The big beasts of the corporate legal jungle have been quiet over the past year. It may even be time for some of them to go to sleep. Michael Taylor reports.
In the early 1990s a number of Manchester’s ascendant firms – Addleshaw Booth & Co, Dibb Lupton Allsop, Halliwell Landau and Eversheds – had powerful and active senior figures who strode the corporate stage. Some of these firms have also changed names. And now it appears the senior leaders are also undergoing a change in personnel, too.
Paul Lee rose to be senior partner of Addleshaw Goddard, Manchester’s top law firm for a generation; he’s stepping down as senior partner. Alec Craig, who learnt at the knee of his former mentor, Clive Garston, has taken Halliwells to a new level, is up for re-election next year and many expect him to make way for a newer face.
DLA Piper, now a global firm after several mergers, has changed the most. For the Manchester office, 2009 was the year it could no longer accommodate the ambitions of Simon Woolley, the banking lawyer who took over as managing partner but left quickly in October. In another era he would have been the next corporate figure in the way that Roger Lane-Smith has been through the different growth spurts of DLA.
All this signifies a number of things. The recession has hit lawyers hard across the board. According to the Law Firms Survey completed by PricewaterhouseCoopers (PwC), profit per partner was heavily hit in 2009, with North West firms falling even further behind, reporting an average decline in profit per partner of 33 per cent to £284,000. Why? They’ve been operating in the most competitive and depressed areas of the market such as transaction and deals; and have reduced the number of partners and fee-earner by less than other firms. Most firms in the region have been similarly affected, with virtually all reporting a fall in profits of at least 10 per cent.
PWC director David Thurkettle, says: “Last year there was the greatest turmoil in the law firm sector since our survey began in 1991.”
It has also put more pressure on firms to rely less on corporate as the institutional battering ram of the firm and none can rely on big fees from big corporate deals coming in.
The experience of Manchester law firm Cobbetts is fairly typical. Senior partner Michael Shaw says: “Volumes of corporate transactional activity in 2010 will be lower, hence the contributions of corporate departments to overall revenues will be less significant. While a lack of traditional bank funding will result in reduced activity in the short term, the deal flow will steadily rise for corporate lawyers who have stayed close to clients and can add value by providing true innovation.
“At Cobbetts, we have built a strong reputation in international work, and are offsetting the reduction in domestic demand by deploying the skills of our corporate lawyers for project work and areas requiring collaborative partnerships outside of traditional M&A.”
Mark Brandwood, managing partner at Brabners Chaffe Street, which is at the top of the Insider survey this year, says the firm has pitched itself at the lower end of the corporate market: “Our real stomping ground is transactions between £1m and £30m, where there has been a more consistent supply of opportunities. The lower mid-market has been far more resilient, mainly because deals aren’t reliant on a big chunk of bank debt to get them over the line. There’s a greater conversion rate for this type of deal than, say, a £50m management buyout where there’s £30m of leveraged debt to find.
“A lot of the larger law firms aren’t resourced to handle smaller opportunities and still view them as ‘unsexy’, but our model is geared to servicing this part of the market so we’ve been able to maintain a similar sized team.”
But Bill Jones, managing partner at JMW Solicitors in Manchester, says the firm’s growth as a full-service practice relies on a strong corporate department: “We have brought in top-quality corporate lawyers to ensure that we grow in this area. A good corporate practice brings in other work.”
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