Lawyers square up

As law firms lock horns in the battle to keep existing clients and attract new ones, Chris Baker discusses whether such competition is healthy and how solicitors go about tackling it

Think of business rivalries and the mind tends to picture sharp people in even sharper suits relentlessly plotting one another's downfall, like something out of a Jeffrey Archer novel.

However, talk to most law firms, and they will tell you that they are above that sort of thing.

But as the legal sector aligns itself more with big business, a certain amount of competition will inevitably emerge.

While the deliberate targeting of a rival firm's clients is generally frowned upon, having competition is seen as good for sharpening practice - prompted by fears that clients will defect if they believe another firm is doing a better job.

Robert Ashing, a consultant at law firm consultancy Hildebrandt International, says: 'The level of competition has increased substantially over the last five years and it's affecting all levels within the legal market.'

Rivalry first reared its head a decade ago among the magic circle firms - about the time their 'no poaching' agreement started to fall into disuse - but has since spread across the market, he says.

Earlier this month, Birmingham-based Wragge & Co took the unusual step of naming the four firms it will target when it sets up a private equity team in London next year.

The rivals - City-based private equity teams at Macfarlanes, DLA, Travers Smith Braithwaite and Scottish firm Dickson Minto - expressed surprise and flattery at being in the spotlight (see [2002] Gazette, 14 November, 9).

Corporate finance teams all appear to relish rivalry to some extent.

Partners talk up a clubbish atmosphere where work is referred to competitors when there is a conflict of interest, but the desire to beat the other team is never too far below the surface.

'There's a natural desire to be the best and to be the best you have to look at what other people do and think how you can do that better,' says Vanessa Knapp, a corporate finance partner at City firm Freshfields Bruckhaus Deringer and chairwoman of the Law Society's company law committee.

'We want to be more innovative and more on top of new developments, so we can do a better job than other people - and to do that you have to look at what other people do.'

A partner at another City firm, who did not wish to be named, adds: 'Everybody is trying to do the best by their clients, so that their clients will stay with them.

Competition does sharpen our focus - it's the same for any business.'

But Nigel Boardman, head of corporate finance at City firm Slaughter and May, denies any rivalry.

'I don't think there's a great deal of rivalry.

I think that's partly because the people here went through training at university, then the College of Law with friends who are now partners in other firms.'

Even so, he concedes: 'We would want to make sure our work is at least as good as other firms.'

Most firms admit to benchmarking against the competition.

In Leeds, whose position as the north's legal centre is being challenged by Manchester, Hammond Suddards Edge corporate finance partner David Armitage says: 'Being able to measure ourselves against other law firms keeps us sharp in terms of service delivery and it helps us set standards that we can improve upon.

Competition does tend to breed excellence and improvement.'

Sean Lippell, head of corporate finance at Addleshaw Booth & Co, agrees.

'In Leeds, there is an intensive competitive market and that tends to ensure everyone sharpens their act,' he says.

'Of course, you benchmark against your competition if you have the ambition to be the leading firm in the north - you cannot do it in a vacuum.'

But getting obsessed with what the rival team is up to is not good for business.

Mr Lippell advises: 'Don't build your strategy completely on what they are doing because you end up just being reactive.'

Firms tend to identify rivals to match their objectives and aspirations.

Some practices the Gazette contacted preferred not to dignify - or flatter - their competitors by informing them, but others were happy to name names.

Mr Armitage says Hammonds aspires to be a leading European practice.

'So, we would see European law firms like Allen & Overy, Bird & Bird, Simmons & Simmons and Freshfields as competitors.'

Mr Lippell sees his rivals 'nationally and in no particular order' as firms such as DLA, Eversheds, Wragge & Co and other major national players.

'But if you are looking at different markets you end up with a different analysis,' he adds.

'It all depends on aspiration and where you want to be.'

At Freshfields, Ms Knapp says: 'If you look at our work as corporate lawyers, then Slaughter and May would be a good example [of a rival].

But if you look at the league tables, then there are a large number of law firms that are trying to provide very good legal services.'

Mr Boardman disagrees.

'Freshfields is a good firm but I wouldn't say they were a direct rival,' he says.

