The shipping industry is blooming - good news for the select band of firms that practise in this area, writes Grania Langdon-Down


Film stars Angelina Jolie and Brad Pitt are reportedly the latest celebrities to succumb to that ‘must have’ accessory – the superyacht, complete with its own swimming pool, heliport and mini-submarine, and a price tag of £70 million.



Whether it is true or not, increasing wealth, particularly in Eastern Europe, has created a resurgence in the megayacht business. This comes at a time when the shipping industry in general is booming, with waiting lists for new merchant ships including gas carriers, crude oil carriers and container ships, running to three years, and rates soaring.



Clare Calnan, who has more than 20 years’ experience in shipping, including three years as managing partner of top ranking shipping specialists Ince & Co, says: ‘For reasons best known to themselves, some of the mega rich are not content with just one yacht but want more.’



Now a partner with niche energy and shipping firm Curtis Davis Garrard, she says: ‘The price can be the same as a small cruise liner and the negotiation of these contracts is an extremely specialist area – there are probably only four or five lawyers with the necessary experience.’



Leading shipping law firm Holman Fenwick & Willan has a luxury yacht practice on its finance and transactional side. Richard Crump, who recently became the firm’s managing partner, says: ‘The disposable income and number of rich people wanting these yachts has increased significantly and it is a growing area for us.’



And if that means a work trip to inspect a megayacht in Monte Carlo or visit a shipyard in Shanghai, then that is just one of the attractions of a practice area which Hugh Livingstone, head of Holman Fenwick’s shipping and transport practice, describes as ‘highly international, fast-moving, entrepreneurial and exciting – it is the antithesis of boring law.’



James Wilson, who heads Ince & Co’s ship casualty team on a global basis, says they get instructed on five marine casualties a week, ‘so we have people in the air all the time’.



But, he says: ‘Some ports are extremely dangerous and, as a firm, we have to be very careful where we send our people.’



Piracy is a constant threat in some parts of the world. James Gosling, head of Holman Fenwick’s admiralty department, describes a case last year when a vessel chartered to an oil major was captured off Somalia. Acting for the ship owner, he contacted the authorities in London.



‘When they learnt there were no English nationals involved, they weren’t interested. So we negotiated and money was run out to the kidnappers through ex-SAS people. The situation was resolved but unfortunately the rogues got their money. Since then, I have been interviewed by Scotland Yard and the FBI, who were suddenly terribly interested. I suspect the pirates had some terrorist link which the Americans didn’t like.’



On the terrorism front, Mr Gosling acted for the owners of the French-owned oil tanker Limburg, which was attacked off Yemen. Mr Gosling says: ‘It polluted the coast and the Yemeni Government sued the ship owners for strict liability. We can limit liability but the Yemenis, from whose community the terrorists came, refused to allow us to do that initially.



‘The war risk underwriters were livid so they said any ship calling into Yemen would have to pay a much higher premium, so no ships would go there. We were then involved in negotiations with the government and they agreed to give certain guarantees to the underwriters as a result of them, allowing vessels to call there.’



Another big issue is pollution. Mr Wilson says the European Community is getting increasingly involved in shipping and marine insurance. ‘We acted for the owners and insurers of the Prestige which broke up off Spain. It led to a whole review of the pollution compensation regime and the EC has decided to try to introduce its own regulations, which run contrary to the international conventions which most member states have signed. We have been instructed by a number of shipping industry bodies to lead an application to the European Court to challenge the directive.’



When casualties happen, law firms have to have the resources to respond immediately. Holman Fenwick employs 15 former mariners, some of whom have re-qualified as solicitors, as investigators.



The firm acts for the owners of the MSC Napoli, which broke up off the Devon coast, leading to wholesale scavenging of cargo washed up on the beach.



Mr Crump says: ‘That required a large team to deal with the authorities, the regulatory issues, the legal side, taking evidence, as well as solving the immediate problems of the ship and the cargo.’



