It's good to be medium

Reflecting the fortunes of City firms, Birmingham's medium-sized firms have had a better year for profits than their larger rivals, who had big over-heads to sustain in a lacklustre year. While Wragge & Co's profits per partner dipped by 10% after a below-average year for the Birmingham stalwart and a number of partner departures, firms such as Shoosmiths and Mills & Reeve – both relatively recent players to enter the Birmingham market – have enjoyed healthy profits for 2003-04.

Shoosmiths' partners in particular must be rubbing their hands at the 66% hike in profits per partner, up to £226,000 from £90,000 last year. The Northampton-based firm added four lawyers to its 18-month-old Birmingham office in March this year, bringing staff numbers up to 55. The firm has stuck to its policy of making lateral hires from local firms rather than bringing in Shoosmiths fee earners from the firm's six other offices; Birmingham office head Joel Kordan came from Birmingham firm Lee Crowder in November 2002, bringing four assistants with him.

"Birmingham is going great – we are getting a lot of referrals from big firms and there is a definite buzz in the market," Kordan says, pointing to the firm's property department as a particularly strong performer. Shoosmiths says it now wants to move the game on in Birmingham by moving into the corporate arena; come the autumn, the firm expects it will have some announcements to make regarding its corporate ambitions. With a staff of 55, the firm is also looking to build up the Birmingham office with some more junior lawyers.

Mills & Reeve is a very different firm culturally and strategically to the ebullient team at Shoo-smiths. Managing partner Mark Jeffries explains that the firm has opted to slowly build up the Birmingham practice with a mix of local hires and Mills & Reeve lawyers from other offices. This year's turnover stands at £6m, on the back of a 11% turnover rise firm-wide.

"We are keen on doing more than bringing in lateral hires if it is one of our smaller offices – we want to generate the same culture and common standards," Jeffries says.

The firm is now getting more bold in Birmingham though – it will move into new offices in the business district's Colmore Row at the beginning of next year. The new space is twice the size of the current offices, and will put Mills & Reeve among the main Birmingham players in the heart of the city, rather than sitting out in the suburbs.

The past 18 months have seen Mills & Reeve launch a number of new practice areas. It hired senior associate Steve Allen from local rival Wragge & Co as a partner to launch a commercial litigation practice in the city, Martineau Johnson partner Matthew Hansell was brought in to set up a private client team and Jeffries says he hopes to add a matrimonial lawyer to complement Hansell's practice.

Even though Mills & Reeve has cast its net wider than Shoosmiths in Birmingham by building a broader practice, it has managed to earn the respect of its main Birmingham rivals.

"It is challenging in Birmingham, which is why we want to concentrate on areas that we have a national reputation in," Jeffries explains. "We are not proposing to chip away in what firms are already doing."

Birmingham veteran Martineau Johnson enjoyed a 26% profits per partner increase this year, with managing partner Bill Barker declaring the firm to have "turned the corner" after a difficult 2003.

"I am pleased that we improved on last year, but we have aspirations to achieve much higher levels of profit," Barker says. He singles out the firm's PFI team, which joined from DLA in 2003, as a particular area of strength, pointing out they have a business plan to double the turnover they have delivered this year.

Insurance boutique arrives in Birmingham

Insurance specialist Robin Simon made a bold launch into the national legal market in May last year. Having decided to split wholesale from Hammonds in March 2003 after the national firm opted to move out of the insurance market, the nine-partner team quickly set up shop in Leeds, London and Manchester. All of Hammonds' insurance lawyers and staff were included in the move.

Then, in May this year, Robin Simon announced the hire of Beachcroft Wansbroughs professional indemnity specialist Philip Steel to launch an office in Birmingham.

"We have already demonstrated that it is possible to run a specialist City insurance operation in a regional context and that is what we seek to replicate in the West Midlands," said Steel, when the Birmingham launch was announced in June this year.

