LB145/liverpool p34-40
24/5/04
2:53 pm
Page 34
Personal injury/North West focus
Grown-up operation Out on a limb? The North West is one of the key UK regions which has worked out how to provide efficient bulk personal injury work; defendant practices at City firms have been hammered SAM KENWORTHY
34 Legal Business June 2004
THE CLOSURE OF TAYLOR WESSING’S personal injury practice in April this year was more than a simple casualty of internal restructuring; it was yet another example of a City firm being priced out of a market that’s heading north. The firm had established the practice in 1990, with two partners and six associates, acting for defendants, primarily Norwich Union and Commercial Union. ‘In those heady days, there was no pressure on fees. London rates were paid without question,’ says Taylor Wessing’s head of litigation, Michael Frawley. ‘Then, about five years ago, whether to make themselves more attractive to investors or simply to maximise profits, firms on the panels were told to re-think their rates.’ Re-think as in reduce. Profits took a battering as a result. A retirement allowed the firm to downsize the practice to one partner and two associates, generating £1m per annum, but the squeeze had not yet finished. In 2003, the firm was told by one client that it would have to set hourly billing rates at £105 for senior associates, and £135 at partner level – just under a third of what the firm ordinarily bills for litigation at the top end; the writing was on the wall.
LB145/liverpool p34-40
24/5/04
2:53 pm
Page 36
Personal injury
‘The case management system is essential to the success of any PI-focused firm. Each case must be run according to a plan established from the outset. You cannot wing it.’ Terry Sweeney, Silverbeck Rymer > ‘It simply isn’t feasible to run a defendant
explains. ‘You tend to find that local firms recruit from the same pool of like-minded PI practice at a City firm. Claimant firms firms. London lawyers have to lower their have a better chance of survival, but only expectations if they leave the City.’ because the shrinking number of firms will mean more referrals for those still involved,’ explains Frawley. ‘And even though the litiNorth West steps gation system as it stands pressures parties The North West is one of the key areas of into settling, the costs of running a litigagrowth in the UK. Here, the ‘high-intensity’ tion at City rates are often horrific.’ models are already up and running. In At nearby Irwin Mitchell, which excluformer heavy industry cities, frequent sively advises claimants, Colin Ettinger is injuries to workers have always meant comsimilarly wary. ‘Work referees are squeezing pensation. Since the 1970s, it has meant the firms on fees, and there will be casualincreased litigation. Liverpool may suffer ties in the City, where overheads and fees unfair jibes about ambulance chasing, or are higher, and where defendant firms are being the ‘tripping-and-slipping’ capital of more vulnerable,’ he warns. Britain, but its law firms certainly know Sweeney: case management system is essential In the era of ‘no win, no fee’, it’s all how to stay healthy. about your business nous, in what is ‘There are two key principles to running overheads. I can see experts ultimately a series of well-informed a successful provincial PI firm: efficiency moving out of London to the gambles. The demise of Claims Direct was and specialisation,’ says Terry Sweeney, provinces as a result.’ set against a backdrop of what were alleged chief executive at eight-partner Silverbeck National firms have an to be grossly exaggerated success ratios. In Rymer. ‘We only have specialists working advantage in holding on to an industry where the margins of success cases that they are familiar with, and as a their talent by relocating it to are so critical, companies such as Invaro firm we only take on cases that we know we another office: Eversheds runs have sprung up, providing access to justice can handle. There is a high degree of PI work out of its Cardiff office, by vetting claimants and arranging specialisation because it’s not effective to while DLA does the same from insurance, or getting funding from a bank have lawyers dealing with a mixed bag.’ five regional offices. However, or lending body, to cover fees. Although The firm advises defendants and claimants recruitment consultant Martin premiums and interest payments may cost, although, whereas versatility would be Vowden, at Michael Page, has a second opinion in assessing the validity of viewed as an advantage in other yet to see significant movement claims reduces the risk of client and disciplines, concentration on specific to independent firms in the solicitor being out of pocket at the culminaareas is the route to profitability, both for provinces. ‘The problem is tion of a case. Validity is based purely on the individuals and the firm as a whole. the difference in salary,’ he the chances of success: while a firm might publicly put a 51% THE NEED FOR SPEED: BOTT & CO chance of success as the threshold, in reality the requirement is significantly higher. a year on upgrades suggests you have to spend money Bott & Co could be the model PI firm of the Frawley has no doubt about to save your clients money. future. Sole partner David Bott overseas six the prognosis for the market. When Bott stresses the importance of quality of solicitors and eight legal executives, who handle ‘The future is a high-intensity service, he’s talking about speed and efficiency: nonover 3,000 cases at any one time, generating warehouse in the provinces,’ he qualified employees focus on work where, ‘common £3.2m in fees annually. Impressive for a threesays. ‘By that I mean leveraged sense and good administrative skills are more year-old firm. firms, around one partner to 20 important than knowing the intricacies of the law’. ‘The only way to make PI work as a business is with assistants, perhaps not even ‘If you are carrying 300 files, it’s better to get a lot of technology, which keeps costs to a minimum,’ qualified lawyers, with a high through them quickly,’ Bott concludes. says Bott, although the firm’s expenditure of £100,000 turnover of work and low
