Times have been challenging for almost everyone in the Leeds legal market: from Fox Hayes, which went into administration last year, to members of the original ‘big six’ Leeds firms such as Hammonds, which made over 70 redundancies and had to close its conveyancing business, Hammonds Direct; to Lupton Fawcett which, although it grew when it took on fee-earners from Fox Hayes, has made staff cutbacks. Eversheds’ turnover fell by 3% in 2009-10.
Yet some in Leeds have turned a bleak outlook into an opportunity. James Haddleton, president of Leeds Law Society, says: ‘Maybe it was good that there was reform. Maybe this is how Leeds law firms remain strong.’ Or as one Leeds solicitor tells the Gazette: ‘A lot of the fat of the larger firms has gone, but our strengths have kept the market afloat.’
Breadth of practiceThe large and mid-tier firms say they have been protected from the worst of the recession by either their breadth of practice areas, sectors or client base – or all three. Despite the fall in turnover, Eversheds’ senior office partner in Leeds, Keith Froud, says that the international firm has been shielded from the worst of the downturn: ‘We are insulated from a recession because of our size and diversity, with, for instance, a balance between institutional and corporate, and a mix of local, national and international clients.’
Beachcroft is proud of the fact that it has not made redundancies and has in fact recruited in the region as well as invested in a second office in Leeds. Virginia Clegg, head of real estate at the firm nationally, and also the new senior partner in the Leeds office, says: ‘Our revenues have slipped a bit but we will steadily grow, in real estate, in employment, in our litigation group.’
Certainly, recessions have their winners and losers – and they can be within the same firm. Big six member Addleshaw Goddard’s head of financial services, Adam Bennett, has taken the firm forward with his building society and Financial Services Authority expertise, becoming involved in 16 building society mergers nationally.
And then there was Halliwells. Though, of course, all law firms naturally distance themselves from what happened to the firm, ‘the other side of the Pennines’, Halliwells has exposed vulnerabilities which were simply not envisaged before for a firm of that size and calibre. Haddleton says that what happened at Halliwells has changed the relationship between lawyers and their banks forever: ‘There is clearly now a model, if we can call it that, of pulling the plug on a law firm. Banks are much tougher these days, their covenants are tougher. Certainly you don’t simply ask the bank for more credit and get it.’
Firms will not disclose how much Halliwells’ demise has really affected them or whether they are changing their strategy on lending. Most will admit, however, that law firms were already pondering such crucial financial concerns because of the tough economic conditions. Froud says: ‘Halliwells caused shockwaves in the sector and no one takes any pleasure in what has happened there. But all these types of issues such as cash management, control of your working capital and restructuring, have been extremely important of late. The bottom line is the job isn’t finished until we pay the bills. Halliwells has just sharpened a lot of this pondering.’
Finding opportunitiesSo much for the doom and gloom. But Leeds wouldn’t be Leeds without unearthing opportunities from the debris. For Froud, this is what lawyers in the West Riding do best: ‘We just keep looking,’ he says. ‘Consider the issue of the overcrowded legal market. With over 200 law firms now in the city, Leeds has had too many lawyers for a long time. So it has simply extended its boundaries and looked outwards and forwards. There is Yorkshire but there is a lot more out there.’ Leeds Legal, the marketing initiative for the sector, for instance, has recently received a delegation from Barcelona as part of its ongoing campaign to widen the sector’s reach. Rosemary Edwards, who represents Leeds Legal, says lawyers are seeking to turn the recession to their advantage: ‘Leeds firms have a history of adapting well to changing economic conditions and they have continued to demonstrate this, in many cases emerging strongly.’
Take the crop of new niche practices such as Metis Law and Lake Legal, and the launch of a specialist French law practice, Heslop & Platt. Lake Legal, an independent litigation practice, was set up a year ago by two former partners from Watson Burton, Lyn Ayrton and Karen Eckstein. Both found their own client base and practice were not aligned to the way the firm was going (and in Eckstein’s case, there were conflicts of interest) and so they agreed an amicable departure because they felt it was time ‘to control our own destinies’, says Ayrton.
