By John Malpas
"You only have to look out of the office window to see there is a great deal of construction work about."
So says Simmons & Simmons construction partner Richard Dyson. Like all the leading construction teams around the City and the regions doing non-contentious work, it has been a busy year for the Simmons' team – and 1999 looks equally frenetic.
Figures published recently by Construction Forecasting and Research (CFR) show that the boom in City construction work is not confined to the Square Mile. In 1998, construction activity in the private commercial sector grew by 12% and this year CFR expects output to grow by a respectable 6%.
Although CFR believes the sector's growth rate will level out next year, it predicts a continued increase in public sector work will increase growth in overall construction activity next year to 2.2%, compared to a 1.3% growth in '99.
"We remain confident construction as a whole will avoid recession, although some sectors will experience a downturn," says CFR managing director Jacquie Cannon.
Even more encouragingly, she believes construction is heading for "a high plateau of activity".
"There is relatively much less speculative construction, so less likelihood of creating large surpluses of floorspace that would depress future demand," she says.
Construction lawyers, who were badly hit by the last recession, will be hoping that Cannon is right.
Linklaters construction partner Stella Mitchell says: "I don't think we are in for a boom or a crash, this is not the late 1980s. Activity is at a much more sensible level, there is less speculation going on."
But while construction lawyers will be keeping half an eye on the future, they have their hands full at the moment. And, not only do construction lawyers report that they are busy, they also say work is becoming more complex, and more interesting.
According to
Ann Minogue at Cameron McKenna, construction law work has increasingly become polarised. At the top end of the market, she says, lawyers are being called in to oversee complex 'development agreements' between developers and an array of sub-contractors, while at the bottom end developers and constructors are relying on standard contracts.
Simmons & Simmons' Dyson agrees that construction lawyers are having to become more versatile. He spent much of last year acting for Railtrack on the complex Channel Tunnel Rail Link project, which involved 48 of the firm's lawyers. He says Railtrack has been at the forefront of promoting partnering agreements whereby developers incorporate 'pain and gain' clauses that build in incentives to encourage contractors to meet deadlines.
Of course, the Channel Tunnel Rail Link wouldn't have been possible without government help. And with private commercial work set to level off in the next couple of years, private finance initiative (PFI) and public-private partnership work is set to become more important for construction lawyers.
Huw Baker, head of construction at Mason's Manchester office, and Raith Pickup, who heads construction at Mills & Reeve, agree their practices have been transformed by the growth of PFI work.
Although PFI was invented by the last Conservative government, it has only really taken off since Labour came to power in 1997.
One of the Government's first acts was to appoint a PFI taskforce, headed by ex-Linklaters partner Adrian Montague. The taskforce was told to kickstart the scheme, and lawyers agree it has been largely successful, despite continuing accounting-related concerns.
Pickup says people are getting more comfortable with the concept, which, he says, is good for regional firms. "Three years ago there was a tendency for these projects to go to London because clients were being cautious. Now it is getting more price driven, which is where firms like ours come into their own."
He predicts that the PFI concept will soon transfer to the private sector as developers explore different ways of raising the capital to get projects off the ground.
That big ticket construction work is getting more complex is good for lawyers, making the work more interesting and bringing in fees. But, as Denton Hall partner David Courtney-Hatcher partner points out, there is a down side. "Construction contracts are going to become even more detailed and complex and, for the less charitable, more tedious and pedantic.
"As a result, lawyers will continue to be criticised for the time and cost required to close deals."