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Personal injury/North West focus SAM KENWORTHY 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. 34 Legal Business June 2004

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34 Legal Business June 2004

Personal injury/North West focus

Grown-upoperationOut 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

THE CLOSURE OF TAYLOR WESSING’Spersonal injury practice in April this yearwas more than a simple casualty of internalrestructuring; it was yet another example ofa City firm being priced out of a marketthat’s heading north.

The firm had established the practice in1990, with two partners and six associates,acting for defendants, primarily NorwichUnion and Commercial Union. ‘In thoseheady 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 yearsago, whether to make themselves moreattractive to investors or simply tomaximise profits, firms on the panels weretold to re-think their rates.’ Re-think as inreduce. Profits took a battering as a result.

A retirement allowed the firm todownsize the practice to one partner andtwo associates, generating £1m per annum,but the squeeze had not yet finished. In2003, the firm was told by one client that itwould have to set hourly billing rates at£105 for senior associates, and £135 atpartner level – just under a third of whatthe firm ordinarily bills for litigation at the top end; the writing was on the wall.

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36 Legal Business June 2004

Personal injury

overheads. I can see expertsmoving out of London to theprovinces as a result.’

National firms have anadvantage in holding on totheir talent by relocating it toanother office: Eversheds runsPI work out of its Cardiff office,while DLA does the same fromfive regional offices. However,recruitment consultant MartinVowden, at Michael Page, hasyet to see significant movementto independent firms in theprovinces. ‘The problem is the difference in salary,’ he

‘It simply isn’t feasible to run a defendantPI practice at a City firm. Claimant firmshave a better chance of survival, but onlybecause the shrinking number of firms willmean more referrals for those still involved,’explains Frawley. ‘And even though the liti-gation system as it stands pressures partiesinto settling, the costs of running a litiga-tion at City rates are often horrific.’

At nearby Irwin Mitchell, which exclu-sively advises claimants, Colin Ettinger issimilarly wary. ‘Work referees are squeezingthe firms on fees, and there will be casual-ties in the City, where overheads and feesare higher, and where defendant firms aremore vulnerable,’ he warns.

In the era of ‘no win, no fee’, it’s allabout your business nous, in what is ultimately a series of well-informedgambles. The demise of Claims Direct wasset against a backdrop of what were allegedto be grossly exaggerated success ratios. Inan industry where the margins of successare so critical, companies such as Invarohave sprung up, providing access to justiceby vetting claimants and arranginginsurance, or getting funding from a bankor lending body, to cover fees. Althoughpremiums and interest payments may cost,a second opinion in assessing the validity ofclaims reduces the risk of client andsolicitor being out of pocket at the culmina-tion of a case. Validity is based purely onthe chances of success: while afirm might publicly put a 51%chance of success as thethreshold, in reality the require-ment is significantly higher.

Frawley has no doubt aboutthe prognosis for the market.‘The future is a high-intensitywarehouse in the provinces,’ hesays. ‘By that I mean leveragedfirms, around one partner to 20assistants, perhaps not evenqualified lawyers, with a highturnover of work and low

explains. ‘You tend to find that local firmsrecruit from the same pool of like-mindedfirms. London lawyers have to lower theirexpectations if they leave the City.’

North West stepsThe North West is one of the key areas ofgrowth in the UK. Here, the ‘high-intensity’models are already up and running. Informer heavy industry cities, frequentinjuries to workers have always meant com-pensation. Since the 1970s, it has meantincreased litigation. Liverpool may sufferunfair jibes about ambulance chasing, orbeing the ‘tripping-and-slipping’ capital ofBritain, but its law firms certainly knowhow to stay healthy.

‘There are two key principles to runninga successful provincial PI firm: efficiencyand specialisation,’ says Terry Sweeney, chief executive at eight-partner SilverbeckRymer. ‘We only have specialists workingcases that they are familiar with, and as afirm we only take on cases that we know wecan handle. There is a high degree of specialisation because it’s not effective tohave lawyers dealing with a mixed bag.’ The firm advises defendants and claimantsalthough, whereas versatility would beviewed as an advantage in other disciplines, concentration on specific areas is the route to profitability, both forthe individuals and the firm as a whole.