Although many disputes and developments are abroad – China aims to be the world’s largest ship builder by 2010 – the UK remains the centre for international shipping work.



Mr Wilson says: ‘What attracts people to London is the high level of integrity that exists here. We deal in just about every country in the world, and the quality of the judiciary and the integrity of the legal system here is unparalleled – I think we sometimes underestimate that.’



However, despite the industry enjoying a boom, the legal market has seen a degree of consolidation and contraction.



Ms Calnan, who specialises in dispute resolution in the shipping and energy sectors, says many of the larger law firms are closing their shipping departments because they do not see it as being as profitable as banking or corporate work, and because it is so specialist.



That leaves half a dozen shipping firms which provide a broad range of shipping services on both the transactional and operational side, including Ince & Co, Holman Fenwick & Willan, Clyde & Co, Reed Smith Richards Butler, Barlow Lyde & Gilbert and Watson Farley & Williams.



‘There are then a series of much smaller firms,’ she says. ‘Most have been created by breakaways from the larger firms and specialise on particular aspects of the shipping industry, such as Jackson Parton and More Fisher Brown. There are then highly specialist firms, such as ourselves, whose shipping focus is largely centred on the acquisition and employment of ships.’



Two recent developments in the legal market have been international maritime and trade law specialists Thomas Cooper & Stibbard’s creation of a new shipping practice in Paris, and HBJ Gateley Wareing’s acquisition of specialist shipping firm Shaw & Croft.



Mr Wilson says the market is in a ‘period of flux’. Rates for much of the contentious business work are being heavily influenced by a small number of insurance companies.



‘Our hourly rates for shipping are half or less than the fees some of the big firms can charge for their corporate or commercial work. The impact is felt particularly keenly when we are competing for graduates and newly-qualifieds.’



Overall, he says, the lower rates of return have led to some large law firms closing their shipping departments, while forcing some of the very small firms to ‘disappear, merge or change’, leaving a smaller number of serious players.



‘We are attracting more high value work because we have the capacity to do it,’ he says. ‘However, it is not healthy if the legal element becomes too centred on a small number of firms. We need to sustain viable legal competition here.’



Given those pressures, can small firms compete? Joe Mays and Tony Brown founded Mays Brown four years ago with two assistants, who they have just made up to partner. They have taken on a trainee and are recruiting another assistant.



‘There is an absolute space in the market for us. If there is a huge catastrophe, we are never going to try to compete with Ince & Co. But there are other cases where, simply because the amount of money involved is big, it doesn’t mean you need a large team. Once clients realise our rates are very competitive, they see a place for us.’



While the job can be the stuff of boys’ own adventures, being a good shipping lawyer involves more than scrambling up and down ships’ ladders. ‘A strong academic background is essential,’ says Ms Calnan. ‘There are no black and white answers to the work that we do. In addition, you need a real understanding of, and interest in, the business of shipbuilders, ship owners and how they operate.’



Mr Gosling adds pragmatism and gregariousness. ‘You are trying to bring clients to London to resolve their disputes so they have to like and trust you. You also have to be commercially bright because you are dealing with business owners who can spot a duffer at 400 paces.’



Given the male-dominated world of shipping itself, is it difficult for women lawyers to make it to the top? Ms Calnan says: ‘When I started in 1982, there weren’t many female lawyers in shipping. Nowadays, if people have a genuine interest in shipping and the offshore industries, there is no real bar to anyone making progress.’



However, fewer women reach the senior positions but that, she says, is more to do with how the professional lives of women develop rather than anything specific to being a shipping and energy lawyer. For those who do choose shipping, there are opportunities to run cases and develop clients at an early stage.



However, the novelty of racing to the latest casualty can wear off. Mr Wilson remembers: ‘A few years ago, I was climbing up the side of a ship that was aground off Denmark. It was 23 December, the snow was coming horizontally and there was a three-metre swell. I was with a trainee who turned round and said “This is why I joined Ince & Co” and I thought “I would rather be anywhere else than here”.’



Grania Langdon-Down is a freelance journalist