Rural market - Lawyers follow surveyors and agents

Having always enjoyed working with a clutch of agency and surveying clients who make a happy living in the rural market in the areas of land agency, estate management, farm management and farm consultancy it is good to see that some law firms have seen the light and focused attention on this important market.

Agriculture currently uses about 10,850,000 hectares of land in England and Wales, around 72% of the total area. In 2003, this was used mainly as grass and rough grazing (57.2%) and crops and bare fallow (35.4%). All other agricultural activity made up the rest (7.4%). Average farm business income is expected to fall by approximately 8% in 2008/09 to £44,300 per farm.

Knight Frank research suggested that first quarter 2009 farmland prices were 1% above those of the same quarter in 2008 whilst farm house prices fell by around 20%. Yet agricultural land has tended to retain value and management contracts offer stimulating, if challenging, steady work. A recent article in The Lawyer provided some insight into the legal firms in the East Anglian market:

Howes Percival in Norwich reports “Real estate turnover is up and a lot is in East Anglia…There’s a lot of cash available”.

Mills & Reeve in Cambridge said that “Land prices are bearing up quite well” and has picked up new clients investing in the area, including a pension fund, landed estates and offshore investors.

Birketts, in Ipswich and Norwich, is seeking to grow in Cambridge.

It may be that the margins are only attractive to smaller firms as Eversheds has decided to close its Norwich office.

Demand is being driven by those with an interest in shooting and sporting rights, as well as the potential for residential development and alternative energy sources.

In England there is plenty of farmland beyond East Anglia – whilst Lincolnshire and Norfolk clearly have the most, there is significant amounts in Suffolk, Cambridgeshire, Leicestershire, Northamptonshire and even Nottinghamshire.

But beyond real estate, there are shortages of lawyers who know agricultural law and regulations and advisers who can keep up to date with all the taxation changes. Property professionals in the market also mine a rich vein of family management work which offers potential to private client lawyers.

Lawyers adding real value to client relationships?

An article in The Lawyer (6th July) described how Sainsbury’s asked its 11 panel law firms to each invite one of their other clients along to pitch their products, Dragon’s Den style, to Sainsbury’s. The winner, by the way, was Dentons with an Internet based parts company called e-spares.

A fundamental element of any client relationship programme is about understanding the nature of your client’s business sufficiently so that you can seek out and be alert to ways in which you can add value which is beyond the specific brief of your professional role. Even if it doesn’t provide any short term gains for the professional firm but recognising that if you put a deal in front of a client then the likelihood is that any professional work likely to be required – licensing or distribution contracts, merger due diligence, real estate portfolio work etc – is likely to come your way.

The property industry knows this well – any investment agent worth his or her salt knows that you have to pitch in suitable investment opportunities if you want any chance of being asked to do the agency and professional work. Accountants are pretty savvy about this too – particularly in the corporate finance teams.

So why has it taken law firms so long to find this out? The tender documents of just about all major corporates ask law firms the question “How will you add value?” – and most law firms will talk about free legal updates, free seminars or maybe even a dedicated extranet. Imagine how differentiating and persuasive it would be if you could provide a list of real revenue and profit generating ideas that you have pitched into similar companies?

UK’s top 20 law firms – Winners and losers

The Lawyer magazine recently wrote “The Magic Circle is redrawn…Clifford Chance relegated to third place…Lovells set to overtake Slaughter & May”. It showed the top 20 in terms of 2009 revenues as follows:

Rank Firm 09Rev(£m)08Rev(£m)PEP 2009(£K)
1 Linklaters 1,298 1,293 1,302
2 Freshfields 1,287 1,178 1,440
3 Clifford Chance 1,262 1,330 733
4 Allen & Overy TBC 1,016 TBC
5 DLA Piper 584 503 645
6 Lovells 531 479 585
7 Slaughter & May TBC 479 2,250
8 Herbert Smith 444 421 808
9 Eversheds 366 390 404
10 Norton Rose 314 297 517
11 Ashurst 301 323 TBC
12 Simmons & Simmo TBC 289 TBC
13 CMS Cameron McK 240 235 554
14 SJ Berwin TBC 215 TBC
15 Pinsent Masons 215 213 TBC
16 Clyde & Co 185 157 550
17 Berwin Leighton TBC 186 TBC
18 Taylor Wessing TBC 185 TBC
19 Addleshaw Godd 173 195 TBC
20 Denton Wilde Sa 169 164 300

Taking into account more recent news reports, some of the other highlights amongst the largest UK firms:

WINNERS
• Linklaters becomes Britain’s highest grossing law firm and pushes ahead with profits increase (Project New World restructuring appears to be paying off)
• Bird & Bird revenues up 29% (but a 6.5% PEP fall)
• Mills & Reeve revenues increase 7%
• Freshfields overtakes Clifford Chance as top UK firm by size
• Bevan Brittan profits up 56% to £8.6m – PEP rose 23% to £222K

LOSERS
• Clifford Chance out of No 1 slot – revenue decline of 5% and PEP just half of Freshfields and Linklaters
• Shoosmiths profits fall by more than half
• Norton Rose PEP falls by 17% but turnover edges up
• Allen & Overy PEP falls but it remains in the £1m club
• Osborne Clarke PEP falls 36% and revenue by 12%
• Simons & Simons PEP falls 20% and turnover remains stagnant

Currency issues appear to have given an advantage to some firms. There is generally a view that demand is shifting from UK City and Magic Circle firms to the regional firms. Looking at the top accountants (see earlier post), 4 out of 5 of the top 50 reported slower growth last year.