Bott & Co could be the model PI firm of the future. Sole partner David Bott overseas six solicitors and eight legal executives, who handle over 3,000 cases at any one time, generating £3.2m in fees annually. Impressive for a three-year-old firm.

‘The only way to make PI work as a business is witha lot of technology, which keeps costs to a minimum,’says Bott, although the firm’s expenditure of £100,000

a year on upgrades suggests you have to spend moneyto save your clients money.

When Bott stresses the importance of quality ofservice, he’s talking about speed and efficiency: non-qualified employees focus on work where, ‘commonsense and good administrative skills are moreimportant than knowing the intricacies of the law’.

‘If you are carrying 300 files, it’s better to getthrough them quickly,’ Bott concludes.

THE NEED FOR SPEED: BOTT & CO

‘The case management system is essential to the success of anyPI-focused firm. Each case must be run according to a planestablished from the outset. You cannot wing it.’ Terry Sweeney, Silverbeck Rymer

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Sweeney: case management system is essential

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38 Legal Business June 2004

Personal injury

It is for this reason thatboutiques are more likely tosucceed in PI than the bigger,full-service firms. Case manage-ment systems at SilverbeckRymer, and elsewhere, aretailored for PI claims, andwould not be transferable toother areas.

The whole firm is a machineof efficiency. ‘The case manage-ment system is essential to thesuccess and profitability of anyPI-focused firm. There must be100% focus on its develop-ment,’ continues Sweeney. ‘Weconstantly develop and modifyours. Each case must be run according to aplan established from the outset. Youcannot wing it.’

Although the firm prefers to advocatethe quality of advice rather than the value(‘We certainly do not see ourselves as acheap alternative,’ says Sweeney), low-cost

work is the foundation. Smaller,more straightfor-ward claims arehandled in largenumbers, providingtraining for juniorstaff who aregradually involvedin more complexmatters as theirexperience growsand, perhaps more importantly,maintaining asteady cashflow thatallows the firm to

undertake claims which maynot generate fees for years.Good business sense does notmean grabbing every penny you can, however. ‘Legitimatecriticism has been levelled atfirms for letting claims run

along, and at the end the claimant andlawyer both get a big payout but the clientends up with a poor life outcome,’ saysSweeney. The theory is that rehabilitationprojects, which cost less in strict monetaryterms than cash settlements, are not goodfor firms. ‘“Best client quality care” is whatwe don’t compromise on,’ says Sweeney.‘This may reduce fees in the short term, butwill increase profitability in the long term.’

Union tradeAlthough Thompsons is a national firm, a70-year history of advising trade unions andtheir members generally directs its opera-tions to work-related injury claims in indus-trial centres. The firm fits the leveragedmodel of 35 partners to around 800 staff,across 18 locations in England, Wales andNorthern Ireland, and it is the workloadgenerated by the various offices whichpermits the pursuit of lengthy claims. Headof the Liverpool branch, Matthew Tollitt,explains: ‘High- volume, bulk work funds

the longer, more drawn outcases where fees won’t be seenfor a while. A sole practitionerrunning 100 or 200 cases simul-taneously is going to find it verydifficult to keep going withoutsettling cases and getting feesthrough the door. The nature ofour firm is that we can aggres-sively litigate matters if theinsurance company or defen-dants are dragging their feet,which they are prone to doing.’

Tollitt also reveals a loss-leading principle, with similarethics to Silverbeck Rymer’s best

Ettinger: warns of casualties in the City

Tollitt: pushing back boundaries

Proposals to float law firms are set out in the widely-debated Clementi review, and have generated mixedresponses – caution and optimism. Many lawyers arebeginning to accept that the idea of non-legal financialinterests in law firms is an inevitable development ofthe process of modernising legal services. Personalinjury firms may be the first to feel the force of thesereconsiderations.

Amongst the most likely beneficiaries of externalinvestment are high-volume, process-driven firms,such as personal injury practices.

Colin Ettinger, head of personal injury in IrwinMitchell’s London office, and recently appointedPresident of the Association of Personal Injury Lawyers,notes: ‘We would welcome investment from outsidebusiness where it can be a genuine partnership. PIfirms with very good infrastructures know how to runcases, but may lack the marketing know-how necessaryto generate business. Linking up with marketing organi-sations, for example, can help to generate work and thetwo can feed off one another and benefit from it.

