Gishan Abeyratne discusses the growth of the corporate market in the South West as firms demonstrate their ability to compete for work with London and considers the possible impact of Brexit
Bristol is one of the UK’s major legal centres, hosting heavyweights such as Burges Salmon, Osborne Clarke, CMS Cameron McKenna, Simmons & Simmons, Bond Dickinson, TLT, and the list goes on. Both the volume and quality of work being undertaken in Bristol are fast making this city a place to be for firms looking to expand in the UK.
One of the more renowned disciplines in Bristol is corporate law, and in the last three years we have catalogued a significant increase in the number of instructions that we have received regarding positions that are suitable for corporate solicitors. This explosion in demand comes off the back of a stronger economy, but a rather prevalent question of late has been: how will Brexit affect firms throughout the UK?
Prior to 24 June, an increased confidence in the economy, the loosening of the banks’ purse-strings, and the exploration of alternative financing models all led to an improving corporate marketplace, with work flooding in from homegrown businesses and foreign corporations looking to break into the UK and EU markets respectively. Despite an initial unsettled period immediately after the referendum, it would appear that this trend has continued and corporate work is still on the rise in Bristol.
As we await the Supreme Court ruling on whether the government must consult parliament before triggering article 50, uncertainty seems to surround Britain’s Brexit plan as a whole, but within legal circles there are particular concerns about Britain’s continued presence in the single market and how this will impact on business. There are, of course, conflicting reports depending on who you ask, but generally speaking there seems to be quite a measured and unpanicked approach within the legal sector. Is this the calm before the storm?
Adam Love, an associate director in the corporate team at Osborne Clarke, commented: ‘Notwithstanding reports indicating that global M&A has reduced significantly in deal value this year, we haven’t noticed a material impact on transactions since the Brexit referendum. While a few of our deals straddled the referendum dates, such as Odeon and UCI Cinemas Group’s proposed sale to AMC Theatres, this and other deals still signed shortly after the vote. Actually, the Odeon deal was widely reported as one of the biggest M&A transactions post-Brexit referendum, which could be a positive signal for future deal activity in the UK.
‘From a South West perspective, over the last six months M&A activity levels have remained healthy. We are therefore approaching the medium term with a cautious optimism as, I think it’s fair to say, are the majority of our UK-based and international clients.’
Bristol is a very strong legal market across a multitude of disciplines and corporate is very much at the forefront of this. The sharp increase in work has obviously led to increased caseloads for the city and region’s corporate solicitors. This means potentially longer hours and greater pressure. Naturally, for many firms, the reaction has been to try to recruit. This task has not necessarily been easy given the low numbers of corporate solicitors who qualified during the recession and the massive increase in the number of opportunities available.
It might seem odd to some that we are still discussing the plights of the recession years later, but if you consider that the ‘magic number’ for firms looking to recruit corporate solicitors is somewhere between four and six years PQE, it makes sense: for someone to be four years qualified they would have been a trainee six years ago and trainee numbers were somewhat lower then than they are today.
In some cases we have heard of situations where fee earners from other teams have been press-ganged into doing corporate work in order to help pick up the slack. In recent years there seems to have been a shortage of ‘good’ candidates for a multitude of reasons. In light of this we have seen increased flexibility in the recruitment criteria, without compromising on the quality or complexity of the work undertaken. This means that access to corporate work has become broader and allowed smaller regional practices to step into the ring with larger national and international firms and compete in the same market. Specialist and niche firms, such as Roxburgh Milkins, are building a name for themselves and offering refreshing competition for corporate work in Bristol.
In addition to improvements in the Bristol corporate market, firms have consistently demonstrated the ability to compete for work in London. Increasingly price-sensitive clients are willing to explore the option of using solicitors based outside the capital, recognising that they can receive a comparable service for a fraction of the cost. This is evidenced quite perfectly by international outfit Hogan Lovells opening up an office in Birmingham and Simmons & Simmons in Bristol, which was already competing with the likes of Osborne Clarke and Burges Salmon in London.
There are likely to be significant opportunities for associate-level solicitors to progress in private practice over the next couple of years, as increased work and billing levels make it easier to create a business case for directorship or partnership. Against that backdrop, recruitment into in-house legal teams has increased significantly in the last few years, as my colleague Victoria Moore, the head of BCL Legal’s in-house Midlands and South West division, explains: ‘The in-house legal market has grown considerably, with the number of lawyers working in-house doubling in the last ten years. This has led to both a greater demand and more opportunities for experienced solicitors who have a range of specialisms within the commerce and industry sector.’
Many businesses in the South West have bolstered their legal teams, and crucially many of those recruits have moved away from private practice. Following a fairly sustained period of recruitment activity, the number of commercial contracts specialists still looking for an in-house position has diminished. In turn, many in-house teams have been giving significant consideration to appropriately skilled corporate solicitors for a while now. For some corporate solicitors, the more consistent hours that are often associated with in-house roles have proven to be particularly attractive and have tempted them to make the move.
Bringing it full circle, how will Brexit impact on the legal sector and business in Bristol and the South West? While confidence remains buoyant and teams continue to win work in London, the life of corporate solicitors is likely to remain busy. Most of the firms in the region have a good supply of partners and juniors, but mid-level solicitors are in increasingly short supply. In meeting this challenge, teams are being reasonably pragmatic and building from the bottom upwards. This approach is providing some fantastic opportunities for junior solicitors as they are able to work very closely with partners on some good-quality work and promotion opportunities are in healthy supply.
The attraction for local solicitors in working for such well-known legal brands and undertaking the highest-quality work for FTSE 100-listed businesses is fairly obvious. However, this trend is not just limited to new entrants into Bristol. Several more established Bristol teams are also pushing their ability to service London and internationally based work. Not just the larger practices but the smaller mid-level firms are also able to offer stellar services with many teams now being led by ex-Magic Circle lawyers favouring the quieter life outside the City with the same quality of work on offer.
In addition to this, money talks: it is very well known that regional salaries are simply not comparable with London, even among firms that have major practices in the capital and elsewhere. Some of that disparity is slowly being bridged, with Bristol firms leading the way with higher-than-average salaries for NQs, which has a direct effect on salaries as you climb the PQE ladder. Thinking about all of this from a client perspective, you’re able to have the same level of service at a lower cost. From the corporate solicitor’s point of view, they are able to take on the higher-level work while being paid comparably well to do so. With consistent growth in the Bristol market and with firms favouring the culture and practice of progressing their own talent, the career prospects in Bristol are rather exciting.
When considering the corporate market in Bristol, the three biggest players are certainly Burges Salmon, Osborne Clarke, and TLT, but not to be discounted are other regional and national heavyweights, such as Bond Dickinson and DAC Beachcroft. All of these firms are multi-office UK practices with an international presence. When you consider the wider UK market, all of these firms are paying above average, which helps set the Bristol market apart from other legal centres, such as Birmingham and Manchester.
To quote the Legal 500: ‘Burges Salmon LLP stands “toe to toe with London firms”. It regularly advises on cross-border transactions for clients in the leisure, healthcare, and financial services sectors, and in 2015 acted on a number of big-ticket acquisitions for clients in the energy sector.’
These sentiments are broadly echoed in the activities of other large national and international firms in Bristol, and as a result the city is seeing an increasing flow of high-quality corporate work. As teams get busy, they need to get bigger. This has resulted in a myriad of junior-level positions being created and filled. However, securing the services of solicitors below partner level who are sufficiently experienced and skilled to run some of the deals remains particularly challenging.
Gishan Abeyratne is a senior associate in the Bristol and South West team at BCL Legal