Money talks

Private client work, recently shunned by the major law firms, is once again taking off in a big way.

Bibi Berki discovers the secret of dealing with all that wealth

While the rest of us tut-tut at the huge sums celebrities like Posh and Becks can command simply by posing for a couple of pictures, private client lawyers are a lot more forgiving.Huge personal wealth is the secret to a healthy private client business, and there is plenty of wealth about.

Private client departments at the top end of the wealth scale say a boom in rich people, be they e-millionaires or traditional landed families, has created a very buoyant market for their line of work.

But the fact remains that many of the major firms jettisoned their private client departments in the last few years.

Do they now regret it? Should they all be jumping back on the bandwagon?The answer seems to lie not in how big or skillful your department is, but, quite simply, how loaded your clients are.

So-called 'high net worth' clients can, in some cases, pull in an income comparable to that made through corporate clients.

Those firms that stuck by their private client departments at a time when private client work was deemed positively unsexy are now doing very nicely out of a crop of Middle Eastern businessmen and young entrepreneurs.This may have influenced global giant Clifford Chance in its decision to re-enter the private client arena after a lull of around nine years.

The firm is at pains to point out that it has continued a private client practice for the past 30 years but it has not been, to say the least, one of its priorities.

Partner Murray North, who has been put in charge of revitalising Clifford Chance's private client work (or 'international wealth management' as they prefer to call it), says the decision to boost its profile was triggered by its new international links.Clifford Chance merged with US firm Rogers & Wells and German practice Pnder Volhard Weber & Axster at the start of this year.

The merger has brought with it new demands on an international scale, not least an integrated private client service.

'Our New York merger partners have a group that does private client work, and the ability to combine UK expertise and US expertise is enormously important,' explains Mr North, who is working with private client partners John Dadakis in New York and Manfred Benkert in Frankfurt.'We think it's quite a new approach.

We've been moving in that direction for some time, but we think it's different from the way that private clients have traditionally been treated,' he says.

'Most of our clients are international clients, in the sense that they have legal and tax issues which need to be addressed in more than one jurisdiction.

This may be because they are investing abroad, they may be married to somebody who's not British, or they may have members of the family who live abroad.'Clifford Chance's decision to refocus on private client work makes it unusual among the top-ten City firms whose names - with one exception - are noticeably absent from the leaders in trusts and personal tax work.

The exception is Allen & Overy, which stuck by its private client team when other firms its size were dropping them like hot coals.Partner Richard Turnor was in the team when it went to the other partners, around ten years ago, asking for greater support.

He says they told the partners that either the team was allowed to grow into a vibrant practice, or it would have to go elsewhere.The support was duly given and the gamble paid off.

The Allen & Overy team is now around 15-strong, with a number of new recruits due to join.

It has a rapidly growing client list, many of them referred from other departments in the firm.Mr Turnor says that the team's work - if its pro bono activity is counted - makes it averagely profitable in the firm.

'The reason why we've kept going, and we're going through a huge spurt at the moment, is because it's profitable,' he explains.

'You've got to manage it right to make it profitable,' he says, adding that the secret is to be able to handle the more sophisticated and complex work demanded by some clients.He says firms which rejected private client work lost out on a major area of profitability.

The kind of work handled by Mr Turnor and his colleagues ranges from estate planning and trusts, through charities work, to professional partnership advice.

'I think the main problem they have with not having private client expertise is not having trust experts.

Trusts law is important to transactions.

Private client lawyers tend to be on top of it.

If you don't have it, you've got to go to the Bar.'Allen & Overy's support for its private client department is applauded by other practitioners in the field.

The boom in private client work is the firm's reward.

But what is causing this boom?Some say its an increase in interest from private banks, others simply that more people are coming into enormous wealth.

The international angle is also offered as an explanation: as more UK firms go global, they are having to handle the needs of clients from their partner practices abroad.

Another explanation is that private client work is seen as a more stable earner than corporate work at times when clouds are seen on the economic horizon.

A significant factor must also be the attractiveness of a career in private client work to the young lawyer.

Where once it was considered the dull option - the preserve of elderly partners handling widow's wills - it is now not only considered more exciting, but also more remunerative.'It's possibly the healthiest it's been in recent times,' says Andrew Young, head of the private client department at Lawrence Graham.

This vigour is down to 'the fantastic growth in private wealth', he explains, due to the traditional rich who have got richer and the new City rich.

Having said that, a lot of the department's clients are corporate, such as private banks and offshore trusts.Lawrence Graham's private client work is a core practice at the firm, contributing 15% of the firm's turnover.

It joins a handful of other London firms with pre-eminent private client departments which are now doing very nicely out of the wealth boom.'Firms like this one and Withers and Macfarlanes have always had strong private client arms and it's been constant and is constantly profitable,' he says.Mr Young was one of three partners handling Clifford Chance's private client work in the late 1980s.

He says the world of private client work is small and co-operative, and adds that he is pleased to see Clifford Chance come 'out of the closet' over its need to revive the department.So will all those firms like Freshfields, Slaughter and May, and Norton Rose, which halted their private client operations, end up regretting it? Are they likely to follow Clifford Chance's example and attempt to breathe new life into the practice area?City firm Rowe & Maw closed its private client department last November and is standing by its decision.

Chris Pullen, director of marketing at the 80-partner firm, says the department contributed 1% of the entire turnover.

He says the bigger firms are maintaining their private client departments 'as an additional service to clients and not for making money'.'I think one or two magic circle firms might see that there is a benefit in offering a private client service, perhaps in tying in relationships at certain levels.

There has to be a good business reason to do it.

I think firms like ourselves have no business reason to do it.'But Rowe & Maw's private clients were not simply cast aside.

A deal was negotiated with London firm Farrer & Co, which one of the three Rowe & Maw private client partners - former managing partner Richard Powles - joined.Rowe & Maw couldn't have picked a more bullish firm.

Farrers' private client department, referred to by some in the business as the 'club for the rich and famous', is also enjoying the wealth boom-time.

To illustrate just how good things are, Anthony Edwards, who co-runs the Farrers team with Mr Powles, recounts how he has just taken on a family of four clients who between them are worth 100 million.

Plenty of public companies don't enjoy that kind of turnover, he points out.Farrers' 14-strong private client team (not counting the lawyers handling the tie-in areas of charities, estates and family work) contributes 40% of the firm's turnover.

Mr Edwards says the kind of work handled by his team 'could be anything from immigration to employment, tax planning to conveyancing, landlord and tenant to pensions advice'.

Clients are increasingly from abroad, particularly from the Middle East and Far East.'The days of private client work being dead in London are long past,' says Mr Edwards.

'Solicitors ought to genuinely realise that it's a very verdant field for the future.'And the fact that three headhunters have approached Mr Edwards in the past three months must be some indication that he is not alone in his optimism.