Remember the days when hardly a week went by without a firm announcing a programme of redundancies? It was not that long ago. But it nevertheless came as something of a surprise when legalweek.com exclusively revealed on 9 November that Beachcroft was undergoing a round of redundancies that was expected to affect 38 fee earners and support staff, including nine partners. On a purely human level there could hardly be a better time to axe legal jobs, given the current state of the market. Beachcroft’s private client team, which is headed by veteran partner Julian Korn, has already been snapped up by Laytons ( see page 5). As for Beachcroft, it can point to an 18% increase in turnover for the first half of its financial year as evidence that it is acting from a position of relative strength. As well as offloading its private client practice, the firm is moving its City projects team to Bristol to take advantage of the lower cost base as well as withdrawing its two-partner professional risks practice from Birmingham after accepting that a bid to set up a Midlands team had failed.
Rivals are interpreting the shake-up as a sensible piece of fine-tuning after a busy period for the firm. Among other things, in the last 12 months Beachcroft has become a limited liability partnership, absorbed IT boutique V-lex and launched a professional disciplinary practice group.
Beachcroft sees its challenge as keeping its eye on the insurance ball — litigation accounts for more than 50% of its turnover — while continuing to diversify into related areas. Its recent bagging of a place on Zurich’s commercial panel is a encouraging sign in this regard.
But expansion requires investment, and law firms do not have a good track record when it comes to keeping a handle on costs. The current shake-up suggests that Beachcroft is aware of the potential pitfalls associated with its ambitions. The focus on London also indicates that it is grappling with an issue that plagues most national firms — the potential for City-generated costs to act as a drag on profitability.
But it would be unwise to bet against the firm, given its recent track record. It is among a small group of national insurance practices that have survived successive rounds of panel culls to emerge leaner and meaner.
Shoosmiths is another such firm, as is Liverpool-based Hill Dickinson, which has just demonstrated the strength of its model by re-absorbing its former London office, Hill Taylor Dickinson, which had spent nearly 20 years attempting to strike out alone as a player on the international stage.