Eckstein says: ‘There’s not a comprehensive handbook which tells you how to do it. But not knowing what was involved in setting up a law firm was the best thing about it. If you did know, you wouldn’t do it.’ The firm now has eight employees and has recorded over £1m turnover in its first year.
Necessity is what drove Paul Cooper to found Metis Law, a new specialist practice named after a wise counsellor in Greek mythology, when Cooper lost his job as an in-house lawyer at a property developer. With very little chance of finding another post, he and his business partner, Rajat Sharma, decided to set up on their own. ‘I was in the eye of the storm, I had to do something,’ Cooper says.
Using their specialist skills and experience in commercial property litigation, particularly litigation arising out of ‘off-plan’ developments, the pair developed a reputation and a client base which enabled them to expand their office. They have done this by taking on fee-earners on a ‘consultancy’ basis rather than as permanent employees, which has enabled them to offer work to lawyers who have otherwise found it difficult to find work despite their high levels of experience. The Metis Law model is much like a virtual law practice (though they are at pains to stress that they are ‘real’ – that they have an office) in that any fees generated by the consultant are split with them on a pre-agreed percentage basis.
There are other success stories. DWF, for example, has expanded from 27 to 200 people since it opened in Leeds in 2007. Profits for the last financial year were up by 17%. The firm now has two floors in the Bridgewater Place complex, having absorbed teams from other firms (some from floors above them at Eversheds). Haddleton, who is senior partner and current president of the local law society, says it is all about the client: ‘We keep close to our clients which means we keep our clients’.
Adding valueOf course, DWF is not the only firm to concentrate on client relationships and to find new ways to add value, particularly as clients are putting cost pressures on firms as businesses tighten their own belts. Addleshaw Goddard started a client relationship programme with Cranfield University, using business analysis tools to work in partnership with clients. Beachcroft, with clients in the health sector, has involved itself in the Healthcare Personal Management Association, which develops talent in that sector. Clegg says that clients are ‘even more price-sensitive’ and so firms need to keep the focus on added value.
Commercial firms are cautiously optimistic about the immediate future and are buoyed by the last three to six months, which have seen a slight increase in business for corporate teams. ‘We are of course quieter than those heady days of 2006/07 where there was an unprecedented level of private equity, and merger and acquisition activity,’ says Simon Pilling, a corporate partner based at Addleshaws. ‘But there was a real pick-up at the back end of last year, culminating in deals completing in March and April.’
The legal recruitment market, always a bellwether of the legal sector, has picked up in Leeds too. Rachael Mann, a director of Sacco Mann, the Manchester and Leeds-focused recruitment company, says this is ‘her busiest six months ever’. She says: ‘Profits have hit firms and, following restructuring, many are at their operational core. They are now, however, looking for growth. Many of the mid-tier commercial firms are looking at their three- to five-year strategies and are seeking growth through lateral hires or to fill gaps in the firm’s profile.’ Interestingly, firms seem not to be proactively seeking mergers or consolidation, though Mann says that mid-tier firms are ‘open to talking’ to smaller firms about possible takeovers.
It is the junior end of the profession and firms doing publicly funded work that are perhaps worst hit by the downturn, and these challenging conditions seem set to continue. Young lawyers in Leeds have had a rough ride. There have been students unable to secure a contract, and trainees unable to get a full-time position or indeed any position, as Heidi Sandy, national chair of the Junior Lawyers Division, explains: ‘Some firms have only been able to offer their trainees paralegal work instead of a newly qualified post, or only fixed-term, one-year contracts, or they have frozen salaries at trainee levels even when they have qualified.’
One consequence, Sandy says, is that young lawyers are now more focused on improving their soft skills and have learnt to be very adaptable. The market appears to have improved for this September, as Mann notes: ‘This year is a lot better and there are fewer without jobs but newly qualifieds are still having to keep very flexible.’
In legal aid, meanwhile, as we know, the Legal Services Commission recently announced tenders for family law which saw an estimated 46% cut in ‘suppliers’ nationwide. In the Leeds region the statistics are even worse, with only a third of firms, eight out of a total of around 30, being successful. Specialists warned that there will be ‘complete mayhem’ come October when the city’s firms have to refuse publicly funded cases, though the LSC has since agreed to extend contracts for a month.
