They may not have much else in common with the Liberal Democrats, but Simmons & Simmons and Birmingham-based firm Shakespeare Putsman know the value of power sharing. They are both looking to a coalition – if that’s the right word – with Mayer Brown and Needham & James respectively. Consolidation is rising up the legal services agenda nationwide and lawyers in Birmingham believe mergers could be the next big thing in their region, given the difficult economic situation.
At the same time, the city continues to attract good quality legal work, both domestic and international in scope, and can boast a few innovations too.
With a population exceeding one million and over 7,500 solicitors, Birmingham has seen its legal profession expand rapidly over the last five years, attracting a rush of new entrants such as Mills & Reeve and Shoosmiths. However, since the Gazette last visited a year ago, only Cartwright King, the niche business defence firm, has entered the market, from across the border in the East Midlands. Times have changed.
Paul Wilson, chief executive of Shakespeare Putsman, places the rationale for his merger initiative firmly in the context of the poor business environment: ‘The extreme economic conditions experienced in the past two years have intensified competition within the legal marketplace,’ he said at the time of the announcement. He told the Gazette: ‘The Midlands economy is in a difficult place now. There will have to be mergers in the middle-tier. For a lot of firms outside the very top tiers, this is crunch time.’
Mergers are appealing to some firms that want to expand, increasing their range of services, even changing their profile to remain attractive to existing clients and finding new sources of work. For Shakespeare Putsman, combining with Needham & James will provide the firm with a social housing team, a necessary component of its property department that is currently lacking. Such a merger might also provide increased revenues, and growth and investment opportunities. Wilson wants to develop ‘a £40m-£50m business’ and will start the process by investing in IT and marketing.
For other firms, small and specialist in particular, growth is more about survival. According to Wilson: ‘If they are going to stay in the Midlands they are going to have to increase their revenue or get out.’
He is not alone in this rather brutal assessment. Richard Langton, who heads the Birmingham office of national firm Russell Jones & Walker (which has just re-absorbed a family law practice from Gorvins), says: ‘We are going to see firms merging and amalgamating. Specialist, small firms simply cannot survive in this climate. They can’t afford the insurance premiums for a start because they are astronomical now. You need critical mass to have a chance in the market.’
Of course, a merger has to make sense. Charlotte Stokes, who runs Charlotte Stokes Legal, a Midlands-focused legal recruitment agency, is practised in team moves and creating merger opportunities. As she says, for mergers to be successful a firm must secure the right strategic, financial and cultural fit, and it is the last element which is often overlooked. Guy Barnett, managing partner at Blakemores, observes: ‘Birmingham firms have a very specific culture and ethos and not all firms from outside the area are going to fit in.’ He was ‘surprised’ at the announcement of the marriage of Needham & James and Shakespeare Putsman.
If merger mania has yet to really take hold, partners have not been slow to up sticks: ‘There has been plenty of movement of partners,’ says Stokes. ‘This is in part due to the level of new entrants into Birmingham but also firms’ continued appetite for hiring people with genuine business cases. Other firms are changing their profile, such as Irwin Mitchell, and so they are recruiting partners to do that.
‘In future there will be more partner moves, because we are bound to see more whole-team moves and consolidation as legal services markets continue to change.’
As befits England’s second city, Birmingham’s legal scene is extremely diverse, with top-notch firms undertaking high-quality work both national and international in scope. One such firm is Russell Jones & Walker, which has 50 staff and high-rise offices overlooking Birmingham’s Eastside. Because of the nature of its work, such as litigation and crime, RJW is reasonably recession-proof. As Langton says: ‘We don’t have peaks, but we don’t tend to have lay-offs either.’
RJW’s Birmingham office is leading on a high-profile group litigation claim relating to toxic sofas. This concerns contaminated imported sofas which have caused skin complaints, some very serious. According to the firm, the case, featured on the BBC’s Watchdog programme, is the largest consumer group litigation order in the UK for a faulty consumer good. The firm has just come to the end of what Langton calls ‘the first chapter’ in the litigation: there has been settlement with insurers in 1,500 cases where liability has been admitted, with an estimated £20m in the compensation fund. In a further 3,000 cases liability is denied and litigation is ongoing. The firm has not received any fee income yet because the claims are being brought under a conditional fee agreement, bringing to light the stark financial realities of this kind of work.