36 Legal Business June 2004
LB145/liverpool p34-40
24/5/04
2:53 pm
Page 37
LB145/liverpool p34-40
24/5/04
2:54 pm
Page 38
Personal injury
> It is for this reason that
work is the foundation. Smaller, boutiques are more likely to more straightforsucceed in PI than the bigger, ward claims are full-service firms. Case managehandled in large ment systems at Silverbeck numbers, providing Rymer, and elsewhere, are training for junior tailored for PI claims, and staff who are would not be transferable to gradually involved other areas. in more complex The whole firm is a machine matters as their of efficiency. ‘The case manageexperience grows ment system is essential to the and, perhaps success and profitability of any more importantly, PI-focused firm. There must be maintaining a 100% focus on its developsteady cashflow that ment,’ continues Sweeney. ‘We Ettinger: warns of casualties in the City allows the firm to constantly develop and modify undertake claims which may ours. Each case must be run according to a not generate fees for years. plan established from the outset. You Good business sense does not cannot wing it.’ mean grabbing every penny Although the firm prefers to advocate you can, however. ‘Legitimate the quality of advice rather than the value criticism has been levelled at (‘We certainly do not see ourselves as a firms for letting claims run cheap alternative,’ says Sweeney), low-cost
along, and at the end the claimant and lawyer both get a big payout but the client ends up with a poor life outcome,’ says Sweeney. The theory is that rehabilitation projects, which cost less in strict monetary terms than cash settlements, are not good for firms. ‘“Best client quality care” is what we don’t compromise on,’ says Sweeney. ‘This may reduce fees in the short term, but will increase profitability in the long term.’
Union trade
Although Thompsons is a national firm, a 70-year history of advising trade unions and their members generally directs its operations to work-related injury claims in industrial centres. The firm fits the leveraged model of 35 partners to around 800 staff, across 18 locations in England, Wales and Northern Ireland, and it is the workload generated by the various offices which permits the pursuit of lengthy claims. Head of the Liverpool branch, Matthew Tollitt, explains: ‘High- volume, bulk work funds the longer, more drawn out cases where fees won’t be seen OUTSIDE MONEY: CLEMENTI’S OWN OPERATION for a while. A sole practitioner running 100 or 200 cases simulOthers believe that relationships with the larger taneously is going to find it very Proposals to float law firms are set out in the widelyclients – in this instance, the large insurers involved difficult to keep going without debated Clementi review, and have generated mixed in defendant PI work – would risk being diluted if settling cases and getting fees responses – caution and optimism. Many lawyers are private money were to take hold. ‘I doubt it would through the door. The nature of beginning to accept that the idea of non-legal financial work with insurance,’ comments Chris Charles, our firm is that we can aggresinterests in law firms is an inevitable development of finance director at Beachcroft Wansbroughs. ‘We’ve sively litigate matters if the the process of modernising legal services. Personal invested a huge amount of time with clients over the insurance company or defeninjury firms may be the first to feel the force of these last five years, making sure they are comfortable dants are dragging their feet, reconsiderations. with the process. Effective negotiation remains the which they are prone to doing.’ Amongst the most likely beneficiaries of external key to managing this work and this requires good Tollitt also reveals a lossinvestment are high-volume, process-driven firms, lawyers. It would be difficult to attract good lawyers leading principle, with similar such as personal injury practices. into a non-legal environment.’ ethics to Silverbeck Rymer’s best Colin Ettinger, head of personal injury in Irwin With deregulation on the horizon, however, chalMitchell’s London office, and recently appointed lenges are ever-looming. The RAC, which has a long President of the Association of Personal Injury Lawyers, history of offering legal services to members and also notes: ‘We would welcome investment from outside operates in the legal expenses arena, has made clear business where it can be a genuine partnership. PI its intentions to get a foot in the legal market. Jonathan firms with very good infrastructures know how to run Gulliford, head of legal affairs, says: ‘We're a very big cases, but may lack the marketing know-how necessary provider of legal services already. We want to extend to generate business. Linking up with marketing organiwhat we are able to offer to anyone who wants to use sations, for example, can help to generate work and the RAC. A more competitive legal market could be of great two can feed off one another and benefit from it. benefit to people needing legal assistance.’ ‘The challenge is to ensure the interests of the client Sir David Clementi was appointed to undertake a reign supreme and that their interests will never be review of the regulation of legal services in England and subjugated to business interests. If you end up with a Wales. He released a consultation paper in March, and flourishing and thriving business, and it results in a is expected to publish his recommendations in a report good product for the consumer of legal services, then by 31 December. why not? The reality of life is that it’s going to happen,’ Rachael Doeg Ettinger concludes. Tollitt: pushing back boundaries