Social trends – Family life cycle model breaks

Some research identified during a recent PEST (Political Economic Sociological and Technological) analysis suggested that the traditional family life cycle model has broken down:

Graduates are blue – Figures from the Higher Education Statistics Agency show that 21,000 graduates who finished first degrees last year were still out of work six months after leaving university. One in three could only find work in bars, shops and other non-graduate fields. Now 34.5% of graduates are in non-graduate jobs (up from 33.1% in 2007) and average starting salaries increased by just £500 pa to £20,500. Media studies and, surprisingly, computer science had some of the highest jobless rates.

Greys are in the pink – A survey of 2,100 adults called “Age Old Stereotypes” by Standard Life showed that over 55s were free from financial responsibility and having the time of their lives travelling the world and arranging evenings of socialising. This supports the research I completed during 2008 on the emerging “silver” market (please let me know if you'd like a copy). The under 25s are the generation most likely to be lonely and stressed by money worries. Those between the ages of 26 and 35 were often choosing to travel abroad and socialise and postpone children or starting a business til they are between 36 and 55.

Workfree families – The office for National Statistics shows that nearly a quarter of children in London live in households where no one is working. The British average is 15% but is 23% in London and 18% in the North East, North West, West Midlands and Wales.

Marketing communications technology for professional firms

A week or so ago, I was invited to the offices of Vuture by a former colleague that I had worked with many, many years ago in the property sector. With his partner, he has spent the past few years developing a kind of digital asset and content management system for professional firms which he wanted to demonstrate to me. It is essentially a facility to store and manage all your marketing communications resources and tools in one place with a common, easy to use interface.

The main platform is called Vx which provides a truly easy way to create and manage web sites, intranets, extranets, email marketing campaigns, all manner of print documents (you need to see how easy it is to create a newsletter from a template!) and pitches.

The system is modular (so you need only subscribe to the elements that you need – and with entry level costs at around £500 pcm it really is accessible) and provides everything you would expect from a content management system – photo/library images, identity guidelines, version control, audit trail, templates, picture editor etc – as well as some more advanced facilities such as a blog editor (with moderator facilities), integrated email campaign management from Concep and a pitch builder. The system really is incredibly easy to use – so much so that you might even allow your fee-earners to have a go!

They have also just done a deal with LexisNexis to integrate with the leading law firm CRM system InterAction. Presentation, video and audio production are in the pipeline.

It has already won the Legal Technology Award 2009 for innovation and a Legal Marketing Awards. Yet there are already a number of users from the property sector (also managing boards, hoardings and numerous advertisement formats) and even amongst the largest accountancy practices (as well as some of the biggest players in the insurance sector) so expect to see it become a familiar tool across all the professions.

Go and have a look www.vuture.co.uk

Property Book Launch

Thanks to all those who attended the informal launch of my book “Growing your property partnership – Plans, promotion and people” last night. I had a great time and hope everyone else did too.

It was great to see so many clients and contacts from the property industry – lots of old faces, quite a few new/young ones too. Organisations represented included: Catquin, Cluttons, Corporate Value Partnership, Cushman & Wakefield, E A Shaw, EG Books, Estates Gazette, Pellings, Plato Property Investments, Reed, Remit Consulting, Rix & kay, Rok, Royds, Russell Cooke, Seddons, Stiles Harold Williams and TB Data.

And, of course, some family (including my son James) and friends were there to provide the support that they always do.

Many thanks too to the partners and BD team at haysmacintyre accountants for organising and hosting the event.

Innovation update

The new business magazine by Grant Thornton (Elevate) carries a number of articles about innovation. Amongst the most interesting points are:

• There is a new £4.5m state of the art Digital Manufacturing Centre with facilities for rapid prototyping at the Metrolopolitan Works Creative Industries Centre in London.

• Larry Keeley of strategy firm Doblin Inc developed a diagnostic tool called Innovation Landscape to graphically display activity, change, development and opportunity in a given industry. Clients work through ten types of innovation that can raise a company’s success rate.

• Charles Leadbeater’s latest book “We-Think” explores the way online sharing of views, ideas and information will change global government, business, science and culture and there is a YouTube video that explains more.

• Chris Brogan gives specific and practical advice to those hoping to use social media tools to change their business’s future

• The top 30 innovations of the last 30 years provided by The Wharton School in Pennsylvanian and US television show Nightly Business Report includes:
o Internet
o Personal computers
o Mobile phones
o Email
o DNA mapping
o MRI scans
o Microprocessors
o Fibre optics
o Office software
o Robotic surgery
o Restriction free software
o LEDs
o LCDs
o GPS
o Online shopping
o File compression
o Microfinance
o Solar energy
o Wind turbines
o Social networking sites
o Graphic user interface
o Digital cameras
o RFID
o GM plants
o Biofuels
o Bar codes
o ATMs
o Stents
o SRAM
o Antiretrovirals

Grant Thornton also provides a great blog on innovation at www.grant-thornton.co.uk/thinking. And it also offers 'Innovation Island: is the UK open for business?' by the Economist Intelligence Unit.