Regional focus: Leeds Tough at the top
The last decade saw Leeds' 'big six' grow to dominate the local legal market - and beyond. So, asks Alex Novarese, what do they do now?
March 22, 2000 at 07:03 PM
11 minute read
Speak to most commercial lawyers in Manchester and they will tell you that Booth & Co, the leading Leeds firm that hooked up with Addleshaw Sons & Latham a couple of years ago, had aggressively shaken up its smaller partner.
Try telling your average Leeds lawyer that Booth & Co, which had to compete in the toughest regional market against the likes of Dibb Lupton Alsop and Hammond Suddards, is an aggressive firm, and they will laugh out loud.
It is a telling contrast and a useful illustration of the qualities that Leeds lawyers have come to typify. Competitive, commercially-minded and focused, if there is one market in the UK where lawyers like to go head-to-head with the venture capitalists and bankers as dealmakers, it is Leeds.
Addleshaw Booth & Co banking partner Mark Chidley says: "Introducing lawyers to this market sometimes looks like a blood sport. In my own area, you might have a really experienced partner taking on a two-year-qualified City assistant on a major transaction. The assistant is technically excellent, but commercially green."
It is an approach that has stood Leeds firms in good stead. Having expanded aggressively throughout the 1990s, the position of the big six – Addleshaws, Dibbs, Hammond Suddards, Eversheds, Pinsent Curtis and Walker Morris – looks unassailable on their home turf, generally regarded as the UK's second legal centre.
The inability of the big six to pull away from each other, coupled with the shake-down of the only serious challenger to their position, Garretts, were the dominant themes of 1999, with even the most bullish managing partners admitting that the pack remains tight.
Some argue that it cannot last. The 1990s has seen Yorkshire firms spill out of the region to successfully pursue new markets in Manchester, London and Birmingham with mixed results. No-one would argue that Leeds firms have been complacent when it comes to business development, but the next five years will show those that have judged the right growth areas for investment and those that overstretched themselves.
"Leeds is a 'premier league' city – but in the end there are only six teams in the premier league that matter, and even that number may be shrinking," says Eversheds' Leeds and Manchester managing partner David Ansbro. "You have to have the best people and the best clients; you have to work hard and play hard. It may be that only two or three firms are really in the top league."
It is a common sentiment, but the last 12 months have offered few clues as to who will form the new regional super league.
In a steady rather than spectacular year, Addleshaws is seen to have had the best 12 months, clocking up firm-wide fees of £61.5m in the latest financial year – an increase of 24%. Although the firm refuses to give regional breakdowns, conservative estimates suggest 60% of that figure is thanks to Leeds.
From a Manchester perspective, critics claim Booth & Co has overrun Addleshaws; from its Yorkshire base, the addition of Manchester's corporate finance muscle to Booths' property and banking excellence has created a firm to compete with the best.
Likewise, its hiring of Garretts' corporate backbone last summer, including Sean Lippell, Andrew Kay and Simon Pilling, showed the firm has gained an appetite for the kind of lateral hiring that would have been unthinkable a few years ago.
High-profile work on the £1.2bn sale of Meadowhall, Airtours' contested bid for First Choice and client wins such as BT and Standard Life have not hurt either.
But the closure of its debt recovery arm is viewed as an understandable, but clumsily-handled move. Rivals also say the firm's profits per equity partner lags behind its big six rivals, but Addleshaws maintains, with some justification, that its structure, which splits partners 70% equity to 30% salaried, makes the comparison unfair.
"Is that the real indicator of the business?" Chidley asks. "Our overall profitability as a percentage of fee income is significantly better than our major competitors in Leeds."
In contrast, Addleshaws' national rivals Eversheds, Hammond Suddards and Dibbs, have maintained lower profiles, by their standards, as minds have been concentrated on the trials and joys of working in London and further afield.
Ansbro would be the first to admit that Eversheds is setting its sights further than Yorkshire, estimating half the office's fee earning is done for clients outside the region.
But with 42 partners, Leeds is still a key market for Eversheds. Successfully twinned with the firm's Manchester outpost five years ago, the business is expected to cough up £47m towards Eversheds' bottom line, two-thirds of which will come from Leeds.
In addition to the essential corporate and property practices, strength in litigation, (which, under the watchful eye of national head John Heaps, has won lucrative work on the Bloody Sunday inquiry), and public law mark out the Leeds operation as one of the best in the region.
Dibbs' office head Neil McLean is just as open regarding the wider ambitions of his firm, but he claims that corporate finance, under the leadership of respected section head Alastair Da Costa, has proved to be fertile ground. The poaching in December of Garretts partner Roland Todd, a solid corporate name in the region, underlines the point.
"The Leeds market will see some shake-out in the coming years," says McLean. "I do not knock the other firms, but we are looking wider. There will be some sort of reorganisation."
Hammonds, the firm on the other end of the Meadowhall deal, shows equal strength in what is still regarded as its nerve centre. Overseen by the likes of Chris Jones, John Heller and Paul Rhodes, formerly Dibbs' managing partner, much of the firm's famed profitability is thanks to Leeds' 37-partner operation.