Concern is most acute in child law, an area which has seen a greater number of cases since the Baby P trial – and the Leeds Care Centre is considered the busiest in the country outside London. Yet four of eight successful firms have only one specialist care lawyer in post and one has none at all. Pat Gore, a partner at Davies Gore Lomax, says: ‘There are simply not going to be enough solicitors to do the care work’. Lawyers say the tender process worked in favour of the bigger firms and that many of the rules governing the award of points were unclear (it was not clear, for example, that a firm needed the full 40 points required to be successful).
The recent tender outcomes are but one aspect of a depressing outlook for legal aid firms. As Gore explains: ‘The divide between the legal aid firms and the commercial firms is bigger than ever now. In the last twelve years we have seen no increase in real terms in our income. I am functioning on ever-diminishing returns. More importantly, I am functioning on an overdraft. I defy any business not to put up its prices and still survive’.
Another family lawyer who wishes to remain anonymous (as he is appealing the tender process) tells the Gazette: ‘The one thing that kept me going was that I was doing something of social value, that I was delivering real, tangible assistance to the most vulnerable – and now I feel that this role has too been cast aside. We all feel a great sadness that so much experience, goodwill and hard work is being thrown away.’ He adds: ‘We are not saying that we shouldn’t change. Of course the scheme could be more efficient and trimmed down, but we want a fair and equitable system.’
One thing, however, that all firms in Leeds must contend with is what may happen in the longer term, beyond the next 12 to 18 months. There remains the prospect of a double dip recession, and of course the profession is also awaiting alternative business structures.
\So what then? Clegg says: ‘It’s all in the mix now – alternative business structures, a firm’s blend of lawyers and non-lawyers, solicitors will find it more and more difficult to work in a traditional firm in a traditional way’. In Leeds, lawyers insist they will make the most of it – whatever ‘it’ turns out to be.
Leeds’ architectural landscape is a tale of two cities – what is and what might be yet. A number of developments have collapsed in the downturn such as the 53-storey tower, Criterion Place, and Wellington Street. There are plenty of undeveloped plots down Whitehall Road and there is a distinct look of unfinished business about the Bridgewater Place development, south of the River Aire and the railway station, where Eversheds and DWF both have new offices.
But all is not lost. The recently completed Broadcasting Place, made of corroded steel (otherwise known as ‘rust’), was voted the best tall building in Europe 2010 by the Council for Tall Buildings and Urban Habitats (and this despite the fact that it is not particularly high – it provides 23 storeys of student accommodation for Leeds Metropolitan University). On top of this (quite literally), one of the buildings in the new Granary Wharf on the Leeds-Liverpool Canal has a communal terraced garden on the top floor.
Leeds is also going ahead with a new £350m shopping centre, the Trinity Leeds project, as well as a regeneration programme in the south of the city, the Holbeck Urban Village.
The cost of a residential property in Leeds is still below the national average, according to figures published in the Financial Times recently. The average two-bedroom property costs around £149,500 and a one-bedroom just over £100,000. Chapel Allerton and leafy ’burbs in the north of the city are self-contained urban villages with their own social scene and community. The former village of Meanwood, now a suburb of Leeds, will soon have the city’s first Waitrose. What else does one need?
There is a new firm in Leeds which gives real meaning to the word ‘boutique’, for Heslop & Platt practises French law. It advises on buying and selling French properties, and related issues such as disputes with neighbours or disagreements with the local French planning authority. Launched at the beginning of 2009, it was not deterred by the unfavourable economic climate, as Graham Platt, one of its partners, says: ‘Tim Waterstone said that the best time to start is in the depths of a recession. There is never a bad time if you believe in what you do, though we probably have slower expectations.’
The client base is full of Brits buying their dream property in France (though these days the trend is towards Alpine chalets, not tumbledown barns in the Dordogne). But prospective buyers do not help themselves and often do not investigate a property thoroughly, as Platt explains: ‘Our firm will make all the necessary contact with the notary in France who will do the basic searches. But we will also go one step further. We will try and talk to the Mairie’s office and locals to find out what is really going on around a property. You know the sort of thing: electricity pylons, a wind farm, a waste processing plant. The things that the French call projets d’intérêts générale.’
Polly Botsford is a freelance journalist
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