East Anglia: promising morrows

Asked how business is going at the moment lawyers will almost invariably spin together some positive words about adverse conditions but how they manage to remain optimistic. In East Anglia, this sounds believable.

Hayes & Storr, a ten-partner firm born in Fakenham with five offices across the crescent-shaped north Norfolk coast, is so confident about the future that it is moving to larger premises in King's Lynn, only one year after opening in the town.

The latest expansion into King's Lynn follows the acquisition of a smaller local firm two years earlier in Sheringham, but, while the firm is keen to build on its presence in the region, its effort will focus on consolidating its existing bases. 'King's Lynn was an ideal add-on for us; it complements neatly the patch we want to concentrate on,' says senior partner Iain MacBrayne.

Now the idea is more to recruit lawyers who will help grow the firm and put in place a stable succession plan ahead of the imminent retirement of two of the partners. Unusually, the firm has taken on two trainees this year rather than just one, though always with a view to investing in the firm's future lawyers.

Landowners and larger estates, such as Holkham and Raynham, have been generating work for the local community since the 18th century. For law firms, this has been reflected in the very visible slant towards agricultural, commercial and private client work. Hayes & Storr is a case in point, with four of its ten partners working in private client.

Even conveyancing is perking up. At a time where property work in the rest of the country is still crawling back to life, Iain MacBrayne says this part of Britain is showing definite signs of recovery. 'Property has been challenging for everybody but clients now seem to be bullish,' he says. 'A lot of property is being transferred into SIPs, where people who had their own business put the property into a plan and lease it back because of the tax advantages. It's not a new phenomenon but we've noticed a lot more interest recently.'

According to MacBrayne, property prices also appear to have resisted better than in other regions, with the market for £1m+ houses picking up and agricultural land value holding strong.

'We can't ignore Tesco'

Of course private client work is the prime target for an invasion by 'Tesco lawyers'. Small firms take this seriously, but, over five years since the Legal Services Bill started a small tsunami of scaremongering, they have quietly become more confident that they can take on the predicted retailers' assault.

'We can't ignore Tesco and the recession but we want our clients to see us as their trusted advisers, not a press-button service,' says MacBrayne.

For firms like Hayes & Storr, this, in fact, works both ways and ties in with a strategy to target more affluent sections of the market. Assembly-line legal advice is not what the firm wants to offer, and this is not what its clients are after. But this doesn't mean that the battle is already won.

'There is a challenge; we've got to keep quality and client care standards up,' MacBrayne continues. 'It will be more of a challenge for conveyancing for instance, but having said that agents are still coming to us because we can turn things around quickly, which means the agent can get paid earlier.'

The response has changed little in the past few years. But two years after the beginning of a recession which has damaged the high street, law firms that are still around have greater faith in the traditional values of personal service and client care as a means to fend off the invaders.

'Where we have the edge over Tesco is that people can come into our office, speak to the same partner who started the job for them,' MacBrayne says. 'We don't advertise, and we do the job well, which is what makes the difference '“ people judge you by your last job.'

Richard Pennington, senior partner at seven-partner firm Ward Gethin, has become equally circumspect about the Tesco revolution. 'Ten years ago I went to all sorts of seminars where everybody said the end of the world was nigh. It was the same thing five years ago. I can see the argument for commoditisation but it just has not happened,' he says.

There is serious realism behind the scepticism. Pennington acknowledges that the internet and IT generally have opened up opportunities for all firms. Email for instance is the standard means of communication at his, and they will text clients where necessary '“ if they can't get hold of them by phone for instance. But they have not developed an online transaction service, which Pennington says is only worthwhile either if a firm is in the volume business or has enough very large clients to justify the investment.

Like Hayes & Storr, Ward Gethin's strategy is to concentrate on mid-level clients, and, for Richard Pennington, the recession has been a cautionary tale for a certain form of entrepreunership. 'The mid market is where firms like us can operate profitably; the volume firms have gone bust,' he says.

The other area where Tesco could chip at law firms' hegemony is personal injury work. Here again though, Pennington believes experience will make a difference. Most of the work is based on conditional fee agreements (CFAs), and much as he is not enamoured with this funding mechanism, he says claimant PI lawyers have little choice but to go with it.

Unlike a lot of larger PI firms, Ward Gethin has opted to remain a generalist rather than specialise in large claims. 'If you're in this business you've got to take all cases on, not just catastrophic injury,' says Pennington.

'Large claims take much longer to resolve, so you get paid much later; with smaller cases it's not only much quicker but with experience you can spot issues and pinpoint the claim more specifically, so that it's a lot more effective for both the lawyer and the client.'

Cautious planning

So, what does he make of the current situation? This corner of England has not been as badly hit by the recession, and if people with a mortgage are in employment they are likely to have benefited from lower interest rates, he says. And these lower rates have also helped keep the property market active, as individuals with capital to spare turn into second homeowners investing in property instead of putting their cash in bank accounts offering little return. The abolition of home information packs (HIPs) was another piece of good news.

All the signs are that the local economy is doing well but growth plans, as at Hayes & Storr, will be cautious '“ though Richard Pennington is definitely on the lookout.

'Some small practices are finding it difficult to secure professional indemnity insurance, and there are some sole practitioners retiring who will probably struggle to afford run-off cover, so there may be opportunities there.'

But the big mergers, he reckons, are at an end. 'Some people have had their fingers burnt. These mergers only work if there are true economies of scale where the joint overheads are reduced; they don't work if you end up with more offices with more partners, larger overheads and a bigger overdraft '“ all of which ends up costing more.'

Mind you, this doesn't stop the rumour mill. The other week Pennington went for lunch at the local pub with a lawyer friend. The next day, their respective firms were apparently merging...

Copyright & permissions