D'ya wanna be in my gang?

A City firm links up with a regional group. A sensible pooling of resources, or a waste of time? Sharon Wallach reports
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The Independent Online
Few things demonstrate the extent to which law firms have become like the businesses they advise better than the emergence of various forms of alliance. The trend started in the recessionary Eighties, when even some large firms struggled to keep afloat. Those that survived range from Eversheds, now described as a national firm, to loose confederations of independent firms, such as the first groupings to emerge, Norton Rose M5 and the Legal Resources Group, and the networks established largely for the purpose of marketing and promotion, such as Conquest and LawGroups UK. Yet others place great emphasis on quality control, such as LawNet, the grouping of regional firms, which the Legal 500 guide to the legal community pays the compliment of describing as the "small-firm equivalent of Norton Rose M5".

Most have memberships based in the regions. But this month has seen McKenna & Co follow its fellow London firm Norton Rose in joining a grouping, in this case linking with LawNet to form LawTeam, creating what it claims is the UK's largest combined legal resource. Its aim is to offer large companies and institutions an individually tailored and co-ordinated legal service, with one point of contact, a state-of-the-art communications system and clear costs and charging information.

LawNet has a membership of 78 medium-sized non-London firms, with an average partner size of 10, throughout the UK and Ireland. According to LawNet's Christopher Whitamore, it is a member-owned organisation with each member a shareholder in the central co-ordinating company. "It operates by enhancing the firm's ability and resources beyond the level which a firm of that scale can normally apply to its work in the client's interest," he says.

McKenna & Co offers manpower and specialist expertise, while the LawNet firms offer geographical convenience and local knowledge. "What McKenna's brings and what LawNet firms bring can meet all the legal requirements of a large organisation and do it through a single contact point. It's highly desirable for most major companies and institutions that have a lot of legal work to outsource."

The benefits of a system such as LawTeam for the smaller firms making up LawNet are reasonably clear, but it is not immediately obvious what's in it for McKenna & Co, rated number 13 in last year's Legal Business Top 100 firms. According to the McKenna partner Richard Price, the relationship between the firm and LawNet stems from "pressure building within the profession, where the large provincial firms have been seeking to expand at our expense and the smaller provincial firms have been banding together with the same purpose".

LawTeam is a "protective marketing tool", he says. McKenna's links with LawNet began defensively, initially to protect the firm's delivery of expertise and service to existing clients from encroachment by provincial firms. "It has developed into something more pro-active, allowing us to go out and target other clients."

He acknowledges that few City firms are following this path. But he says: "I believe this will be the major practice development initiative over the next 10 years. LawTeam is a pitch on which to expand McKenna's entire practice on a national basis."

He places great store by LawNet's emphasis on quality standards, which are rigorously applied and monitored. "Every client has equivalent standards and can't understand why lawyers don't," he says.

Some observers, however, believe the move has no real substance. According to one, McKenna & Co seems to have lost its way. He compares the crisis at the firm some 18 months ago with that at Denton Hall, "which went for over-expansion, flashy new premises and so on, and came unstuck". Whereas Denton Hall was ruthless in the way it changed its personnel and concentrated on core areas - "really going back to basics" - McKenna & Co, he suggests, is "just dabbling". "Whether LawTeam will lead to anything I don't know, but it may be a helpful exercise for McKenna's getting people refocused."

Another observer suggests that the firm's move to set up LawTeam is wishful thinking. While pointing out that there is no harm in establishing links with smaller firms, he says it is questionable whether this will feed serious work to McKenna's. "They would have been better going to the second-tier regional firms, whereas LawNet firms are third and fourth tiers."

John Pritchard, who edits the Legal 500, goes further and wonders whether law firm groupings, particularly those involving the large firms, have outlived their usefulness. "They were a great device in the Eighties," he says, "offering extensive cover without the hassle of merging." The need for them has disappeared as firms such as Eversheds and Dibb Lupton Broomhead have grown countrywide. "It's different for small firms," Mr Pritchard says. "Belonging to a grouping carries an important comfort factor, and there's no question that groups like LawNet and LawGroup UK do generally raise quality in firms."

Another observer sees McKenna & Co's move as "a bit of a waste of time". "There is no work McKenna's can realistically pass to the small firms or that the small firms can realistically pass to McKenna's. I don't see where the work's going to come from."