Change the name of the game for region’s law firms

IT has been another dramatic year for the North West legal market with international takeovers, new entrants to the market, high profile near-collapses and the emergence of the ‘boutique’ firm.

The UK legal market is rapidly evolving. And nowhere is the evolution manifesting itself more than here in the North West. It is a fiercely competitive marketplace. Yet 2014 once again proved that the Manchester market, with its transport links and relatively low cost base, is still very attractive to new entrants.

One of the biggest stories of the year was the £33m acquisition by Slater & Gordon, the listed Australian consumer law group, of the majority of Pannone’s business.

The move followed the acquisitions of personal injury specialists Fentons, John Pickering & Co and Liverpool’s Goodmans Law, to create Manchester biggest law firm. And to house its 700-strong workforce, Slater & Gordon also confirmed that it is going to relocate to 58 Mosley Street – the former home of the now-defunct Cobbetts – in what was the biggest city centre office letting this year.

2014 saw a host of new entrants to the marketplace with larger players announcing strategic mergers to gain market share.

In February, Field Fisher Waterhouse’s partners voted to merge with boutique Manchester firm Heatons, while Slater Heelis recently took over Cottrils giving it a Manchester office once more.

Meanwhile, a number of firms opened Manchester offices after luring partners from high profile rivals. In May, Nabarro joined the legal market after recruiting three partners from Addleshaw Goddard, including head of real estate Mark Haywood.

TLT Solicitors, which opened a Manchester office in 2013 with the hire of six partners from Irwin Mitchell and one from DLA Piper, continued its expansion with a number of high profile hires including Stephen Devlin from DLA Piper.

Others new entrants included City of London firm Berwin Leighton Paisner.

Elsewhere Squire Sanders, which has an office in Manchester, has announced a deal to merge with Washington DC-based Patton Boggs in a move which Rob Elvin, head of the Manchester office said would help attract fresh inward investment into the North West.

2014 also saw a number of boutique firms open in the city. In February 2014, Pannone Corporate was established by managing partner Paul Jonson and chairman Steven Grant who led a management buyout of the majority of the commercial practice of Pannone.

In management circles, John Joyce, a Manchester-based corporate restructuring partner at law firm Addleshaw Goddard was elected as its new managing partner to succeed Paul Devitt.

IP litigation partner Graeme Orchison, one of the founding partners of TLT’s Manchester operation, was appointed head of the Manchester office. At Mills & Reeve, which merged with George Davies in 2013, Niall Innes was appointed head of the Manchester office in succession to leading sports lawyer Mark Hovell.

There was change at the top too at JMW Solicitors as founder Bill Jones, pictured, stepped down as managing partner in April and became chairman of the Spinningfields-based firm, which in the last six years has doubled from £8m to £16m.

Jones was replaced as managing partner by Paul Walker, who shares the leadership of the firm with senior partner Joy Kingsley.

While 2014 did not see a high profile insolvency like Cobbetts the previous year, there was a near miss when Linder Myers narrowly avoided administration through a restructuring deal with Assure Law.

So what will 2015 hold for the region’s legal market? Certainly it is a crowded marketplace particularly with new entrants and the advance into the market of the major accountancy firms.

Earlier this month, EY became the latest accountancy giant to enter the marketplace when it was granted a licence to offer legal services in England and Wales.

It now means that the global professional services firm, along with other big rivals KPMG and PwC, are operating in the legal field.

Paul Jonson, managing partner at Pannone Corporate, believes the region is over lawyered and pressures on fees and margins remain.

He said: “Firms in the squeezed middle space will continue to have to work hard to remain relevant and competitive. However, there are good prospects for well-structured firms who really listen to what their clients want and need and who react quickly to opportunities in the market.
 “The rise of the focused and fee sensitive boutique firms will continue.”

Phil Jepson, founder of legal recruiter Jepson Holt and director of legal consultancy Totuus, said the market is “strong” and alive with opportunities for agile and well-managed firms.

“It’s a great market, but it’s one that is not as easy to business in as it was. The winners are going to be those who can get their heads around the fact that the world has changed and understand they have to operate differently and offer new things to their clients.”

Giles Chesher, corporate partner at Squire Patton Boggs in Manchester believes that the legal market needs to keep a close eye on the accountancy firms.”

“In the North West, we have seen accountancy firms hiring big hitters; well-connected lawyers who have built their careers in the region.  This is creating pressure on the recruitment market which is already strained due to a skills gap caused by the recession and major corporates building up their in-house legal functions.
 
“It remains to be seen how the accountancy firms will develop their services and how successful they will be in gaining market share.  That said, there has been significant investment made already – EY has recruited more than 250 lawyers worldwide since January 2013 – and so the ambition of accountancy firms to build a legal offering should not be underestimated.”