‘The challenge is to ensure the interests of the clientreign supreme and that their interests will never besubjugated to business interests. If you end up with aflourishing and thriving business, and it results in agood product for the consumer of legal services, thenwhy not? The reality of life is that it’s going to happen,’Ettinger concludes.

Others believe that relationships with the largerclients – in this instance, the large insurers involved in defendant PI work – would risk being diluted ifprivate money were to take hold. ‘I doubt it would work with insurance,’ comments Chris Charles, finance director at Beachcroft Wansbroughs. ‘We’veinvested a huge amount of time with clients over thelast five years, making sure they are comfortable with the process. Effective negotiation remains the key to managing this work and this requires goodlawyers. It would be difficult to attract good lawyers into a non-legal environment.’

With deregulation on the horizon, however, chal-lenges are ever-looming. The RAC, which has a longhistory of offering legal services to members and alsooperates in the legal expenses arena, has made clearits intentions to get a foot in the legal market. JonathanGulliford, head of legal affairs, says: ‘We're a very bigprovider of legal services already. We want to extendwhat we are able to offer to anyone who wants to useRAC. A more competitive legal market could be of greatbenefit to people needing legal assistance.’

Sir David Clementi was appointed to undertake areview of the regulation of legal services in England andWales. He released a consultation paper in March, andis expected to publish his recommendations in a reportby 31 December.

Rachael Doeg

OUTSIDE MONEY: CLEMENTI’S OWN OPERATION

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June 2004 Legal Business 39

Personal injury

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 ourclients as a group in the long term, but have little chance of success as individualclaims. For a firm doing exclusively high-volume, road traffic accident work, a 90%

high-volume PI specialists Donns inOctober 2003, in order to re-immerseherself in the nitty-gritty of fee-earning

work at her own single-partnerfirm. Donns is the archetypalhigh-volume firm, employing12 partners to 218 fee-earners,handling around 30,000 casesannually. A recognised brainand spinal injury specialist,Meredith is known for her work with ex-soldiers in claims against the Ministry ofDefence. Such cases are lengthy,complex and bad for cashflow.To make ends meet, the firm isset to open an industrial diseaseunit, fast-tracking cases with asix- to eight-month turnaroundtime, which will be handled

win ratio is essential. For us, itisn’t.’ There is certainly anelement of old-fashioned union spirit atThompsons, ofDavid versusGoliath. ‘Wecertainly have theethos that we workfor trade unions, forinjured workers,and that it shouldbe a motivatingfactor for anyonewho joins the firm,’Tollitt explains.

Hilary Meredithleft her position asmanaging partner atManchester-based, Frawley: can see experts leaving London for provinces

‘The future is a high-intensity warehousein the provinces.’ Michael Frawley, Taylor Wessing

Corporate Partner | £ Six Figure PackageThis leading commercial firm with national networks has grown rapidly overrecent years based on a culture of innovation and reward. As one of thefirm's key growth areas, they seek to strengthen the corporate departmentwith a heavyweight partner. It is likely you will bring a following, along withproven practice development abilities, in return for the opportunity to have asignificant impact and contribution to the continued growth of the firm. Ref GC1071262

Planning Partner | to £200,000This leading law firm with offices in London, Europe and Asia seeks anexperienced partner to drive forward its existing planning practice. The firmhas a strong reputation for its planning work nationally and is committed todeveloping its Northern presence. You will have good market contacts,sound planning experience and ideally some environmental experience alongwith the desire to take a key role in the growth of department and the firm. Ref GC 624846

Head of Department, Private Client | £75,000 + BensThis strong regional commercial player seeks to strengthen an alreadyestablished department with an experienced partner to head the team. Thefirm is totally committed to developing this practice area and the role willinvolve both capitalising on long standing contacts as well as a commitmentto building the practice. You will have experience in UK tax planning andworking for high net-worth entrepreneurs. Ref GC1022398