In the international arena, Wragge & Co, one of Birmingham’s most long-standing firms and a member of the so-called ‘Birmingham Six’, is advising on huge projects in competition with magic circle firms. These range from rail projects in Africa to worldwide distribution agreements; one team has drafted legislation for the creation of a health service in Abu Dhabi. It’s partly about size. Quentin Poole, the firm’s senior partner, claims: ‘We are the largest professional services firm of any kind in Birmingham.’
But it is also about strategy. Poole adds: ‘When everyone else in Birmingham was expanding to do national work or looking at opening an office in London, we decided to look to the FTSE-100 for our client base, while always operating from Birmingham.’ Michael Whitehouse, Wragge’s head of international, adds: ‘Ten years ago, 80% of our work was from the Midlands – now 80% of our work isn’t.’
The firm has kept its London presence discrete while expanding abroad on a client-needs basis, the latest venture being a new Paris office on the Champs-Elysées. Closer to home, Wragge & Co’s
PFI team has just advised Amey, the Spanish-owned public service provider, on a new contract with Birmingham City Council worth £2.7bn to upgrade and maintain the region’s 2,500km road network.
Birmingham has a history of innovation and finding marketable solutions to practical problems. Consider the manufacturer, Matthew Boulton, one of Birmingham’s most famous inhabitants, who was involved in the silver business. Boulton discovered that he was losing time and money taking all his silver to London to be hallmarked; his solution was radical and simple. He petitioned parliament for a hallmarking office nearer to his business. This is now the grand late-Victorian Birmingham Assay Office (which still hallmarks, and has built up an impressive silver collection of its own).
In rethinking the way the legal market works, Birmingham’s law firms have some similarly innovative ideas. One such is ‘Lawyers2you’, the new consumer branch of Blakemores, a ‘new approach’ to providing consumer legal services. Lawyers2you is in the Boulton mould; it involves the lawyer going to the client (probably better called ‘the customer’) rather than the other way round. Barnett explains: ‘Customers have a great appetite for legal knowledge and have a huge variety of legal problems, but they won’t take them through the door of a law firm because it is forbidding and it looks – and is – expensive. So lawyers need to go to them instead. We are a high street firm without a high street presence. We are re-establishing that connection.’
Lawyers2you uses a variety of tools to go directly to the customer. For instance, it has legal helplines for members of associations which contract out their own advice services, and a consumer-friendly website. But the most radical venture is the stands which it has erected in all 20 of the Birmingham area’s shopping centres. These branded stands, pole-positioned in the aisles of the shopping centre, are manned by a representative and offer free initial legal advice on issues such as family and child care, employment, immigration and property. If a customer approaches the stand, a representative assesses the issues raised and takes their details. Then a lawyer from Blakemores’ call centre contacts the customer to provide ongoing advice, using different pricing structures.
Of course, other firms have set up similar discrete brands: Shoosmiths has ‘Access Legal’ (see [2010] Gazette, 4 February, 2) RJW has ‘4Expert Protect’ and ‘4Exec Protect’, and so on. Lawyers2you, however, claims to be ahead of the game in shopping centres as it has exclusivity in those centres with which it has agreements.
The Lawyers2you website is also different. Designed to appeal to a customer or consumer rather than the traditional ‘client’, it looks just like a website for buying something tangible, like a new phone. Barnett says this is deliberate: ‘Most law firms’ websites are there to showcase their people, not to appeal to real clients.’ And Lawyers2You is said to be doing particularly well. The project has been running six months and has already reached targets that Blakemores set for 12.
It is fortunate for Birmingham that it should be renowned for versatility and adaptability given the prospect of alternative business structures. There is a lot of talk among Birmingham’s lawyers about what ABSs might mean, such as creating hybrid firms and more new consumer divisions doing volume business. But the debate is also about the impact of external interest and investment in firms. Wilson, who is a non-lawyer chief executive, says buying into and running a profitable law firm is harder than it looks: ‘Law firms are difficult because people are the product and that’s tricky. Any senior management team is going to be challenged by that fact.’ So we may see consolidation, but not necessarily a wave of disposals among Birmingham’s law firms after the reforms take effect in October 2011.
