London: a balanced diet

Private client work, once perceived as a solid but slightly lacklustre practice area, is experiencing a renaissance. For many firms around the country, it has provided much-needed revenue as they battle through the recession. A spate of high-profile cases has also pushed it up the legal fashion rankings and a new breed of clients is giving it a more attractive shine. Nowhere does this seem truer than in the capital.

Where corporate firms have been going through successive rounds of redundancies, those with a more balanced diet involving a healthy dose of private client work have managed to weather the storm.

One of the drivers behind the growth of private client work has been the steep increase in wealth in the past two decades. The rise in property prices has meant that anybody owning their home is now much wealthier than the previous generation '“ even taking into account the current state of the market.

'For example, council tenants who bought their local authority flat have increased their wealth dramatically,' says Richard Frimston, head of private client at Russell-Cooke. 'A few decades ago all they would have had was a few bob in a building society account.'

This, according to Frimston, has led to a corresponding rise in contentious work, with families more likely to be feuding over their shares of a relative's estate.

The most recent case to hit the headlines was that brought by Dr Christine Gill against the RSPCA, claiming that her mother had never intended to leave her estate to the well-known animal charity but had promised it to her.

A few months earlier, the High Court in Devas v Mackay had restored the previous will of a wealthy book collector who, the judge said, did not have mental capacity when she made a later will in favour of her carer's son.

Over in Belgravia, Peter Woodroffe, senior partner at Woodroffes, also reports a few disputed wills. One involved a forgery that nearly went undetected, and another a trusted 'man from the Pru' character who had exercised undue influence over an old client to make her rewritte her will in his favour.

Woodroffe agrees with Frimston's suggestion that the rise in disputes is the logical result of the overall rise in the nation's wealth. 'If the value of an estate is low, once legal costs have been taken into account, the figures are usually such that it does not merit getting involved in litigation; but if the value increases, this is a different proposition,' he says. But, unless your firm specialises in contentious probate, Woodroffe reckons such cases have probably remained few and far between.

What Gill has highlighted, however, is that costs need no longer be an obstacle to litigation. The possibility for claimants to fund probate litigation through conditional fee agreements is another reason why there could be a further rise in will-related disputes, according to Andrew Goldstone, head of private client at Mishcon de Reya '“ the firm which acted for Dr Gill under a CFA.

The case involved claims of undue influence and promissory estoppels. These are two common grounds for disputing a will, to which lack of capacity can be added. But Goldstone says that where a claim appears legitimate, lawyers will think creatively about ways in which it might succeed.

Claims more representative of recessionary times, based on loss of value, have also started appearing, according to Neil Turner, senior partner at Holborn firm Cumberland Ellis. Much as claimants tried to blame surveyors for a drop in the value of their property during the previous recession, he says, some claimants are now trying to blame executors for delays in probate, arguing that it has led to a drop in the value of the estate.

Not all about disputes

But contentious probate is only one aspect of the work undertaken in private client departments which underpins the buoyancy of the area.

'People's lives have become more complex, more move to other countries, set up businesses abroad '“ all of which triggers a need for specific professional advice,' says Richard Frimston, who has developed a specialism in cross-border issues.

International clients are also a major source of work at Collyer-Bristow. For senior partner John Saner, 'this has to be the direction for larger private client firms seeking to expand their foothold in the high-net-worth and ultra-high-net-worth market'.

A few streets to the south, at Speechly Bircham, John Ward, a senior partner in the private client department, makes similar comments. Over a year ago the firm launched a 'Swiss initiative' involving regular trips to Geneva and Zurich, an operation which has resulted not only in work from the continent but also in instructions from Middle Eastern clients.

Meanwhile, back at Mishcon, Andrew Goldstone provides further insight into the kind of work brought by this kind of client. Typically, a high-net-worth 'non-dom' client will require assistance with immigration matters, they will often buy property, get married, sometimes get divorced, and even set up a business. Along the way, the firm will be able to offer seamless advice on family, tax and business matters.

In fact, whether he is a non-dom or not is just a slight variation on the average client profile. What the clients of firms like Mishcon, Collyer-Bristow or Speechlys have in common is that they tend to be wealthy entrepreneurs or business owners looking for a one-stop law firm that can deliver across all their legal requirements.