38 Legal Business June 2004
LB145/liverpool p34-40
24/5/04
5:06 pm
Page 39
Personal injury
‘The future is a highintensity warehouse in the provinces.’ Michael Frawley, Taylor Wessing
client quality care focus. ‘We don’t just pick cases with a 90% chance of success,’ he explains. ‘We take cases which will push back the boundaries and benefit our clients as a group in the long term, but have little chance of success as individual claims. For a firm doing exclusively highvolume, road traffic accident work, a 90%
win ratio is essential. For us, it high-volume PI specialists Donns in isn’t.’ There is certainly an October 2003, in order to re-immerse element of old-fashioned herself in the nitty-gritty of fee-earning union spirit at work at her own single-partner Thompsons, of firm. Donns is the archetypal David versus high-volume firm, employing Goliath. ‘We 12 partners to 218 fee-earners, certainly have the handling around 30,000 cases ethos that we work annually. A recognised brain for trade unions, for and spinal injury specialist, injured workers, Meredith is known for her and that it should work with ex-soldiers in be a motivating claims against the Ministry of factor for anyone Defence. Such cases are lengthy, who joins the firm,’ complex and bad for cashflow. Tollitt explains. To make ends meet, the firm is Hilary Meredith set to open an industrial disease left her position as unit, fast-tracking cases with a managing partner at six- to eight-month turnaround Manchester-based, time, which will be handled Frawley: can see experts leaving London for provinces
North West Partnership Opportunities Corporate Partner | £ Six Figure Package
Heavyweight Commercial Litigator | to £125,000
This leading commercial firm with national networks has grown rapidly over recent years based on a culture of innovation and reward. As one of the firm's key growth areas, they seek to strengthen the corporate department with a heavyweight partner. It is likely you will bring a following, along with proven practice development abilities, in return for the opportunity to have a significant impact and contribution to the continued growth of the firm. Ref GC1071262
As part of a well thought out, exciting business strategy, our client is looking for someone of first class ability to drive their Liverpool office forward. You will have an excellent track record and a demonstrable level of achievement. This opportunity allows you to be a fulcrum of the firm's development and would carry enormous kudos both internally and externally. You will thrive on a mixed caseload and have client skills and ideally a following that sets you apart from the rest. Ref MV1022398
Planning Partner | to £200,000
Comm Property Partner/Teams | £ Six Figure Package
This leading law firm with offices in London, Europe and Asia seeks an experienced partner to drive forward its existing planning practice. The firm has a strong reputation for its planning work nationally and is committed to developing its Northern presence. You will have good market contacts, sound planning experience and ideally some environmental experience along with the desire to take a key role in the growth of department and the firm. Ref GC 624846
Seeking to build on this booming discipline in the North West, a unique opportunity has emerged at our prestigious client based from their Liverpool office. As the city goes from strength to strength this is a fantastic opening which will further boost your reputation, dealing with an exceptional calibre of client and quality of work. A following would be desired but extraordinary candidates relocating from other regions will be considered. A partner with a team to bring with them will be seriously entertained. Ref MV844265
Head of Department, Private Client | £75,000 + Bens
Employment Partner | to £75,000 + Benefits
This strong regional commercial player seeks to strengthen an already established department with an experienced partner to head the team. The firm is totally committed to developing this practice area and the role will involve both capitalising on long standing contacts as well as a commitment to building the practice. You will have experience in UK tax planning and working for high net-worth entrepreneurs. Ref GC1022398
Our client is a regional heavyweight looking for a commercially minded ambitious partner to further build and enhance this well regarded department. You will have the capability to capitalise on business development opportunities that exist within the broader firm. A portable following is not essential but experience must include advisory work, TUPE, drafting and tribunal advocacy. Ref MV 640439
To apply for any of these roles or to find out about others currently available please send an up-to-date CV to Georgina Crompton or Martin Vowden at Michael Page Legal, 12th Floor, 82 King Street, Manchester M2 4WQ. Alternatively telephone 0161 833 5050 or email: legal.manchester@michaelpage.com Michael Page International is a world leading recruitment consultancy.
