Classy City outfit still has the substance but a little more visibility wouldn't hurt

What does Macfarlanes stand for these days? Macfarlanes senior partner Charles Martin certainly puts it succinctly: "Our goal is to be a pre-eminent independent City law firm, offering our clients a service that is partner-led and that takes advantage of our single site and compact size. That means that it is much easier for our work to be joined up than is the case with many of our much larger competitors."

Fair enough, but even accepting that the recession was never going to be easy for a single-site City firm geared towards mid-tier corporate and private equity, the question is whether that message is getting across. For a firm associated with quality corporate work, Macfarlanes has been lower on the radar for the last two years than many would have expected. Certainly, even broadly comparable practices like Travers Smith and SJ Berwin have been more apparent on headline deals. Macfarlanes likes to argue that its understated, client-centric style means that it often flies under the radar. But if you have a business model that relies on being attractive to ambitious young lawyers and referral allies, then visibility does matter.

Part of its lack of profile has been the focus on restructuring and refinancing work linked to the bursting of the credit bubble. Most notably, the firm last year secured a prominent role on the complex restructuring of Four Seasons Healthcare's £1.5bn debt pile.

Many rivals – including the sizeable band of the firm's admirers – would contend it is partly due to the relative lack of pace the firm has shown in private equity over the last five years. By consensus, the firm no longer enjoys the kind of clear brand recognition or positioning that Travers Smith has cemented in recent years (the relative lack of bid activity by key like clients Alchemy, 3i and Candover would not have helped and, to be fair, Travers' steadfast commitment to the sector has obviously come at the cost of short-term profitability.)

And rightly or wrongly, Macfarlanes has not chosen to get its name out there by focusing on the classic mid-market play of the Alternative Investment Market, though it did last year advise on LXB's £100m listing.

The firm's deal stats present a mixed message. A three-year M&A breakdown from Mergermarket shows Macfarlanes acting on 101 ranked deals over the period. In comparison, Travers scored 149, SJ Berwin 204 and Berwin Leighton Paisner 126. However, Macfarlanes' total deal value clearly tops the group, suggesting the firm is still maintaining a healthy balance of volume and upper-mid-market work. Macfarlanes' financial performance over the last three years also testifies to the quality of the practice: turnover has drifted down from £105m in 2007 to £99m last year, while average partner profits of £846,000 remain top of its weight class. Given that the firm derives around 55% of its turnover from corporate finance, it has stood up well to the recession.

So perhaps the real issue is how successful Macfarlanes has been in attempts to broaden its practice in response to a much-changed market. The most positive signal comes from the firm's once-diminutive litigation practice. The practice has achieved very respectable growth, from £9m in 2007 to £13.5m in 2009 – a good haul for an eight-partner team.

In this content recent senior recruitment looks well judged with the firm last year bringing in Jones Day litigator Barry Donnelly and Dresdner Kleinwort regulatory specialist David Berman being appointed to fill out its contentious practice. Likewise, given the current demand for leveraged companies to restructure, Macfarlanes understandably has high hopes for restructuring specialist Francis Bridgeman, who joined from Allen & Overy.

It is less obvious what the firm hopes to achieve with current ambitions to expand in derivatives and specialised areas of deal finance like mezzanine. Macfarlanes remains the Waitrose of City law firms: not the biggest or most specialist, but the place you go for mainstream quality with strong delivery. As such, it's hard to see what can be gained by building up more esoteric practice areas.

For some the firm's restrictive policy on lateral recruitment also remains a fudge. Macfarlanes arguably has neither the clarity nor motivational tool of a Slaughters-style organic promotions model nor much room to make strategic investment. Perhaps it's time to get off the fence.

There are also signs that the firm has been a little slow to increase its focus on the clients that generate the bulk of its business; a stance that is acknowledged to have generated more than its fair share of conflicts. The firm is also on lighter on plc clients than you would expect for a practice of this quality. But in total these remain minor points. For the foreseeable future, Macfarlanes' vision of a mid-tier Slaughters built on strong referrals and client links still looks credible. But talk of the virtues of understatement belongs to a bygone age. There's no need to reinvent this classy City outfit, but it could be time for a bout of renewal.