But the wave of panel reviews have hurt the firm – the loss of its position on Barclays recovery panel was a blow.
Most rivals concede, however, that the firm, which has 45 partners based in London, has coped well with the inevitable strains of building such a large practice from scratch. From London much has been made of the difficulties of firms like Hammonds in establishing themselves in the City, but in Leeds, Hammonds and Dibbs are acknowledged as having set up the most credible London practices.
In that context, Hammonds' decision to jettison its bulk insurance division has been taken in its stride by competitors.
A more mixed reception has greeted the firm's £1m rebranding exercise by Saatchi & Saatchi Rowland, which seeks to twin Hammonds' image as a growing City player with the down-to-earth sensibilities of the 'classic' northern firm.
Office head Mike Henley dismisses speculation that the campaign is an attempt to bind two disparate cultures.
"I was at the London strategy meeting where [Saatchi] did the presentation. My opposite number in London, Gary Watson, loved it," Henley says. "You are always going to have some personality issues in a firm this size, but regional tensions do not exist because we know we need London to survive and London knows they need us to survive."
If the nationals had a generally solid year, rivals claim Pinsent Curtis is the firm that has had the most problems. The mid-1990s has been stressful, encompassing the marriage between Birmingham's Pinsent & Co and Leeds' Simpson Curtis, a string of defections to Garretts and failed talks in Birmingham with Edge Ellison.
Its decision to rebrand itself as a City firm last year led to the election of national managing partner David Ryan; national head of litigation Nigel Kissack becoming its Leeds head in place of Malcolm Lloyd; and a spate of partner defections across its offices in Leeds, Birmingham and London.
However, Pinsent Curtis, the only firm to have eschewed the bulk work divisions that have proved so profitable for its rivals, is still seen as the blue chip firm. PFI, tax and employment remain keys areas for a practice that boasts respected partners such as Stephen Chandler and John McMullen.
Likewise, Kissack claims the move in November to its Park Row offices, the first time the firm's 45 partners have come under the same roof, has given the firm new momentum.
"A lot of our work is at the top end of the market and that requires pretty heavy partner attention," says Kissack, summing up the Pinsents culture. "We do have our mind towards leverage and profitability, but on the A-grade quality work you need to have the senior people."
Walker Morris, together with Wragge & Co in Birmingham, is increasingly looking like the name the nationals have to prove they can beat. Rivals rate it as one of the best managed firms in the region, but the long-term viability of its single-site approach is still questioned.
With 34 partners and 550 staff, Walkers is projecting an impressive 30% increase in fee turnover this year, which managing partner Philip Mudd says allows the firm to act as a national firm from its regional base.
With clients that include Disney, Caterpillar, and AstraZeneca, the firm has defied predictions that it would fall by the wayside against its multi-site rivals, but the London office still remains down the agenda.
"Perhaps at some point we would have to consider London, but it is not an issue we see coming up in the next few years," Mudd says.
But where now for Yorkshire's elite firms?
The injection of Leeds-style business acumen into Manchester has seen the development of a thriving legal scene, with the top tier in the region expected to achieve £20m fee income this year. Pinsents has long been rumoured to be sizing up the city, but current indications are that the firm's new strategic shake-up will divert investment towards its 20-partner London arm.
Most concede that the market will be considerably harder to enter than it was five years ago – but there lies half of the problem for Yorkshire-based firms.
Having set out into new markets, the firms that helped to shake up their rivals in surrounding regions now find these markets are much tougher to crack than before.
It is also hard to see who is going to pull away from the pack in a city that has a reputation for running the tightest legal ships outside London.
Many believe that success or failure in the capital will be the deciding factor, but it could be argued that London is a poisoned chalice. In many ways, Yorkshire firms have been the best proponents of the notion of solicitors as multidisciplinary partnerships, being aggressive in setting up quasi-legal and non-legal services such as consulting, conveyancing and claims handling.
But focus is the key to success in London, as witnessed by the inability of the region's firms to make much headway against the capital's corporate specialists such as Macfarlanes and Gouldens.
Staffing issues look set to concentrate firms' minds on what their real priorities are. With the flow of young lawyers from London greatly reducing in recent years, the ability to keep quality staff, particularly in niche areas such as pensions, IP and four- to five-year-qualified corporate, is becoming more important. The firms that can hold and attract the best people look bound to edge ahead.
Investing in an expensive full-service London office could become much harder to justify if that lateral hiring steps up a gear closer to home.
In the meantime, the next couple of years will hold its challenges.
Dibbs, which will be consolidating its position with a move into a new 72,000 sq ft office in June, look set for considerable expansion.
Next month, Addleshaws will open a new separately branded housing division targeted at its mortgage-lending clients. Pinsents will need to ensure a period of stability if it is to move forward. Walker Morris is expecting great things from its public law group under the heading of former Eversheds partner David Kilduff. All, except Walker Morris, are chasing glory in London.
One thing is for sure, if there is one market in which you do not want to take your eye off the ball, it is Leeds.
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