Shop til you dropStephen Ward investigates how law firms are helping high-street chains ring the cash tillsEvery month, lawyers in the Bristol and London offices of Osborne Clarke gather for a video conference of the firm's retail team.The composition of those dozen or more solicitors around the virtual table shows the retail expertise that now goes across every discipline - property, corporate, commercial, information technology (IT) and intellectual property (IP).
The head of the team, Bristol partner Claire Wagner, says: 'We share expertise within the group and talk about the work we are doing.' Osborne Clarke is one of many firms taking an increasingly integrated approach to the retail sector, which as Christmas sales figures reported this month show, is still in a state of uncertainty in the face of strong customer resistance to higher prices, changes in shopping patterns away from town centres, and the effects of sales over the Internet.
The retail market for legal services is demanding, volatile and competitive, reflecting the trading conditions the shops experience.
'When I am acting for a client, I never take it for granted that I will still be acting for them in a month's time,' says Christopher Denny, a retail partner at City firm Denton Wilde Sapte.And clients, which for Mr Denny include Sainsbury's, Marks & Spencer and the Co-op, like to build relationships.
Jack Jacovou, head of retail at Birmingham firm Wragge & Co, says: 'Retailers don't just change solicitors for the sake of it, just because another firm comes along and says it can do the work cheaper.'There is a consensus on both sides of the client-firm relationship that it should be hard to get onto a panel, and hard to be thrown off unless you do something wrong.They are clients who expect detailed sector knowledge.
Mr Jacovou says: 'We do find leisure and retail operators like us to be involved in their business.
They like you to know what's going on in their market, what they're concerned about.'Michael Reevey, a partner at the Leeds office of Addleshaw Booth & Co, agrees.
He says: 'They want us to be business advisers, not just technicians.'The game-plan for law firms setting up retail groups is that existing contacts give you access and credibility in one area of work, and from there you have to convince the clients that other parts of the firm are just as good.Osborne Clarke, for example, first did property work for the supermarket chain Somerfield two years ago, and has been able to add several commercial contracts, some litigation and quite a lot of construction work, Ms Wagner says.
It has extended its work for Dewhurst, the butcher's chain, from property to include some property litigation.Within many firms, partners will develop a retail expertise without necessarily being part of a retail structure.
At Wragge & Co, for example, the retail group consists of commercial property lawyers, but there is a network of retail experts across the firm.
Retail groups are based around commercial property in most law firms because traditionally the basis of the demand from retailers was managing, buying and selling retail outlets, warehouses and offices.
When a retailer expands, it uses solicitors to buy extra shops, and when it contracts it needs them to sell surplus sites.
Retail expertise means understanding the needs of a client, such as making sure a lease always allows the shop to change the sign on the front without permission from the landlord.
As Mr Jacovou says, a shop which rebrands its logo from red to blue does not want to have to ask permission from 500 different landlords.
His clients include Marks & Spencer and Boots.
'We have a specialist unit to do routine work,' he explains.
This is the sort of work a retailer will not want to do in-house.
'If you're a five-year-qualified in-house lawyer and are handling acquisitions, then dealing with a simple lease renewal or a licence alteration isn't going to be at the top of your pile.
But from the client's point of view, that work is important.' A licence alteration for change of use of a premises is critical.
'They want to get it in place, fit up the store and open in time for Christmas,' he says.Large retail firms almost invariably give their business to a formal or informal panel of solicitors, usually giving different practice areas to separate firms.
For property there will usually be two or three firms doing the work.
Mr Reevey explains the logic: 'They want to keep us all on our toes.' It helps the law firm too, most partners believe, because they can compare their performance against the opposition, and take steps to improve or alter it if they are being out-performed.There have been some hefty mergers and acquisitions too.
Notably, in June 1999, the US giant Wal-Mart bought Asda for 6.7 billion, in a bid contested by the Kingfisher group.
Kingfisher is demerging the part of the business which owns Superdrug and Woolworth from the part which owns the B&Q and Comet DIY and electrical chains.Mr Denny says it is misleading to see the magic circle law firms which carry out these deals as the retailers' main lawyers.
The choice of law firm for a major takeover or merger will often be dictated by the banks putting up the finance.
'They will say to the retailer, we always use such and such a firm, that's who it will be.
So however loyal the clients are to their law firm, they will have to use a magic circle firm for the transaction.'As Denise Jagger, head of legal at Asda, which used Slaughter and May for the takeover, says: 'We can't afford to pay 500 an hour for everything.' Asda, for example, uses Eversheds for commercial and commercial property and some employment and litigation work, with 20-partner London firm Park Nelson as an alternative for commercial property.
Addleshaw Booth & Co handles IP.Some of the retail chains and supermarkets are jealous of their lawyers' favours.
Mr Denny recalls that John Menzies newsagents used to be one of his clients.
They made it quite clear that his firm should not do any work for WH Smith.
Eventually, to his disappointment, WH Smith took over John Menzies, and the work was lost anyway.
Ms Jagger at Asda says law firms must not act for competing supermarkets.
'We expect them to be thinking of us first, and how to advance our business,' she says.
A year ago the shopping street and shopping centre were seen as under terminal threat from the Internet.
Mr Jacovou at Wragges is proud of having predicted before the hi-tech shares crash that there was a limited future for selling goods like clothes over the Internet unless they were being sold by established retailers, whose customers could see the goods in a shop first.
There is still a potential impact on retailers of commodities such as books and CDs, but it will not come immediately, most lawyers predict.
In the shorter term, the expansion of traditional retailers into e-commerce is bringing extra demand for legal services.
Osborne Clarke, which has IT as well as retail sector knowledge, says it has picked up e-commerce business from two clients, the electronics chain Dixons and the jeweller Mappin and Webb.
And although law firms are aware that some of the high-street names will decline if they fail to keep innovating with the market, the wise ones will hedge their bets in such a volatile sector.
As Mr Denny says: 'Any manage-ment consultant will tell you not to write off any client when they are not doing well.
But they also tell you to keep looking for new business at the same time.'Stephen Ward is a freelancejournalist
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