt, who has been with the firm for over 20 years, says: “We are doing quite a lot of our work outside of the region. We do not think it is necessary to open up everywhere where we have a client. Our clients are very keen that we do not lose our advantage of a low cost base.”

Dickinson Dees business development partner John Flynn also argues that because of its geographical spread of clients, it has more in common with the big six firms in Leeds than fellow north-east practices.

“There is no difference between us and Addleshaws and Hammonds and Pinsents because, like us, they have all got the bigger clients.”

But Flynn also points out that there is enough potential in the north east to support the firms which are able to tap into it.

He says the region has undergone a recent economic boom, but this could create a recruitment problem.

When it comes to recruitment, it is not just a matter of providing exceptional work and clients. It is also vital to convince people they will enjoy living in the area.

“One of the big problems for us is to continue getting good people in. A lot of people say it is going to be more and more difficult,” says Flynn.

“That is going to put more pressure on the other firms because if we cannot do it then Ward Hadaway and so on certainly will not be able to.”

However, Ward Hadaway remains upbeat about recruitment. Hewitt says the firm receives between 700 and 800 trainee applications each year.

“We have never had any problem hiring senior people in from outside the region. There is a good mix between home-grown and laterally hired people,” says Hewitt.

But recruitment is becoming a problem in private client practice. Traditionally a strong field of work in Newcastle, some lawyers feel that although it will continue to flourish, attracting the right people will be difficult.

One insider says: “Most people who do it are awful and it is always very difficult to get good new people in because they want to go towards the corporate departments. But there is potential and a market there. There is a lot of money in the area.”

Robson, who is chairman of the Newcastle Committee of the Chamber of Commerce, believes this potential is spread across all practice areas.

“The focus is going to be on software and telecoms, value-add precision engineering. The offshore industries are on a down-turn but they will come up again. We will always be a good area to invest in,” he says.

Flynn also shares this long-term optimism. In his view both the north east and its legal market are striving to retain their independence and quality growth. “The next five to 10 years will see more money coming into the region,” he says.