The Taylor report

Sitting on Paul Taylor's desk in Berrymans Lace Mawer's office inSalisbury House is a

confidential dossier containing his “four point plan”for transforming the firm into a

national player.The masterplan documents are headed “current”, “previous” and

“hybrid”.They reveal the changing fortunes of the firm and the future strategy

ofclient-led expansion.The firm, created after the merger of Berrymans and Lace Mawer

in 1997, iscurrently in merger talks with Davies Arnold Cooper (DAC), revealed by

TheLawyer (12 July), and north eastern firm Linsley & Mortime (The Lawyer, 21June). It

also has partners scouting around the south west to find anotherpractice to absorb into

what Taylor hopes will become an empire ofinsurance litigation firms.Taylor is in no

doubt that his plan to focus on national expansion isright and claims that his strategy

not only focuses on expansion by mergerbut also on organic growth.And Berrymans is

certainly growing. Turnover in 1991 was £2m. Last year the merged firm generated £36m.

Staff numbers in 1997 for Berrymans andLace Mawer combined were 500. Now they are more

than 700. And the firmhandles 25,000 cases a year now compared with a combined total of

1,500 in1997.Taylor is not only looking at merging across the country but also at

thedevelopment of his firm's offices in each region.”There are areas of Berrymans that

need to be strengthened. We need toreinforce our presence in Birmingham. It is an

expanding city and ouroffice there is small. We are looking at lots of possible options

to getbigger there,” he says, but declines to go into details of exactly how.Berrymans

is heavily dependent on the insurance industry. More than 70 percent of its work is

insurance litigation. The rest of its practice is takenup mainly with niche work done

for insurance companies.”Since 1991 Berrymans expected the insurance market to

consolidate. Wedecided then to merge nationally and our prediction rang true,”

Taylorsays. In 1991 Sun Alliance, Commercial Union, General Accident (GA) andGuardian

Royal Exchange (GRE) were Berrymans' big clients. Since then Royaland Sun Alliance have

merged, Commercial Union and GA have merged, and GREwas acquired by French insurers AXA.

“Not one of our major clients hasstayed the same. All of these companies want national

coverage,” he says.Taylor is putting his faith in developing national coverage, but

otherinsurance firms disagree with Taylor's views on the insurance market andhow to

adapt to changes within it.Nick Thomas, senior partner at London-based insurance

litigation firmKennedys, thinks Taylor interprets too narrowly the way the legal

insurancelitigation market is developing.”There are two types of insurance litigations,”

he says. “The first is lowvalue work that gives a high return. That is what Berrymans

does. It can bespread over the whole country because it is smaller and less

specialisedthan the cases we deal with.”The second is based around the London insurance

market. It is large scalespecialised work that pays more. That is what we do.”He adds:

“This whole country is London-centric. It would make nodifference to us if we had a

regional office. All our work is drawn back toLondon. We travel all over the place, but

London is where our specialistservice lies.”I think Paul has the right strategy for

Berrymans, but it does not applyto all insurance litigators.”In particular, Thomas

doubts whether a merger between Berrymans and DACwould work because he thinks the two

firms handle very different types ofcases.”I would query whether you can get a

homogenised firm from a merger. Ifthe DAC merger does work, Berrymans will inherit more

of our kind ofbusiness from DAC. But then it will have to relocate the majority of

itswork to London. That would affect its strategy of being a national firm.”Jonathan

Lewis, chief executive at DJ Freeman, also has doubts aboutBerrymans' strategy. He says:

“It depends on the type of insurance work youare doing. There are different types. We

are involved with corporatefinance insurance and Lloyd's-type work, which are big

claims. Our head ofinsurance is working in Bermuda at the moment. I don't think having

anational presence would help his work much.”If you have a practice like Berrymans,

which is based on a large numberof claims, then a national strategy may work. But it is

not relevant tous.”Berrymans has successfully avoided the round of culls of insurance

panelswhich have taken place in recent months. But some believe that a mergerwith DAC

could herald the end of the firm's good relationships withinsurance companies.Experts

say insurers may see it as a merger too far because many arecutting the number of their

legal advisers, while Berrymans is, in effect,bringing firms that insurers rejected back

onto the panels. Some go so faras to say that Berrymans is sweeping up their

cast-offs.Insiders say Iron Trades, along with other clients, may review

Berrymans'status as adviser if the DAC merger goes through.Rivals also doubt how a

Berrymans-DAC merger would work. “A DAC merger maywork. It also does a lot of high

turnover claims, but I don't think itwould gel that well for the more high-quality

Lloyd's type work, which italso does,” says Lewis.Taylor admits that the cuts are far

from over.”More panel cuts are on their way. Insurance companies have already saidso.