Setting the precedent in Legal recruitment
London ◆ Manchester ◆ Leeds ◆ Birmingham ◆ Bristol ◆ Reading Amsterdam ◆ Paris ◆ Madrid ◆ Sáo Paulo ◆ Singapore ◆ Hong Kong
◆
Sydney
◆
Melbourne
◆
Tokyo
◆
Frankfurt
June 2004 Legal Business 39
>
LB145/liverpool p34-40
24/5/04
2:54 pm
Page 40
HOW THE THREE COMPARE HILARY MEREDITH SOLICITORS No. of offices 1 No. of fee-earners 19 No. of qualified solicitors 2 No. of partners 1 Live cases at any one time 4,020 Annual fee income (predicted) £900,000 Charge out rates: Partner / associate Asst. solicitor / legal exec. Paralegal Trainee solicitor
£220 per hour £180 per hour £150 per hour £105 per hour
SILVERBECK RYMER – LIVERPOOL No. of offices No. of fee-earners No. of qualified solicitors No. of partners
> primarily by the firm’s team of 16 paralegals.
Dedication Meredith’s dedication to her cause and her clients is evident; when Legal Business speaks to her, she is on her way to Wales from her office in Wilmslow to visit a spinal injury victim. Her clients are national, rather than local, but since they are limited in terms of mobility she must go to them. Meeting clients in
Meredith: dedicated to clients
40 Legal Business June 2004
person, travelling great distances if necessary is essential she says. ‘A lot of firms thought they could make a quick buck with the advent of the claims agencies, but they failed to realise the importance of risk assessment,’ Meredith says. ‘You can’t take on unwinnable cases, and you must have the expertise to be able to decide for yourself whether or not the case is worth pursuing. A lot of City lawyers were a bit reluctant to get off their backsides and go and visit clients.’ Colin Ettinger, for his part as a City PI lawyer, agrees: ‘It is essential to pick the right cases. You must get your judgement right.’ Meredith endorses the claim-vetting role of Invaro, for whom she is a non-executive director and an independent adviser, especially now in the midst of its overhaul, with the necessity that it remains compliant with Law Society regulations. Such personal attention also engenders tremendous faith. ‘Clients put enormous amounts of trust in you,’ she notes. ‘So much so, that they will take your advice even if it is detrimental to their situation, if the claim is abandoned for example.’ This betrays a hard-headed business approach which may have escaped the nowdefunct City practices. ‘You have to be able to close a file. A commercial lawyer, win or lose,
3 80 (144 nationally) 20 (34 nationally) 6 (8 nationally)
Live cases at any one time 30,000 (including small claims) THOMPSONS SOLICITORS – LIVERPOOL No. of offices 18 (England, Wales and Northern Ireland) No. of fee-earners 12 No. of qualified solicitors 5 No. of partners 2 (35 nationally) Live cases at any one time 100-175
will get paid. A PI lawyer won’t. You cannot run cases for the sake of it,’ Meredith says. Although there are differences between these three firms, the common elements are more notable: a balance of high-volume and complex work, handled by a similar split of junior and senior staff; a specific client base; specialisation; a case management structure; client care matched with self-preservation; and, so far, success. What is also noticeable, aside from the fierce business-minded pragmatism, is the undeniable air of philanthropy. As Meredith sums up: ‘There is definitely a sense of worth in your work.’ LB sam.kenworthy@legalease.co.uk