Despite its size, Birmingham has a small, close-knit legal community, clustered around Colmore Row. This elegant, tree-lined avenue overlooking St Philip’s Cathedral runs from Shoosmiths and Eversheds at one end, to Martineau and Pinsent Masons at the other. This means that the trainees and newly qualifieds band together too.
In fact, many of the trainees can be found in the pubs and bars on or just off Colmore Row on a Friday evening after work. I was told that the current favourite is Asha’s on Newhall Street ‘because they serve half-price cocktails’, according to Keith Browne, past chair of the Birmingham Trainee Solicitors Society. He adds: ‘Even trainees at some of the firms a bit further out of town come in for the evening. There are very strong ties in the legal community.’
Last year, there were around 200 trainee placements in the Midlands region. Browne secured his training contract at Martineau. He chose the firm in part because it is unusual in offering six seats as part of the training contract (four months in each seat).
At the time he applied, the firm was also one of the Sunday Times’ ‘Best 100 Companies to Work For’. Browne, who has just become the youngest council member of Birmingham Law Society, believes the city has much to offer. He says: ‘There’s no commute. I walk across the city from my flat in the canal area to Colmore Circus in 15 minutes and I can afford to buy somewhere to live on a trainee salary. A one-bedroom flat can be had for under £100,000.’
For newly qualifieds in Birmingham (as elsewhere) the market is tough. Says Charlotte Stokes: ‘In the newly qualified market, although Birmingham’s large firms have been able to retain the majority of their trainees, there have also been some external opportunities for those NQs who haven’t been successful. This is partly because a number of firms that have come into Birmingham in recent times, such as Shoosmiths, have soaked up junior talent which perhaps could not find a place at the larger firms.’
Andrea Lynch, chair of the Birmingham Solicitors Group, which represents newly qualifieds, is a professional negligence assistant solicitor at Anthony Collins. She says that newly qualifieds are not only finding the market tough, but also insecure: ‘Some may be offered only fixed one-year employment contracts with firms rather than longer-term commitments.’ Swingeing spending cuts also mean jobs in the public sector will not be easy to find either.
Stokes, however, remains upbeat: ‘There has been an increased appetite since the beginning of 2010 both for law firms to recruit and for solicitors to make the move. This is in stark contrast to the previous 18 months, when such movement was virtually non-existent.’ There may also be openings in non-commercial practice areas arising from the downturn, such as crime, litigation or indeed business defence – where Cartwright King has spotted an opening.
Not everyone would associate walking with the city of Birmingham. But in fact there are plenty of canals which provide pleasant walking routes, and watering holes which refresh the spirit. So it should come as no surprise that the Midlands Legal Walk has become an annual event. Julia Jones (pictured below), the walk’s chief project manager, describes the route: ‘The walk starts either from the magistrates’ court or the Civil Justice Centre, [goes] through the Jewellery Quarter, along the canals and ends up on Broad Street where the bars are and where thirsty walkers get to have a free drink sponsored by the College of Law.’
Although only in its third year, the walk is now run by an official trust, the Midland Legal Support Trust, which boasts locals Judge McKenna and Lance Ashworth QC among its trustees. The trust gives grants to free legal advice charities and its ambitious plan at the moment is to set up a Birmingham branch of the Free Representation Unit, the advocacy charity, with the support of the College of Law.
The walk is not supposed to be competitive (‘it’s nice ambling not a race,’ says Jones) but some of the 350 or so walkers are beginning to wear special T-shirts and amble a bit faster than their fellow participants. Others just bring their dogs and take it easy. More importantly, as Jones says: ‘It brings together all sections of the legal community: barristers, solicitors, court staff, judges, legal executives, students from the College of Law, those within the free legal advice community and law centres.’ Do they get heckled by passers by? the Gazette asks. Jones says that one bystander made a joke about the collective cost of all these lawyers. Worth so much – and deservedly so.
Polly Botsford is a freelance journalist
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