South East: slowly out of the woods

'I usually deal with people who have been kicked, bitten or shot,' says Michael McNally, co-founder of Knights Solicitors in Tunbridge Wells. His quip is not a reference to some implausible crime in this affluent part of the Weald but to the specific client base of the four-partner firm.

Set up in 1994 Knights is a niche practice focusing on countryside and country sport clients and a substantial amount of its work includes dealing with riding, shooting and hunting accidents involving not only people but also animals.

The firm's client base ranges from large landowners and estates to hunts, shoots, grouse moors and countryside organisations; and keeping a clear focus on this target market has helped keep the firm busy with only a marginal drop in revenue from last year.

The comparatively small conveyancing department, like everybody else, has been affected, but a sizeable amount of the firm's property work involves rights of way disputes, easements, or trespass on behalf of landowners, and this work has not abated.

Other types of work, for example problems with firearms regulation or breaches of the Hunting Act '“ the only type of criminal work the firm undertakes '“ and general problems associated with the management of an estate, have remained steady. And employment and debt claim inquiries have also increased.

Wide appeal

So, in many ways, lawyers at Knights have remained generalists, able to advise clients on a broad range of issues, but have cut a place for themselves in a competitive market with their expertise in a particular sector, for their ability to consider personal injury cases, employment claims, or property disputes in the very particular context of country life.

How, though, does one grow a niche firm such as Knights? 'We started off with only five of us, now there are 15 of us and we have recently moved offices,' says McNally. 'We usually take one trainee every year and the firm grows naturally as the work increases.'

The firm has also extended its reach beyond Sussex. Having started with a few ad hoc briefings for countryside clients outside the county, it has now rolled out seminars for gamekeepers, shoots and landowners as far as Scotland.

These seminars, McNally says, are very popular and a good way of expanding or consolidating the firm's presence in this sector. 'We discuss the whole range of issues these clients are faced with, from accidental deaths of birds of prey to firearms licensing and countryside vehicles. We see this kind of work as essential in cementing our relationship with clients and the sector as a whole.'

Around the corner on the north side of town, local giant Cripps Harries Hall has also had a good year. At £19.1m, turnover at the 39-partner firm, which employs about 275 staff, is up on last year's, as is the profit margin '“ only by just under one per cent, but it is a lot better than the performance of many of other top 200 firms.

Hope and caution

'We had a good first half of the year with a lot of work in the pipeline,' says managing partner Jonathan Denny, 'but the drop in property development work was hurtful in the second half. Now we need the transactional work back, and there are glimmers of hope.'

But Denny is cautious about the much-vaunted green shoots, saying that the housebuilder market is still in serious difficulty.

'The market is highly geared and banks are still not willing to lend on property,' he says. 'There is this strange contradiction: government housing targets on the one hand, but nobody building the houses and builders unable to get the finance on the other.'

Registered social landlords and housing associations have remained moderately active, but even they, according to Denny, are struggling to secure government or private funding, and he says that more than ever Cripps lawyers are actively looking for opportunities to get on more panels.

Mostly this involves attending specialist events, though figuring out which events are most likely to bring new clients is a game of trial and error. Cripps property lawyers still go to MIPIM, the global property conference held every year in the spring in Cannes. 'It's a huge event and sometimes it can be difficult to navigate, but we have always had good leads,' Denny comments.

The firm's biggest success this year is possibly its appointment on the Crossrail panel, which is likely to involve as much as 19,000 compulsory purchases. 'Crossrail was a huge client win and moral boost,' says Denny who believes the firm won in part because of its involvement in the channel tunnel rail link.

By contrast, things did not start so well at five-partner firm Buss Murton, though senior partner Alan Williams is more confident now than he was at the turn of the year.

The firm, headquartered in Tunbridge Wells and with offices in Cranbrook and Dartford, covers a mixed geographical area.

Williams joined two years ago and his challenge was to turn around the firm's fortunes from traditional high street to a more balanced mixture of individual and business clients.

About 12 years ago Buss Murton got into personal injury work but encountered difficulties and attempted to borrow its way out of trouble. By this time last year, Williams and the partners realised the firm would just no be able to extricate itself from its debt burden. A company voluntary arrangement (CVA) was considered but this would have required the remaining partners to put in some of their own money into the venture '“ an option which Williams says 'would have been like putting money into a black hole'. Instead the old firm went into liquidation and a new one, Buss Murton Law, set up.