Heavyweight Commercial Litigator | to £125,000As part of a well thought out, exciting business strategy, our client is lookingfor someone of first class ability to drive their Liverpool office forward. You willhave an excellent track record and a demonstrable level of achievement. Thisopportunity allows you to be a fulcrum of the firm's development and wouldcarry enormous kudos both internally and externally. You will thrive on amixed caseload and have client skills and ideally a following that sets youapart from the rest. Ref MV1022398

Comm Property Partner/Teams | £ Six Figure PackageSeeking to build on this booming discipline in the North West, a uniqueopportunity has emerged at our prestigious client based from their Liverpooloffice. As the city goes from strength to strength this is a fantastic openingwhich will further boost your reputation, dealing with an exceptional calibre ofclient and quality of work. A following would be desired but extraordinarycandidates relocating from other regions will be considered. A partner with ateam to bring with them will be seriously entertained. Ref MV844265

Employment Partner | to £75,000 + BenefitsOur client is a regional heavyweight looking for a commercially mindedambitious partner to further build and enhance this well regarded department.You will have the capability to capitalise on business developmentopportunities that exist within the broader firm. A portable following is notessential but experience must include advisory work, TUPE, drafting andtribunal 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: [email protected] Page International is a world leading recruitment consultancy.

North West Partnership Opportunities

London � Manchester � Leeds � Birmingham � Bristol � ReadingAmsterdam � Paris � Madrid � Sáo Paulo � Singapore � Hong Kong � Sydney � Melbourne � Tokyo � Frankfurt

Setting the precedent in Legal recruitment

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primarily by the firm’s team of16 paralegals.

DedicationMeredith’s dedication to hercause and her clients is evident;when Legal Business speaks toher, she is on her way to Walesfrom her office in Wilmslow tovisit a spinal injury victim. Herclients are national, rather thanlocal, but since they are limitedin terms of mobility she must goto them. Meeting clients in

will get paid. A PI lawyer won’t. You cannotrun cases for the sake of it,’ Meredith says.

Although there are differences betweenthese three firms, the common elements aremore notable: a balance of high-volumeand complex work, handled by a similarsplit of junior and senior staff; a specificclient base; specialisation; a case manage-ment structure; client care matched withself-preservation; and, so far, success.

What is also noticeable, aside from thefierce business-minded pragmatism, is theundeniable air of philanthropy. AsMeredith sums up: ‘There is definitely asense of worth in your work.’ LB

[email protected]

person, travelling great distances if necessaryis essential she says.

‘A lot of firms thought they could make aquick buck with the advent of the claimsagencies, but they failed to realise theimportance of risk assessment,’ Meredithsays. ‘You can’t take on unwinnable cases,and you must have the expertise to be ableto decide for yourself whether or not thecase is worth pursuing. A lot of City lawyerswere a bit reluctant to get off their backsidesand go and visit clients.’

Colin Ettinger, for his part as a City PIlawyer, agrees: ‘It is essential to pick the rightcases. You must get your judgement right.’

Meredith endorses the claim-vetting roleof Invaro, for whom she is a non-executivedirector and an independent adviser, espe-cially now in the midst of its overhaul, withthe necessity that it remains compliant withLaw Society regulations.

Such personal attention also engenderstremendous faith. ‘Clients put enormousamounts of trust in you,’ she notes. ‘Somuch so, that they will take your adviceeven if it is detrimental to their situation, ifthe claim is abandoned for example.’

This betrays a hard-headed businessapproach which may have escaped the now-defunct City practices. ‘You have to be able toclose a file. A commercial lawyer, win or lose,

40 Legal Business June 2004

HILARY MEREDITH SOLICITORS

No. of offices 1No. of fee-earners 19

No. of qualified solicitors 2No. of partners 1

Live cases at any one time 4,020

Annual fee income (predicted) £900,000

Charge out rates:Partner / associate £220 per hour

Asst. solicitor / legal exec. £180 per hourParalegal £150 per hour

Trainee solicitor £105 per hour

SILVERBECK RYMER – LIVERPOOL

No. of offices 3No. of fee-earners 80 (144 nationally)

No. of qualified solicitors 20 (34 nationally)No. of partners 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

HOW THE THREE COMPARE

Meredith: dedicated to clients

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