Fees have fallen so low that some firms are handling work at a loss,and they are set to

be reduced further.” He even believes that if feescontinue to fall it may not be worth

some firms continuing to practise.Inevitably, the Woolf reforms will have a serious

impact too. “Cases willbe settled earlier because of mediation, the reduction of red

tape, and themulti-track system. So there is going to be less litigation. This will

makeit easier for people to claim, so it will be more attractive. But I don'texpect

there will ever be as many [litigation] cases for lawyers everagain,” saysTaylor.Taylor

believes insurance litigation firms need a new strategy. And, nevershort of an answer,

Taylor has formulated one for Berrymans – hisfour-point plan.Berrymans is putting in

place a delegated handling scheme designed to cutclient fees by taking case files in

bundles rather than individually andnot reporting back to the insurance company until

the litigation iscompleted. The idea is to cut bureaucracy and so costs.Berrymans is

also offering insurance companies whole in-house teams whichTaylor argues will give the

firm a stronger hold over clients and lump sumfees to clients so they can purchase cut

price legal advice in bulk.The firm is also developing a total claims service where it

offers a spectrum of legal services ranging from pre-litigation to the settlement of a

case.”No insurer has accepted pre-litigation advice from an outside firm yet,but we are

fishing for that,” Taylor says.Taylor believes that Berrymans can ride out changes in

the insurancemarket. “The situation for firms is getting tighter and tighter. We

arewatching for the next development in the market.”Under Taylor's leadership, Berrymans

has a clear vision of its future.Rivals and analysts of the insurance market may express

doubts about itsexpansionist plans and the wisdom of its merger mania, but Taylor

remainsbullish.”Insurance companies are looking for real relationships with

theirlawyers,” he says. “Not all firms can provide that… We can.”The question, of

course, is whether that relationship will suffer asBerrymans continues to

expand.Berrymans: the story so farfrom The Lawyer archive January

1997Insurance firms active as merger approachesSpecialist insurance firms Berrymans and

Lace Mawer have made strategicannouncements in the run-up to their widely anticipated

merger. London firmBerrymans has just made nine of its solicitors partners, while

theManchester firm with which it is in merger talks has revealed that it isplanning to

open up an office in Leeds this year…18 February 1997Berrymans and Lace Mawer

mergeBerrymans and Lace Mawer have merged to create a national defenceinsurance law

firm, called Berrymans Lace Mawer. With 250 fee earners, 80of them partners, it is the

largest insurance law firm in the country, andone of the 30 largest law firms

overall…6 October 1998Tulkinghorn: Everlasting honeymoonWho said mergers need bedding

down time? A recent missive from BerrymansLace Mawer on life together post-merger,

revealed that this need not be.The statement, “Married bliss for legal newly-weds”

proclaimed that just 18months after its merger, caseload is up 25 per cent – and

“married life isclearly suiting the firm”…1 February 1999Berrymans leaves Hall Clark

in tattersCity firm Berrymans Lace Mawer has taken on the senior partner and threeothers

from London-based Hall Clark, leaving the smaller firm facingclosure and 11 lawyers out

of work. Beryl Whight joins Berrymans as aconsultant. She is accompanied by partner

Andrew Pieri and two assistants…8 March 1999Berrymans' Taylor takes new roleBerrymans

Lace Mawer has changed its partnership constitution to formalisePaul Taylor's position

as national senior partner. A new post has beencreated for Taylor, so he can help

consolidate the firm's recently mergednorthern and southern offices. Taylor has resigned

from the managementboard to take up the post. He denies accusations that he has

beensidelined: “I chose to resign from the management team, where I was handson – and

I remain hands on”…26 April 1999Iron Trades reveals mystery panel advisersBerrymans

Lace Mawer and Jacksons are the two firms appointed by IronTrades to help trim its

insurance panel. Last week The Lawyer revealed thatthe…insurance giant had already cut

its 40-strong panel by half and wastaking advice from two 'mystery' firms. David Evans,

senior partner atBerrymans' Liverpool office, has confirmed that both firms have

beenappointed to the panel. “We are obviously pleased. Iron Trades is anexceptionally

important client for us,” he says…21 June 1999Berrymans moves into North EastBerrymans

Lace Mawer is securing a foothold in the North East in anattempt to put a stranglehold

on insurance specialists in the region. Thefirm is proposing to take over niche firm

Linsley & Mortimer, whichprovides specialist insurance advice…12 July 1999DAC and

Berrymans enter merger talksDavies Arnold Cooper (DAC) and Berrymans Lace Mawer have

been engaging insecret merger talks. Nick Sinfield, managing director of troubled firm

DAC,met Berrymans Lace Mawer senior partner Paul Taylor last month to discuss apossible

merger. A source close to Berrymans says: “He [Taylor] was seeingif there was anything

on the table for discussion”…19 July 1999Berrymans upbeat after Dubai office loses

head Berrymans Lace Mawer islosing the head of its Dubai office to Denton Hall sparking

a majorreorganisation of its Middle Eastern practice. Nigel Truscott, partner

inconstruction at Berrymans, is leaving the Dubai office this month and willbe followed

by his colleague, commercial solicitor Rita Semaani…