By all accounts, the private client side suffered a slight wobble earlier this year '“ though certainly less so than commercial and property departments which have been on the edge of a cliff for the past year. Clients seemed to feel 'less rich' and the drop in property sales meant there was less of a need for capital gains or inheritance tax advice, according to Goldstone.

Alison Broadberry, a senior tax and trust partner at Speechly Bircham, also reports a slight dip earlier in the year, as clients became more concerned about job security or keeping their business going than about personal wealth management. Since then, however, things have perked up. The type of work has also changed slightly. 'Clients now appear more concerned about preserving their wealth, when it used to be more about protecting their estate against IHT; their worries '“ and the advice we now give '“ are more joined up,' she says.

More level workflows

For accountants, however, the beauty of private client departments remains that they are a stable long-term investment and an insurance against bad times.

'It allows the firm to move with the generations,' says Neil Turner, at Cumberland Ellis. Not only is there a lateral, cross-department benefit with commercial and property departments '“ and vice-versa '“ there is also a personal bond with the firm that often passes from parents to children.

The work involved with trusts and estate planning is also more controllable than corporate work. 'It's much more level, with few or no peaks and troughs, which is good for the firm's cash flow,' continues Turner. 'With transactional work, whether it's commercial or property, lawyers get paid on completion. With work such as trusts, it's possible to structure the overall department's activity so that trusts managed by the firm are billed more evenly throughout the year.'

Of course, the size of a private client department very much depends on the overall strategy of the firm. At Cumberland Ellis, it is about 30 per cent of the firm's £5.9m turnover, on a par with the other main two departments '“ commercial and property. At Russell-Cooke, a firm also well known for its personal injury work, it is just over 12 per cent of a £22m turnover. In between '“ to mention just two '“ are Collyer-Bristow, where private client accounts for about 22 per cent of the firm's £13.6m turnover, and Speechly Bircham, where it represents 27 per cent of the firm's £46m turnover.

Renaissance

With greater internationalisation, closer relations with corporate departments and serious money flowing into the coffers, it is little wonder that private client work should be getting more attention.

'Twenty years ago wills and probate was seen as boring and people thought it only involved dealing with little old ladies. Now people's lives are more complex and private client work is no longer for backroom boffins: lawyers deal with entrepreneurs and are called on to solve complex problems,' says Richard Frimston.

Does this mean that new blood is coming into this segment of the profession? 'Absolutely,' Frimston continues. When property lawyers were generating a lot of cash the tendency was to see private client work as the poor boy of the family; trainees didn't find it sexy. Now it's a lot more attractive to younger lawyers.'

Neil Turner agrees: 'Private client used to be a bit unfashionable but young lawyers who, before, may have been more attracted to City work are now showing greater interest, particularly where there is an international element involved.'

Likewise, Andrew Goldstone comments that private client brings unique rewards. 'It's become more intellectually demanding, you tend to be given responsibility earlier on, and you get to see the client through from beginning to end,' he says. There is also personal satisfaction in working directly with 'big players' on their private affairs, and, unlike corporate work, lawyers in private client departments usually have greater control of their own work-life balance.

But the lack of interest of yesteryears has created a problem, according to John Saner. Because earlier generations of lawyers turned their attention to corporate or property work, there is now a skills shortage in private client work at senior levels leading to a war for talent between firms.

For the time being though, it would seem that private client work in London is only just starting to take off. The move by the last few firms in the Top 50 to shed their private client lawyers could signal a new dawn for mixed practices looking after the next generation of entrepreneurs.

'Tectonic plates are shifting again,' says John Ward. 'Unlike the large corporate firms where private client was relatively small and peripheral, private client is built in our core offering.'

Most of the London-based truly mixed practice will agree that this model works well for them. But tectonic plates don't usually stay still for long. Few firms in this bracket feel threatened by the reforms about to take place under the Legal Services Act, but all say they need to grow.

Last year, Cumberland Ellis merged with Hyde Mahon Bridges, and earlier this year Speechlys merged with Campbell Hooper.

Michael Gillman, a senior partner with ten-partner Bloomsbury firm Bishop and Sewell, says that merger is on the radar for many medium-size mixed practices. In the case of Bishop and Sewell, growth will also involve the development of a stronger commercial arm '“ the kind of strategic move that is also being considered at Woodroffes.

While organic growth has been the preferred approach for most firms so far, there is now a sense that this needs to happen faster '“ whether through mergers or large lateral hires, this segment will start moving again before long.