'I like the people in Freshfields and quite often come across them.'

But then again, Mr Boardman does not believe Slaughter and May has any real rivals to worry about.

'It's a competitive market but I don't think there is any firm that is Spurs to our Arsenal,' he explains.

'There is no firm that we would see as having a needle match with.'

But rivalry between firms will lead to competition for clients.

'Any firm that thinks it has exclusive rights to their clients' work is probably very nave,' says Mr Ashing.

'Over the last 20 years, the targeting of other people's clients has become more widespread than it once was - 20 years ago people didn't do it at all,' one partner, speaking anonymously, said.

And it is no Herculean task to do so.

The partner adds: 'It's not difficult - if you move into the private equity market for example, you have only to read the private equity journals and see who is doing deals with whom.

Then there's nothing to stop you from ringing the private equity houses up and asking if you could do some work for them.' Life for commercial firms of all sizes has also become easier since the Law Society allowed them to cold-call businesses.

Hammond Suddards Edge would not deliberately poach a rival's clients, according to Mr Armitage.

But it would still approach them.

'We will look at key players in those industries, look at what we have to offer and if that offering is of interest we will target that company - not their law firm.

We will do a lot of research and not bother about who is already acting for them - it won't bother us if they're using Slaughters or anybody else.'

And at Slaughter and May, Mr Boardman adheres to a similar philosophy.

'If potential clients are available we would try and get them and it wouldn't matter where they came from.

I wouldn't say "I hate Freshfields and I am going to take their clients".

But if they were unhappy with the service they were getting or there was a conflict of interest, then that would be different.'

Eversheds corporate finance partner Stephen Hopkins, who has worked in Leeds for 14 years, is aghast at the notion of firms deliberately targeting and approaching the clients of rivals.

'I don't think people are selling themselves on the deficiencies of another firm - it's more people trying to emphasise the positives of their own firm,' he argues.

'I think [targeting] is a very old-fashioned, negative and unsophisticated way of doing things.'

Rivalries are a lot less cut-throat between high-street law firms.

Legal Aid Practitioners Group director Richard Miller recalls that there was once competition for legal aid cases - but firms are now dropping out in frustration at the vagaries of the system, leading to less rivalry than in the past.

'Competition has been the case but it's decreasing because more and more often we are getting just one or two firms in any town that still deal with legal aid,' he explains.

'And often they deal with different areas, so they will refer cases to each other.'

Solicitors Sole Practitioners' Group chairwoman Sue Carter agrees: 'I like to think that we help each other a lot, so there's not the same competitive edge.

A lot of people specialise and they refer things if it's not in their area, so there isn't the same spirit of competition - it's much healthier.'

However, there is competition from sources other than law firms.

In Blackpool, Kent and Wiltshire personal injury firms have realised that they must band together to try and combat the threat from claims management companies.

And concern continues to grow over the deregulation of conveyancing services - arguably the single most competitive legal market of them all as it is, to judge by the level of fees - and proposals to allow non-solicitor organisations such as supermarkets to offer legal advice, albeit through ring-fenced entities run by solicitors.

One thing all the rival firms agree on is that the way to beat competitors is simply to be better at your job than they are.

'The best way to keep clients is by delivering proper services,' Mr Lippell explains.

'Investment in customer care in its widest sense is the best way to do it.'

But Mr Hopkins warns that if rival firms do not necessarily benchmark against each other, clients will certainly compare and contrast.

Mr Ashing maintains that clients are 'far more sophisticated' than they once were.

Hildebrandt research has found that a firm's view of its clients is quite often at odds with its self-perception.

'The advice we would give is to seriously consider what the focus of the firm is in terms of core business and core practice areas,' he explains.

Rivalries are all the rage these days.

The television schedules are crammed with people competing against one another to be a pop star, a chef in Jamie Oliver's restaurant, best at living in the jungle or the most eligible partner for a pre-selected paramour.

A sense of healthy competition is always good for business, but it is worth remembering that while you are busy drawing up hit-lists of potential clients who may well be on a rival's books, that rival is probably drawing up lists that include you.

Chris Baker is a freelance journalist