A clean slate

'Now we can operate without this huge millstone of mismanagement,' says Williams. 'The north Kent office in Dartford, which relied enormously on conveyancing and suffered disproportionately, has been cut to the bare bones.'

Meanwhile, the Cranbrook office, another family high street office, is almost in a monopoly position with no other firm for miles. But it is the Tunbridge Wells office which remains the engine room of the firm and the place where facilities such as IT and general administration are centralised.

So, which part of the market is the new firm attacking? Williams is gradually bringing the private client/business client balance to 60/40, with long-term plans for a 50-50 balance.

But Williams says he will not be going against the larger firms in the area which operate more along commoditised lines. 'We're more like out-of-house in-house lawyers: providing legal advice to clients who don't have an in-house department, businesses managed by people who have a significant personal financial stake in it.'

He continues: 'Commoditisation involves allocating lawyers by reference to the level of advice required and the use of standardised processes. It doesn't work with clients who want day-to-day advice. That's where the gap is in the market, and it is growing '“ more businesses want a proper relationship with their lawyer. I'm putting this message out to accountants and it's being well received. Sometimes it feels as if I am pushing an open door.'

Over at Warners in Tonbridge managing director Ian Hopkins reports similar trends and shares the same outlook.

'2008 was a very difficult year,' says the former Leo Abse Cohen managing partner. 'A lot of our work is property based and that virtually stopped. Commercial work was also hit as the banks had stopped lending, but tax planning and private client work carried on, and this year property work has picked up and the deals are starting again.'

New opportunities

The 17-partner firm had already made conscious decisions not to touch certain types of work '“ 'we hardly do any personal injury' '“ focusing instead on a mix of private client and commercial work for owner-managed businesses. And the downturn has been the opportunity to keep to a focused strategy and tighten its processes.

'We track the volume of work we are opening and the estimated value, and where this work has come from. We have made big improvements to efficiencies and can now be a lot more competitive,' says Hopkins. 'In addition to core areas, we are also looking more closely at three specific sectors: agricultural, where we are already acting for about 70 farms and landed estates; professionals such as doctors and vets; and education and charities, where we already act for about 20 private schools. The idea is that we can offer a cross-disciplinary approach.'

Warners is also one of those firms that is openly interested in opportunities offered by the Legal Services Act. Not so much ABSs,a change which Hopkins says is unlikely to affect his firm, but alternative funding options. 'This is very much on the radar screen for us,' he says. 'The interesting issue will be the cultural fit. It can already be difficult for two law firms to merge and this might be even more so for a law firm and an accountancy firm to merge. But it would offer the one-stop shop that some clients would be interested in.'

One thing all South East lawyers seem to agree on is that while things are getting better, recovery is still some way off. But the downturn has somehow purged the system and forced law firms to review their efficiencies and focus much more tightly on their business strategy. And slowly, some of them are ready to come out of the recessionary woods.

THE LEGAL AID FIRM

Holden and Co, a sole practitioner firm employing 15 solicitors, is a rare example of a small legal aid practice on the high street determined to grow and continue to offer publicly-funded services.

'We're not a large firm but it is obvious that if you want to stay in legal aid you have to be bigger,' says Joe Holden.

From its Hastings base the firm has expanded in Ashford where it offers crime and family advice, and Maidstone where it offers housing, welfare, and family advice. One year on, it is beginning to reap the rewards of its effort. All the administrative functions are centralised in Hastings, keeping costs to the bare minimum in the other offices.

'Maidstone took a year to get off the ground because we missed the round to advertise in the Yellow Pages but work started coming in immediately after the new edition went out,' says Holden. 'We did well in 2008; the beginning of 2009 was dire, but now things are picking up.'

One difficulty, he says, is that the old referral networks seem to have disintegrated. 'Though there are still referrals from other firms; we even had some housing cases from south London when people couldn't find a legal aid lawyer in their area.'

Another challenge is to offer experience across a critical number of areas to get certification from the Legal Services Commission. 'We've been building up expertise and filling the gaps through recruitment '“ our experience of recruitment agencies was not satisfactory but direct approaches have been positive.'

Recruiting good social welfare lawyers has been particularly tricky. 'These lawyers are in demand, and for many it can be more tempting to work for a local authority.'

What's his outlook for next year? 'I'm optimistic. People will need to turn to legal aid lawyers for assistance. The recession is not over and people will need advice.'