Northwest and Northeast: Pennine Way
Leeds and Manchester may only be 43 miles apart, but the historical rivalry between the two has seeped into the cities' law firms. For national firms with offices in both places, getting Leeds and Manchester working together has been a challenge, with mixed results. Sophie Evans reports
September 13, 2006 at 08:03 PM
11 minute read
The construction of the UK's highest motorway, the M62, is recognised as a major engineering achievement, notably the section between Leeds and Manchester. Linking the two cities meant hacking through Saddleworth Moor and damming a reservoir to forge a route across the Pennine tops – a physical barrier that has well served those seeking to perpetuate the psychological Lancashire-Yorkshire divide.
But what of the legal centres of Leeds and Manchester? Is there still an intense rivalry that precludes cooperation between the Leeds and Manchester offices of the same firm more than a decade after Yorkshire began entering the Manchester market in force?
Anecdotally, lawyers on either side of the Pennines joke about the enduring animosity – Leeds/Manchester client golfing days are often arranged by firms as War of the Roses days – but professionally, many of the seven firms that boast offices in both cities insist, with varying degrees of conviction, that they get along fine.
Addleshaw Goddard Manchester partner Sean Lippell sums up the older national firms' attitude: "There is no need to devise specific debates on operating as one firm, it is built into what we do," he says. For some, however, there is still work to be done.
Cultural differences aside, the two cities have greatly differing legal ecosystems. Leeds is, in revenue terms, the UK's second-largest legal centre outside London and probably the most mature of England's major regional markets.
The city council's decision to diversify in the 1980s and develop itself as a financial services centre was key to the growth of Leeds' law firms and saw the city pulling ahead of Manchester as a business and professional services hub. Leeds' Dibb Lupton Broom-head secured a merger with Manchester leader Alsop Wilkinson in 1996, and Manchester royalty Addleshaw Sons & Latham tied up with Leeds' Booth & Co to form two strong national practices that would bridge the Pennines divide and throw the spotlight on Manchester.
Addleshaws' tie-up with Booth & Co represents what is regarded as probably the most successful of the cross-Pennine mergers. Lippell puts this down to "a lot of time spent getting to know each other". Certainly, it is fair to say that Booth, a gentlemanly outfit by the brash standards of Leeds' thrusting firms, was a good cultural fit for an Addleshaws that had exhausted its local room for growth.
Other Manchester moves have been more turbulent. Notably, Pinsent Masons sealed its Manchester presence in 2002 with a mix of Pinsents partners from Leeds and four partners from Chaffe Street. But this hybrid merger/greenfield launch has been troubled by a string of partner departures from the corporate team. It is too early to say whether the firm's bold attempts to relaunch the practice with a recent programme of heavy recruitment will be a success. But with profits rebounding this year at Pinsents and partner hires from Halliwells and Eversheds as well as Hammonds' local head of corporate, Stephen Levy, the rejuvenation of a troubled office looks convincing for now.
The widely differing origins of the seven firms with offices in Leeds and Manchester goes some way to explain their different approaches to and successes in cross-Pennine practice. For the likes of Eversheds, which has been a single national firm in name at least since 1995, the Leeds and Manchester offices work together where needed, but the Leeds-London, Manchester-London axes are probably more important in terms of revenue.
That said, Stephen Hopkins is Eversheds' regional managing partner for Leeds, Manchester and Newcastle, spending his time between offices to ensure that they are all suitably resourced and that they link up with the rest of the firm. Hopkins says the firm sees no need to reward partners for ensuring cross-Pennine referrals – as some firms, for example Hammonds, do – because the offices have been working together for so long. However, Eversheds does still budget by office as well as national practice lines, which could arguably create an internal market for clients if one office is trailing behind its annual budget.
Issues over coordination have doubtless been eased by the punch-above-weight reputation of Eversheds' Manchester corporate team, which has helped generate a long list of deals for the two practices to work together on. There is no better example of this than the €1.46bn (£1bn) disposal of the telecoms giant Caud-well Group, led by Manchester partner Danny Hall, working with the Leeds, Nottingham and Birmingham offices, one of the largest corporate disposals to be run largely outside London.
Speaking for Eversheds' corporate offering in the two cities, partner Keith Froud says that, at any one time, his team will be working on half-a-dozen of the same matters. "There is a whole variety of reasons for that and that is something which is encouraged in the firm – the accountancy firms have been doing it for a very long time."
Rival national firm DLA Piper seems to pay less attention to its northern swathe of offices as a single block. "We do not have 'northern' meetings or anything like that, we know each other well enough through management meetings and working together," claims Manchester head Roy Beckett. For a firm of DLA Piper's size, the current emphasis is on developing a 'house style' firm-wide so everything from the look of documents, to training and potential partner assessment days, are the same.
Hammonds also budgets by department and office, which Leeds managing partner Ian Greenfield says "provides a focus for the office". He adds that, as long as a department budget is met, it is "not so much of an issue" if the office target is not met. For many firms, getting the budgeting right is key to each partner's behaviour. Moving away from location budgets to departmental or sector targets has undoubtedly fostered greater cross-office working.
