Diversification day

With income falling for some barristers and merger fever gripping chambers, Victoria MacCallum asks whether the Bar is coming to terms with competition and whether it has a future at all

The endlessly thorny issue of fusion of the legal profession has reared its head once again after the latest survey of barristers' chambers made gloomy reading for the wigged ones.

At a time when large parts of the solicitor side of the profession are booming, it found that while barristers' income overall saw a small increase, for many it was down.

The median salary for a senior junior barrister of more than 10 years' call is 71,800, down from 84,000.

However, the Bar is facing attack not just from solicitors: with rising rents, the loss of QCs to so-called 'mega-sets' and the rise of mediation as opposed to advocacy, the vultures are hovering over the inns of court.

The 165 chambers (45% of all sets) that responded to the survey, carried out by BDO Stoy Hayward with the support of the Bar Council, painted a picture of a profession in a state of change.

While the number of barristers appears to have stabilised at around 10,000, the level of movement between chambers is greater than it has ever been.

Most barristers move to larger chambers, with the result that the number of small chambers is falling - in 1999 there were 174 chambers with fewer than 20 members, compared with 146 in 2000.

By contrast, the number of sets with more than 40 members has jumped from 55 in 1999 to 68 this year.

Does this mean that the days of the small specialised set are numbered?

'Absolutely not,' says Mark Green, a director with BDO Stoy Hayward's professional practices group and the editor of the report.

'There will always be a market for smaller chambers who deal with specialised areas such as intellectual property and tax.'

Malcolm Gammie, the one-time top tax partner at City firm Linklaters, who left for the Bar to practise at One Essex Court, agrees.

'I think that specialised fields such as tax are the future for the Bar.

In the more general fields such as criminal or commercial work, then you may have a problem with generating work.'

Mark Humphries, head of advocacy at Linklaters and chairman of the Solicitors Association of Higher Court Advocacy (SAHCA), says that the merging of chambers is a good thing for the profession, and sees this happening more and more in the future.

'They'll just be doing what law firms have been doing for years - they'll be trading off the set's reputation rather than that of individual barristers.' He also points out that in order to survive, chambers will need adequate resources to fund marketing drives, and by merging with other sets, their income will doubtless increase.

This creates a no-win situation for the smaller chambers.

As their QCs are attracted to the mega-sets, such as the high-profile Matrix chambers recently set up by Cherie Booth QC among others, they inevitably take a great deal of work with them, leaving their previous homes doubly bereft.

However, Bruce Houlder QC, chairman of the Bar Council's public affairs committee and vice-chairman of the Criminal Bar Association, does not see the loss of QCs as necessarily sounding the death knell for small chambers.

'Yes, QCs are a magnet for work,' he admits.

'But what is also a magnet for solicitors when referring work is the sheer range of skills that are offered by chambers, whatever size they are.

Some small chambers are the same size now that they've always been because they're very specialised and that's the nature of the work.'

However, what could well prove fatal for small chambers, and indeed the profession as a whole, is the seemingly inexorable rise of the solicitor-advocate, as law firms move away from instructing external counsel.

This danger has been widely trumpeted - with more and more City firms developing in-house advocacy teams and this seems to be the final, and the strongest, nail in the Bar's coffin.

The survey supports this, with solicitors carrying out work in-house named as the biggest threat to the Bar.

The criminal Bar is similarly having to face up to Crown Prosecution Service lawyers carrying out their own advocacy too.

However, Mark Green makes the point that while City giants such as Linklaters have the money to fund in-house advocacy teams, smaller provincial firms do not, and so will continue to refer work.

Malcolm Gammie says that the sudden rush for magic circle firms to establish in-house teams has a lot to do with the need to keep up with the Joneses.

'Many firms want to be seen to have expertise in this field.

Its a very competitive market and if your competitor down the road is offering this service, you need to be seen to be offering it as well.'For whatever reasons, it appears almost inevitable that the number of law firms offering a 'one-stop litigation shop' will continue to grow.

Russell Wallman, head of policy at the Law Society, foresees an increase in the number of solicitor-advocates over the next few years, for the simple reason that 'the idea of an integrated service is attractive to the client in many ways'.

This will, by its very nature, mean a decrease in the amount of advocacy work done by the Bar, he goes on, and as a result the Bar will have drastically to reduce in size; however, it will not disappear.

'There will be a decrease in size, but this won't be a threat to their future.

There will always be a need for a group of specialised advocates operating on a referral basis, as long as they are a high-quality and cost-effective service,' says Wallman.

Not every barrister sees solicitor-advocates as a serious threat, however.

Bruce Houlder says that 'to be really good at advocacy, you need to do it all the time, and solicitor-advocates don't.

Barristers offer a wide range of specialist advocacy services targeted at the case in hand, which just isn't offered by solicitors'.

He also argues that barristers are able to provide a far cheaper litigation service than solicitors, because of their lack of overheads in comparison with law firms.

'There is no more cost-effective product of legal services than the Bar, because we have very low overheads.

It's as simple as that.'

Chambers face an increase in overheads over the next few years, however, with the increasing use of IT requiring training and expensive equipment.

Almost all chambers questioned in the survey planned to apply for the BarMark, a quality mark accreditation.

The administrative start-up costs for the scheme are high, causing a further drain on chambers' budgets already stretched by rising rents.

Another potentially important development is Bar Direct, a pilot scheme that aims to make it directly accessible to certain companies and organisations.

This cuts out the need for a solicitor to act as a middle man, and means barristers will have a relationship with their client in the same way that solicitors currently have.

While this could mean diversification for the Bar by not being solely reliant on referral work -- and in turn bite into solicitors' market -- others argue that it will make barristers no different from solicitors.

If that is the case, what reason is there for the two sides of the profession?

Mark Green stresses that Bar Direct is still very much in its infancy - only 0.4% of work at present comes from the scheme - and he doubts that it will ever take the place of the traditional referral system.

Bruce Houlder is also quick to stress that solicitors will not lose out: Bar Direct will benefit a few specific companies who require a specialised opinion from a barrister, but are currently forced to go through a solicitor to get one.'

'This is not an attempt to rid solicitors of work, but merely trying to reduce uneccessary restrictive practices,' he says.

So what is the future for the Bar? Solicitor-advocates aside, the current popularity of mediation and the growing tendency to see settling claims in court as a last resort means that a major part of the Bar's income is under threat.

The solution seems to be diversification, ensuring that each barrister has more than one string to his bow.

'The more forward thinking chambers have seen this coming [the mediation boom] and have been training their advocates not just for court work, but all eventualities,' says Mark Green.

'There are many other situations that a barrister can be trained for, not just advocacy in a court situation.'Bruce Houlder sees this move from litigation to mediation as a healthy one, and indeed one that the Bar has been encouraging for many years now.

'It's a chance for younger members of the Bar to try out their mediation and arbitration skills - we see it as another work opportunity.'

Despite the drop in salaries, BDO Stoy Hayward found that the Bar's income grew 8% last year to 1.5 billion, indicating that there is life in the profession yet.

There are certainly lean times ahead for the inhabitants of the inns, but the message seems to be that diversification, repositioning and multi-skilling means it is likely the Bar will live to fight another day - albeit a very different Bar from the one we have now.