East Midlands: quiet revolution in Lincoln

LINCOLN CATHEDRAL, ONCE standing a proud testimony to a prosperity built mostly on the wool trade, now casts its gothic spires over a modern, vibrant economic landscape. Yet Lincolnshire has remained very rural and the market for legal services fragmented across numerous market towns.

Figures for the East Midlands as a whole show that the region is home to only 514 law firms (5.1 per cent of the 10,114 law firms in England and Wales) and the overwhelming majority are small: 231 sole practitioners and 204 have between two and four partners. Only Wales and the North East have fewer law firms and more small firms (see East Midlands by numbers table below). There are signs however that the market structure may be changing.

Langleys started life as a traditional high street practice 150 years ago and has grown to become one of the largest in the region with 38 partners and 350 staff between the Lincoln and York offices. But according to Andrew Fearn, a senior partner at Langleys and head of the firm's agricultural department, even for larger firms the market does not lend itself to the "pile 'em high, sell 'em cheap" approach pervading other regions where the client base is more concentrated.

Does that mean the county has been bypassed by the commoditisation roller-coaster? As in other parts of Britain, lawyers have not waited for the market reforms to be implemented to look at ways of rationalising processes and bringing costs down by taking advantage of technological progress.

Commoditised services

In Langleys' case, Fearn says that a lot of the firm's work has already been streamlined using case management software. On the conveyancing side, for instance, because the firm works with some large providers, it had to invest in bulk transaction processes early on and now even offers web-based transaction tracking. However other than that Fearn insists that the way forward for his firm is to offer bespoke services. "We act for landowners, farmers, company directors", he says, "and these clients aren't interested in commoditised services."

Over at Bridge McFarland, Darryn Hedges, the firm's chief executive officer, makes a similar analysis and believes that the local market is not yet ripe for organisations like Tesco. "Commoditisation has opened up opportunities to provide services like conveyancing in a different way, but if Tesco or the Halifax start looking at the market in this area they will quickly realise that they would need to have huge economies of scale to build a strong market position," he says.

Not that Hedges is complacent, but he believes that law firms can improve efficiencies and offer an efficient service without necessarily centralising the work in one location. "If you use technology intelligently, you can provide the same service without having to send the work in a large warehouse out of town", he continues.

Embracing technology has allowed local firms to target price sensitive segments of the market which might be tempted by offers of cheap conveyancing '“ typically first time buyers - but the more sophisticated buyers on their second or third move will be less persuaded by cost than by the level of service, particularly where the transaction value is high.

From conveyancing to personal injury

A personal injury litigator and one of the senior partners at Sills and Betteridge, Steve Wilson is "acutely aware" of the competition threat posed by Tesco types following the upheaval caused by claims farmers in the PI market. "It is difficult to know what we can do to prepare ourselves in the best way possible, but our view is that we offer a good personal local service, which is not what is given to people going to organisations offering solely commoditised services," says Wilson.

According to Wilson the local market is already divided. Being on an insurer's panel can be risky: the fees paid by insurers are low, there has to be a steady flow of work, and the firm needs to be large enough to absorb the work to make its commitment worthwhile.

So whether it is personal injury work, conveyancing or wills, Sills and Betteridge has decided that it would not bid to be on any panel. "We continue to promote ourselves locally and do our best to offer good quality legal service. Doing your shopping at Tesco's is one thing, buying a house is something else; if you go to your local solicitor you know who you will be dealing with and you know you can go back to them if there is a problem. Most people know they do not get this quality of service if they go to a call centre."

Personal injury was one of the pillars of success at Bridge McFarland and still represents a substantial proportion of its present work. The firm was created 30 years ago by the amalgamation of Bridge, a practice with a strong PI reputation built on the back of key relationships with trade unions, and McFarland, a generalist high street firm doing a combination of private client and local commercial work.

As the firm grew, most of the routine, lower value PI work has been delegated to legal executives while the more complex cases such as clinical negligence are handled by senior lawyers, a model which Hedges says is inevitable in this market.