Cobbetts, which completed a string of mergers between 2002 and 2004 to create a national firm, has made a concerted effort to nurture cross-Pennine working. Having denied its ambitions to expand at a time when many of today's national firms were doing just that -"we are not trying to be a national firm. There are fundamental differences in culture," Cobbetts' managing partner Michael Shaw said back in 1999 – the management had a battle on its hands when it eventually opted for the national route. The legacy of the tie-ups with Birmingham's Lee Crowder and Read Hind Stewart in Leeds has resulted in a radical restructuring of the partnership, with 20 partners due to be axed by the end of the year, many from the Manchester office.
"The first two years of the Lee Crowder merger proved difficult in getting people to think as one firm. We have worked hard at integrating people – we had a partner retreat, which was dedicated to integrated working and moving away from personal targets. Our targets are sector-wide and we do not publish individual office numbers -that is important in making people feel they are part of a national firm," says senior partner Stephen Benson.
The firm's Leeds head of corporate, Guy Jackson, said his decision to move across to Yorkshire several years ago was greeted with a 'I don't know how you can do it' reaction from his Lancastrian colleagues.
"I do not think that attitude exists as much as it used to," he says. "Plc work lends itself well to being resourced out of the two offices – for example the nomad is based in Leeds and the company in Manchester – these clients are aspirationally large and so our public markets team tends to be more of a national resource."
Pinsent & Co and Simpson Curtis' 1995 merger also required some cross-Pennine shuttle diplomacy; Leeds managing partner Nigel McClea's frank summing-up, "it was a bit torrid". "Both organisations had grown up being masters of their own fate," he adds. With seven offices across the country, McClea says the firm has developed a clear focus as to what its strategy is and what it is not," he states. "We are not interested in setting up Fortress Leeds or Bristol." Having produced the financial results by office until three years ago, figures are now produced by discipline – a move that many firms have made to stamp out inter-office politics.
However, McClea's 'head of Leeds' role involves coordinating the office's role in the whole firm while also giving the local practice "a sense of soul", as he puts it. Pinsents' investment in the Leeds Legal campaign to promote Leeds as a legal centre is testament to their commitment, along with fellow national firm DLA Piper, to the region and the city.
There are clearly still clients on either side of the Pennines that seek out local lawyers – firms are at (occasionally contradictory) pains to demonstrate that they are not neglecting this client base. As Pinsents' McClea explains, his firm has three marketplaces: clients with international interests and corresponding needs; clients who want a national reach; and local clients with significant companies in the region "that have no interest in whether we have offices in Bristol".
One of the first questions a new client of this type is likely to ask his or her adviser is "where are you based?". As Cobbetts' Jackson says: "We manage relationships on a local basis and deliver services on a national basis." Addleshaws' Lippell agrees that even large plcs like to have the comfort factor of a local client partner. McClea cites the example of Drax power station in East Yorkshire recently going public – the firm's head of energy in Manchester got the call, but as it was based on the east coast and there was a requirement for corporate and property advice, the Leeds office took the lead.
Beachcroft's Leeds-based property partner Virginia Clegg identifies a local marketplace among commercial property clients, a point that her Manchester colleagues agree with. The firm's Manchester office, previously Vaudrey's until 1998, has legacy clients that want Manchester lawyers, such as Manchester United FC and Bentley.
"There is a client base on either side of the Pennines that generally likes a local lawyer," Clegg says. Under-standably, commercial property is the most lucrative practice area in which the local factor still holds a powerful sway.
That said, Beachcroft's property department has a 'northern' team and a very formal basis for integrating the two offices' property teams, despite the fact that property is still budgeted by location. The Leeds office is keeping a 'Manchester desk' for visiting lawyers, and Leeds lawyers will find their own 'Leeds desk' across the Pennines. Leeds managing partner Glenn Miller says the two offices spend a day a month talking about cross-Pennine working "but there should come a time when the geographical distance between the two offices becomes irrelevant except for dealing with locally-based clients".
The firm's employment teams do their business planning together as they have a national budget, as well as joint training.
The size and depth of the client base in both Leeds and Manchester means national firms cannot, and generally do not attempt to, replicate expertise in every office. Hammonds, for example, has its town and country planning practice in Leeds, which is pitched to clients on a national basis.
With the bulk of the FTSE 350 headquartered in the southeast, the reality is that a lot of the national firms' traffic is along a London axis. However, there are significant plcs, private equity institutions and private equity activity in both Leeds and Manchester that means cross-office working will continue – the two cities are also geographically the closest large legal centres in the country, despite the physical divide.
Manchester's economic growth and GDP, traditionally below the national average, has for the past two to three years been above average. This has fuelled a confidence in Manchester's legal community that is now rivalling Leeds. Perhaps crucially, Manchester has been less a victim to the 'nationalisation' of elite regional firms. In comparison, Leeds, the spiritual home of the national law firm, has been a stable but sometimes staid market in recent years.
The trick for the northern offices of national firms, especially with their lower cost base, will be to consolidate their cross-Pennines working to give London a run for its money. But it remains a work in progress.
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