Steel expects the office to be fully operational by the end of July and has hired a team of four to start practising from the firm's Waterloo Street offices. The team includes a junior lawyer from Beachcroft Wansbroughs in Bristol and one from Hammonds, as well as a senior solicitor from Pinsents. Another senior hire is expected by the end of the year from a City firm, but Steel says he does not want to rush into hiring people, given the specialist nature of the work.

Robin Simon was launched to provide specialist services to insurers, with key focuses on professional indemnity, financial institutions, directors and officers, reinsurance and property claims. Steel says the firm, which now has just under 30 fee earners, always intended to launch a Birmingham office, to give the firm a presence in all the major commercial centres outside London.

"I do not see us needing to be anywhere else – we are a niche national practice," says Steel, who has seven years of experience in the Birmingham market. While the city has a reputation for being a highly competitive one, the firm is confident that it will be "head and shoulders above the rest" in its market – Mills & Reeve is seen as the main competitor because of its strong professional negligence practice in Birmingham.

Making its move

This time a year ago, 49-partner Midlands firm, Browne Jacobson was staking its future on being more than a Nottingham firm. It had had a healthy year in terms of increased profits and turnover and had embarked on an expansion of its small Birmingham office. "We want to establish our position as a Midlands practice and not an East Midlands practice," said managing partner Brian Smith at the time.

Average profits per equity partner last year were estimated to be up £10,000 to £210,000, with turnover up to £22.1m. Turnover in 2000-01 was £19m, up from £17m in the previous year.

This year, the steady growth has continued: turnover rose to £24m, while PEP came in at £230,000. Smith says he is moving the Birmingham office towards being full-service, and aims to hire a property team this year. "We would like to bring in a banking and tax practice in Birmingham as well, rather than servicing them from Nottingham."

The development of the firm since then has been steady, if unremarkable. Partners in the firm have been looking beyond Nottingham to Birmingham and London for several years, with steady growth in the Birmingham office in terms of partner numbers and practice areas.

The firm had reached the point of having out-grown the Nottingham market and decided to branch out in Birmingham rather than keep to the status quo.

Two notable hires in Birmingham last year were those of partners Joanna Bligh and Roger Birchall from Hammonds' Birmingham office, who launched a corporate finance practice in the second half of the year. Ex-Hammonds senior associate Tom Durrant joined the firm later in the year, saying he was impressed by Browne Jacobson's ambitions for Birmingham.

But rival firms in Birmingham say Browne Jacobson is yet to make an impression with its small Birmingham office.

"We do not really come across Browne Jacobson on deals," says one property partner at a rival mid-tier firm.

Smith rebuts his rivals' comments by pointing to the firm's gradual but steady growth strategy. "There are a lot of firms with similar ideas to us [in Birmingham], but we see ourselves with the advantage as we have a strong Midlands base already."

Talking about regeneration

Wragge & Co seems to have made a timely launch of its regeneration team. In the same month that Legal Week reported the firm had set up a four-member regeneration-focused team, the Government announced plans for a huge increase in spending on regeneration.

Of the housing spending rise, about £450m is earmarked for social housing and regeneration projects in the north and Midlands, with the rest to go on subsidising commercial building in the Thames Gateway, Ashford, Milton Keynes and the London-Stansted corridor.

Senior associate Stephen Sellers was appointed to head the team which will target local authorities for regeneration work. He thinks the Government's commitment to regeneration means this young practice area has good growth prospects.

"There are three broad areas in which we want to win work," says Sellers. "Local authorities are moving into regeneration more and more; there is a growing role for bodies like English partnerships as John Prescott has given them a new lease of life; and we also act for developers who are sensitive to the change in the Government's emphasis on regeneration."

The firm has acted in the past for Solihull MBC on the regeneration of the north of Soli-hull, and has a strong history of advising local authorities across the country.

Rival firm Eversheds is Wragge & Co's main regeneration rival and the firm is hoping a dedicated team, dubbed 'branded expertise', will give it the edge. Wragges has also added a former Birmingham City council in-house lawyer, Jacqueline Knox, as an associate. Sellers served 20 years in the same council's legal department and has advised more than 20 local authorities in his four years at Wragges.