Ask any in-house lawyer in the Midlands or the north of England and they will tell you the same thing: size isn’t everything. At least, it isn’t when it comes to in-house salary levels.
It is well documented that salaries in private practice are climbing ever higher, not just in London, where it is not uncommon for newly-qualifieds to start on £40,000-plus, but also in the leading regional practices. In the face of such competition, one might expect legal departments in the Midlands and the north to be having difficulty in tempting the legal world’s bright young things in-house, but that does not seem to be the case.
In the northwest for example, the market is busier than it has been for 12 months, according to Mark Levine, a recruitment consultant on the in-house team at TMP Worldwide in Manchester. A quiet 2001 was compounded by 11 September, with the result that there were several vacancies that never got filled.
While last year’s busiest in-house market, the Yorkshire and Leeds area, is stable, other regions, the northwest in particular, have picked up the pace.
The in-house recruitment market in the Midlands and the north, as in other regions, can be split quite distinctly. There is a much smaller number of large in-house legal departments outside London and the southeast. Given the pyramid structure of most legal departments, this has an obvious impact on vacancies. At the more junior end, those candidates with between one and four years’ PQE, there are a lot more opportunities. But at the top end there are few openings for senior legal positions such as heads of legal departments, simply due to the fact that there are few in-house departments in the region.
Salary packages are still comparable with private practice at the junior level. A typical salary level for a three-year PQE solicitor at a leading firm in Manchester is about £35,000 to £40,000, says Levine. In-house, the basic salary will almost certainly be lower, but as most in-house practitioners will tell you, it’s the overall package that counts.
After adding in the company car, bonus scheme, pension provision, health insurance and other extras that come as standard in most in-house roles, the two are fairly comparable, he says.
Tim Raynor, company secretary and ex-officio head of legal for United Utilities in Warrington, believes that by definition, many of the candidates who are interested in moving in-house are not as driven by salaries as their counterparts in private practice. It is as much about the quality and nature of the work, he says. “We can offer people, depending on which part of the business they want to go into and what they want to specialise in, a better breadth, depth and quality of work than most regional firms.”
It is an offer that seems to be working. Raynor has increased the size of his team during the past 12 months and further growth is anticipated. “There are a lot of good CVs out there,” he says. “There has been the hint of a recession, a bit of a slowdown and quite a few people bailing out of private practice. As a result we have been able to recruit three good people within the past 12 months and we are looking for more.”
In-house departments are not immune from the salary pressures in the private practice market, however, and salary levels in-house have had to increase to keep pace. An added issue for in-house departments in large organisations such as United Utilities or Boots Company plc in Nottingham are the pay structures that govern salary levels across the whole company.
Says Ian Thomson, senior commercial legal advisor at Boots: “As a large organisation we have a well defined grading and remuneration structure and it is difficult to deviate too much from that. There is a certain amount of leeway, but it is limited. There may occasionally be the odd exceptionally deserving case, but basically we are bound by the pay structure.”
For the ambitious, the size of most in-house teams can also be an issue. Ann Page is head of legal at The Co-operative Bank in Manchester and her department recently lost “one of its stars at the junior end” to DLA.
The departure was not so much about money, she says, although the departing employee did pick up a hefty pay increase, but rather frustrated ambition. “She was 30, with five years’ PQE and very well-regarded, but I could not tell her that she could jump into somebody’s shoes who had 20 years’ experience. We could groom her, but if one of my senior people left tomorrow I could not replace them with a five-year qualified. I would be looking for somebody with 10 to 15 years’ experience.”
For a young lawyer eager to climb the ladder to the top, spending seven or eight years on the lower rungs might not be too appealing.
DLA is in fact typical of the law firms that have driven a regional legal renaissance over the past five years. Regional firms have got bigger and increased the breadth and depth of the legal services they can provide, the aim being to chip away at the workloads that many of their major corporate clients still send down to London. Without doubt the regional firms are slowly winning more work, but for the really juicy jobs it is still invariably the City firms that get the nod.
For example, BNFL in Warrington uses Freshfields Bruckhaus Deringer; United Utilities uses Slaughter and May, as does Boots; The Co-operative Bank uses Simmons and Simmons; while Northern Foods in Hull sends work to Ashurst Morris Crisp.
Northern Foods’ head of legal, Carol Williams, says: “We do not go to the regional firms for the bigger acquisition work because all the other advisors are down in London. The big deals are done down there, so it does make sense for us to use a London firm.
“Plus, they generally have more people that they can free up and throw at the bigger deals.”
It is a similar story at United Utilities, where Slaughter and May hog the big-ticket corporate and stock markets work.
But regional firms are also seeing an improvement. The in-house legal department that does not give at least some of its corporate and commercial work to a regional office is a rarity, and that workflow is growing. It is not that they are chipping away at the City-bound instructions, but as in-house teams are handling increasing amounts of work, so the level of work suitable for regional firms is growing too.
