Predictability is not an option for lawyers who act in the retail sector. In the fast-moving world of consumer goods, key clients can overnight become subject to national ridicule or, worse still, victims of a takeover. Even those working for the new internet retailers are not safe, as the legal team at Boo.com recently learned to their cost.
But it is not just the changing fortunes of individual clients that leave retail lawyers struggling to keep abreast of the changes in their market sector. The entire nature of retailing has changed dramatically over the past 20 years, with a knock-on effect for retail lawyers. As retailers shifted to out-of-town developments in the 1980s, so law firms were forced to enhance their planning law expertise. In the 1990s, more retailers began to offer financial service packages, with the resulting demands on law firms. As the 1990s drew to a close, the growth of the internet once again increased the range of skills expected from retail lawyers.
With clients demanding an ever-growing range of legal services from their advisers, lawyers might be forgiven for thinking that a few City firms dominate this sector. Surprisingly, this is not the case.
Unlike other business sectors, most notably insurance and banking, little consolidation has taken place in the legal retail sector – although there are signs that this may be beginning to change. The news that Gap, Sainsbury’s, Marks & Spencer and Tesco have all reviewed their legal panels within the last six months may begin to indicate a change in direction by retailers.
But research carried out by business information provider hemscott.NET shows there is still considerable scope for consolidation within the legal retail sector. Although there are 113 listed food and clothing retailers in the UK, more than 80 law firms are listed as main corporate advisers. Only one firm, Clifford Chance, can claim a double-digit client list, which includes Laura Ashley, Hi-Tec Sports and MFI Furniture Group (see sidebar left). The firm, which recently took on former Safeway in-house lawyer, Tim Sherwood-King, to work in its real estate department, is the leading main corporate adviser to the retail sector with 10 UK-listed clients.
With the retail market still highly fragmented, an increasing number of firms are now marketing themselves as a ‘one-stop shop’ for retail clients in a bid to win new work. Manches, Denton Wilde Sapte, Paisner and Titmuss Sainer Dechert are just four that have begun to offer cross-departmental ‘retail groups’ within the last two years, while Pinsent Curtis, Edge Ellison and DLA are also moving towards a similar system. DLA is also aggressively marketing its 24-hour company helpline to retail clients, for situations where they suddenly find themselves in the middle of a major health and safety or product liability crisis.
The effectiveness of retail groups remains in question – no-one contacted could attribute a new client win directly to the establishment of such a group. Nevertheless, law firms that have gone down this route remain confident that they serve a useful purpose.
DLA’s head of retail, Peter Thompson, who previously worked in-house for Littlewoods, argues that his group not only acts as a contact point for clients, it also helps share industry knowledge internally within the firm.
“You have to be able to understand the clients’ industry in order to be able to service them effectively,” he says. “The advantage of our group is that it helps us pool our knowledge, allowing us to identify common threads.”
Adrian Magnus, head of Paisner’s retail group, adds: “Our retail group has enabled us to retain existing clients, but it is always difficult to tell exactly why people choose to instruct you. It is a bit like advertising – half your effort is probably wasted, but you do not know which half.”
Overall, the move towards greater sector specialisation by private practice lawyers has been broadly welcomed by in-house lawyers working in the retail sector – as long as a law firm’s claim of retail expertise can be justified.
“Many firms profess to be experts on everything, so I would not be impressed if a firm simply says they have a retail unit,” says Ian Thompson, commercial legal director at Boots. “I would want to question the firm about their clients, and what sort of work they had done for them. There are some firms that can genuinely claim to have an impressive track record in retail work, but I would have to carry out some fairly detailed probing before I would be satisfied of that expertise.”
Susie Flook, group head of intellectual
property law at Body Shop International, adds: “The usefulness of a one-stop shop would depend on the firm that is offering it. The big firms are more likely to give you a broader range of services than the smaller firms, but I do not need to go to a large law firm for every matter. For example, if I know that Fred down the road at a boutique firm is absolutely brilliant on a particular area, I would have no hesitation in using him.
“I have always said that for outside counsel to be an effective support to the in-house team, they have to know and understand the business they are advising on. If they are not familiar, their advice tends to be cumbersome, more expensive than it should be, irrelevant and not commercially realistic.”
Titmuss Sainer Dechert’s head of retail, Edward Bannister, says the main purpose of his firm’s retail group is to win new work from existing clients.
“For example, we were recently instructed by an internet start-up that came to us on a property matter,” he says. “In time, we are hoping to use our group to offer them advice in other areas, such as employment and trademark law. The idea is to be able to offer them a complete service, building on our existing retail property base.”
However, although Bannister believes property work has played a large part in his firm’s retail success, he says the growth of the internet will mean that property expertise will not, by itself, be enough to guarantee retail work for lawyers in the future.
“Inevitably, the advent of the internet will cause some high street retailers to cease to exist in their present form. Banks, estate agents and car showrooms probably will not have a place in the high street of the future. No doubt, other shops will take their place, but the high street as a whole will contract. Our challenge as lawyers is to understand the issues of the new
e-tail market.”
Richard Parnham is the assistant editor of business and legal internet portal hemscottlegal.com.
Top 10 corporate advisers to the food & clothing retail sector