This has worked well for Bridge McFarland, where the two strands of work have complemented each other, as members of the unions referring PI work to the firm are offered preferential rates on personal legal matters such as wills and matrimonial.

"There is still a wealth of opportunities for a 'full service' firm like ours to cross-sell our services," says Hedges.

"It should be systematic to suggest to a client who has just bought or sold his house that he should think of taking advice in respect of wealth management and estate planning."

"Some solicitors see it as cold-calling and will try anything not to make that follow-up call, while others do it naturally and charmingly, in a way that clients will feel is helpful rather than make it sound as if somebody is trying to sell them something you do not want."

That's quality

But successful cross-selling implies that law firms are able to deliver across the board the proverbial quality that sets them apart from volume transaction organisations. And some serious thinking is taking place beyond obvious definitions referring to terms such as "personal service".

In most cases it means face-to face contact with clients, direct phone numbers and personal voicemail on which to leave messages, alternative names and numbers if a lawyer is not available, and where a firm has web-based tracking a real-time file update and even sms alerts when a particular stage in the transaction is reached. "In the end all people want is to be kept informed, so it's about trying to have as many facilities to send people the information they want in the way they prefer", says Andrew and Co's practice director Peter Bateson. "And mostly, people prefer face-to-face contact, though web-based solutions are available too."

For Steve Wilson at Sills and Betteridge, quality starts with being a modern and approachable firm with properly trained staff able to make the contact with solicitors feel less intimidating. Having an office with a front in a prominent location in Lincoln also helps create a sense that the firm is part of the community.

"Tesco-type pressure has not caused problems yet but we must be able to respond to competition", he says. "The risk is that firms may be tempted to think in terms of fees first rather than service."

Growing to survive

Bateson continues: "Lincolnshire is unusual in that is does not see the highs and lows affecting other regions, it doesn't experience the same surge, but firms almost inevitably have to grow to survive."

His firm recently acquired two smaller practices with a good reputation, which Bateson says allowed Andrew and Co to get instant presence in certain sectors and volume clients straightaway in new towns.

The firm could have waited to pick up the goodwill as the partners retired but Bateson says that it was important to preserve the goodwill. He points out however, that merging with or acquiring a firm is not a strategy but merely a means to an end, intended to increase profitability and protect the firm in time for when competition really kicks in.

Because the firms acquired by Andrew and Co only had one and two partners, culture was not an issue. Others, like Bridge McFarland and Sills and Betteridge, which respectively acquired two and three firms in the past few years, had to work harder at making sure that cultural divides would not undermine the mergers.

"The issues are the same for smaller firms as they are for big firms", says Hedges. "It is easy to merge policies and procedures because firms these days operate in similar ways, but combining cultures can be difficult, particularly where the offices are in different towns and not linked up, reducing the potential for interaction and cross-pollination." His firm would not be averse to merging with another, he continues, but it would have to involve another large player. "When buying a much smaller firm there is a risk that the goodwill disappears quickly and you may end up being the retirement plan for the partners selling up".

Langleys has also been involved in acquisition and Andrew Fearn says the experience has been positive. "It is all in the planning", he says. "Everybody involved knew what they wanted to achieve and everything was handled together, from the ground up to the strategic levels - if there are problems at organisational levels then cracks will appear in the superstructure, so they must be dealt with together".

Similarly at Sills and Betteridge, growth has made way to acquisitions as a means of reaching critical mass more quickly. The firm acquired three practices in the past 12 months, but until then Wilson says that from 10 people in 1979 the firm had grown entirely organically to 10 times its original size.

Paradoxically the number of firms in the East Midlands has grown in the past three years (mostly because of the rise in the number of sole practitioners) but it has remained even as a proportion of the total number of firms in England and Wales.

The difficulty is that in a comparatively small market off the beaten track, it may be difficult to attract lawyers to the region or make lateral hires. As in many other economically buoyant rural areas, lawyers in Lincolnshire say that they are enjoying a quality of life they would not be able to have in large urban areas but that the work is of the same high standards. They are faced with a dilemma though: until the market changes, it is unlikely to be on the career map for lawyers in other parts of Britain - but this may only be a matter of time.