According to Alvin Shuttleworth, head of legal at BNFL, the company used to operate a one-stop-shop with Freshfields, sending it around 30%-35% of the overall workload, mainly the major commercial and litigation jobs. Of the other 60%-65%, most was done in-house. For the 5% that fell in between, he says it was not a problem to ask Freshfields to drop down and take that on as well.
However, “as our workload grew, the amount of work that was appropriate for a City practice remained static, but the gap between the amount we could manage ourselves and that which was suitable for the City grew to be about 25% of the work”, he said.
The result was to set up a panel of firms to take on that extra work, a panel that comprises of the Manchester offices of Hammond Suddards Edge, Eversheds and DLA. Shuttleworth says it has worked very well. “They are very proactive: they are responding to the way we work rather than trying to impose the way they work on us.”
It is a similar situation at Boots, where Ian Thomson says an internal restructuring meant that there was a growing amount of property work to be sent out – not the sort of that would be appropriate for their usual firm, Slaughter and May. “There would be absolutely no point in paying Slaughters’ rates for that type of work, it makes much more sense to use somebody local,” he says.
The local firms that benefited were Shoosmiths in Nottingham and DLA in Leeds, the two firms that now undertake all of Boots’ property work. “They are both very competent and very accommodating firms,” says Thomson.
The flexible and more proactive approach is typical of the top regional firms. Shuttleworth believes that “the leading firms see that in-house lawyers are by far the biggest purchasers of legal services, certainly in the field of commercial litigation and they have become more proactive as a result”. Growing competition throughout the profession, whether from rival firms or to a lesser extent from the Bar, means that now more than ever the
customer, or client, really is king.
The Bar, too, is warming to the concepts of accessibility and flexibility. Several chambers organise their own seminars, conferences or forums, aimed at in-house legal departments as much as law firms.
There is a long way still to go, says Carol Williams, but at least it is a start. “When I first started in practice, you would travel all the way down to London, spend three hours in a conference and you would never even be asked if you wanted a cup of tea.
“Thankfully, things have changed a little since then,” she laughs, “at least you are offered a glass of water these days.”
The bar
The regional Bar is waking up to the opportunities presented by direct access. The more innovative London chambers such as Cloisters, Brick Court, Essex Court Chambers and 1 Essex Court have national reputations not just for their expertise, but for their proactive strategies in developing relationships direct with in-house legal departments. A number of chambers in the Midlands and the north are now following their lead.
One of the early adopters of a more proactive approach is Manchester’s 8 King Street. It has already won directly-instructed work for British Gas (now Transco), North West Water, Rentokil and BNFL among others. Indeed, relations with BNFL are so good that it has three barristers on a rolling secondment at the company. It also sponsors the Law Society North West Commerce & Industry group’s annual dinner and regularly organises and provides speakers for seminars and conferences.
“Our profile has certainly increased,” says Peter Whitman, senior clerk at 8 King Street. “We are not getting a lot of work directly yet, but we are already getting more from clients such as The Co-operative Bank.”
The northwest Bar also boats the Northern Circuit Commercial Bar Association, established in 1999 by its current chairman, Giles Wingate-Saul QC, of Manchester’s 12 Byrom Street Chambers. Its aim is to bring all the region’s commercial barristers together under one umbrella, to increase their profile and facilitate relationship building with potential clients.
Gerard McDermott of 8 King Street is an avid supporter: “It functions almost as a brand so that people know that the member barristers specialise in those areas,” he says. Its annual directory lists all the members, their commercial specialities, key cases and contact details.
It is a lesson that has not been lost on chambers in the Midlands. Five Fountain Court, for example, runs a series of legal seminars for both current and potential clients. Senior clerk Tony McDaid says that almost 1,000 people attended seminars run by the chambers last year and that the in-house market is a great source of untapped potential. “As in-house teams are growing and developing, there is a wider aspect to their legal capabilities and what they are able to do in-house,” he says. “All those in-house teams have become potential targets for us.”
It has not yet got to the cosy stage of seconding barristers into commerce and industry, but according to McDaid it is not through a lack of interest on the part of chambers: “In-house teams are a pleasure to work with because they see things from more than just the legal perspective. It is useful for barristers’ chambers to be able to put our people with in-house teams because it is an education for both parties… any interested in-house departments that wanted to do something like that would be knocking on an open door here.”
St Philip’s Chambers, the main rivals to 5 Fountain Court in Birmingham, also runs a significant seminar programme, but the overall approach is more cautious. Says Matthew Fleming, senior clerk for civil and family law at St Philip’s: “It is another avenue to explore. The worry from our point of view is that if companies are coming to us direct, there is a concern about the preparation of the work: what will and will not be done before you get to the court?”
St Philip’s might be the largest, but it is not the only chambers to take this cautious line. While direct access certainly is not going to go away, there is clearly some convincing still to be done.
