It is often said that one of the best ways to assess the economic prosperity of a place is by counting the number of cranes that dot the skyline. On that measure, the southeast of England – a large and diverse area encompassing 19 counties that includes the Thames Valley, Kent and Sussex – is booming.

"With all the money from Europe pouring in, you cannot move for cranes," says Vizards Wyeth managing partner Jason Rowley (pictured).

According to the South East England Development Agency (SEEDA), the region accounted for 15.6% of total UK gross value added in 2003, while according to 2001 figures, it ranks 15th out of the European Union's 86 regional units.

Specific parts of the region have been the target of well-funded government regeneration schemes. The Thames Gateway, which straddles the Thames Estuary from east London to south Essex and north Kent, was awarded £446m by the Office of the Deputy Prime Minister (now the Department for Communities and Local Government) in 2003, giving rise to a raft of development projects. Meanwhile, a consortium made up of energy giants Shell WindEnergy, E.ON UK and Core, is currently working on the £1.5bn London Array scheme, set to be one of the world's largest wind turbines, covering 90 square miles between Margate and Clacton.

Not surprisingly, law firms in the southeast have been reaping the benefits of such a buoyant environment, particularly in their property practices. "Property has been busy and if you speak to any surveyor or agent the southeast has remained buoyant," says Walter Cha, managing partner of Blake Lapthorn Tarlo Lyons.

Bond Pearce, which runs a southeast office out of Southampton, counts the Church Commissioners and TR Property among its key clients in the region. Recent property deal highlights in the region include acting for cruise operator Carnival UK on the acquisition of a new 150,000 sq ft headquarters in Southampton and a major property deal for Southampton University.

Meanwhile, Shoosmiths' highly-rated property team has advised on a string of transactions including McKay Securities on the £3.1m acquisition of the Lower Cherwell Street Industrial Estate in Banbury and new client Infinity Homes, out of the firm's Solent office.

When the Office of Government Commerce (OGC) unveiled the Government's legal panel in June, southeast firms fared well, particularly on the property and estates roster where Blake Lapthorn Tarlo Lyons, Cripps Harries Hall and Bond Pearce were among the firms to win places. The OGC estimated the contracts for the 48-firm panel would total around £240m over the next four years.

But while firms in the southeast have feasted off the region's economic prosperity, events in recent months have given cause for concern. The summer's economic dramas, such as the implosion of the US mortgage market and the Northern Rock saga, have provoked worries about possible knock-on effects in the southeast.

"There is a hesitation or caution around the credit squeeze but at the moment it is not knocking off the current buoyancy," says Bond Pearce managing partner Victor Tettmar.

Observers have however noticed a worrying shakiness in the region's property market. "During the last couple of months we have seen the property market slow down," says Andrew Clinton, managing partner of asb law, citing a reversal in the amount of income that investors can expect to get from deals and lessening returns on capital growth of property.

However, as Clinton goes on to add, the property market slowdown is tempered by the scarcity of land supply in the southeast, driving up demand and prices. "There is still a fundamental shortage in the southeast," he says.

Asb's head of property services, Jonathan Cavell (pictured), adds: "In the house-building market, developers need to have land supply of at least one year, if not two, so they have to keep going out and buying land."

Cavell adds that it is important to not to generalise about the state of the southeast as a whole, given that it contains many different parts. "The southeast is a massive area and different parts are at different points in the economic cycle," he says.

For example, he notes that Kent is still a fruitful location for developers, while the M4 Corridor, traditionally seen as a barometer for the state of the region's property market, is "looking a bit shaky".

Richard Baxter, managing partner of Guildford-based Stevens & Bolton agrees. "The southeast is geographically fragmented so it is difficult to get reliable information," he says, contrasting it with other regions where the principal city – such as Leeds or Birmingham – indicates the state of health of the whole region.

However, while not panicking at recent events, some firms have adjusted their business models to ensure they are not too reliant on income from one particular practice area.

For example, Stevens & Bolton has invested not only in its property offering but also in areas such as intellectual property, most recently with the appointment of David Wilkinson from Bristows, and is now recommended by chambers in 18 different practice areas, he says. Other notable hires in recent months have included Lovells environmental law specialist Valerie Fogelman as a consultant and Matthew Needham Laing, who joined the firm's construction group from Fenwick Elliott.

"In the last couple of years we have been good at broadening our specialist base," says Baxter.

"Our business model is to have sufficient breadth to smooth out economic peaks and troughs in different practice areas. There has been an acceleration of the rate of growth from bringing in more fees from more clients and from a broader range of practice areas."

Meanwhile, Vizards Wyeth has been moving to broaden its scope beyond legal services, considering additional services it might provide. "Our focus is on the Legal Services Act and developing things that are legal and other disciplines attached to it," says Rowley. "We are looking at offering more than just legal services."

And while panel appointments are valued highly by firms, there is an awareness that they are not necessarily the most secure way to build long-term growth. Public sector bodies, a significant source of revenue for firms in the region, are under increasing pressure since the Lyons Review to relocate operations away from the southeast to other parts of the country. For example, it emerged during the summer that the National Health Service Litigation Authority, which announced a review of its panel last month, was in talks with the Department of Health to relocate a third of its workforce away from London.

"Panel appointments are important because they open doors for you, but it is also key to work on relationships," says Blake Lapthorn's Cha. "We have focused a lot in the last 18 months in making sure we develop client relationships."

Asb's Clinton says: "Panels have distinct advantages but equally are very time consuming to get on and there is no guarantee as to volume or price when you do get on them. We are choosy; we assess the amount of time and resource to go through the process."

One of the main challenges facing firms continues to be the so-called 'war for talent', an issue that has implications for the success of firms' property practices. If firms are able to win good quality work then talented young associates are less likely to be lured to the bright lights of the City.

"The big challenge around real estate in the southeast is attracting a sufficiently good body of people, because we are competing with the ability [geographically] to go to the City," says Bond Pearce's Tettmar. "That is why firms in the southeast need to be offering really good client work if they want to attract good people."

Asb's Cavell admits the region has struggled to retain good quality candidates, but thinks a downturn in the London property market would be to the benefit of southeast firms as City practices scale back on their property offerings. Clinton believes southeast firms do not necessarily have to open a London office in order to capture work from City firms. "We do not have a London offering, which is a deliberate strategic decision," he says.

"There is enough work in our region that currently goes to London that, if we get it right, we can stop going there."

However, Tettmar argues that regional firms will not always necessarily be competing directly with the City. "There is work we do in the regions that is not appropriate for the City, we do some work which is appropriate for the City, and some work where a combination of City and regional firms are appropriate for clients – that is where southeast firms are going to have to be flexible," he says.

"Acknowledging that there is a joint approach can work for the client."