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Firms weigh up value of litigation practices
When times are bad, litigation work booms for the world's leading law firms. And times have been bad. But will the year's most reliable practice keep firms afloat in the coming year?
Kate Gibbs
WHEN times are bad, litigation work booms for the world's leading law firms. And times have been bad. But firms are now speculating, will the year's most reliable practice keep them afloat in the coming year?
But predictions of a brightening economy have scuppered confidence in the litigation market, leaving firms unsure as to where the market is now heading. There are signs, however, that firms are expecting litigation work to be resilient in the coming year.
Law firm Maddocks' litigation practice has doubled in the past year. Meanwhile, in the UK, Clifford Chance has appointed one of its senior partners to run its global litigation practice.
In terms of lawyer resources versus workload, head of Maddocks' commercial disputes practice, Michelle Dixon says, "we've been working very hard". There was a "notable" increase in volume in the six months before March this year, "and we just had to recruit".
Dixon says that despite signs the economy is likely to improve on last year, the practice will continue to recruit from the end of January to deal with the workloads.
Maddocks has already doubled the number of lawyers working in its commercial disputes practice in the past 12 months to 18 lawyers. Dixon attributes the increase in work to the global financial crisis, on top of just doing well across the board.
"The stronger business confidence is, the less litigation work you have coming out of it. Because people are not so concerned about hanging on to the money or losing a million dollars here or there. When times are very good, people tend to not want to do through the litigation when it's distracting them from going through the next deal," said Dixon.
"When things are a bit quiet, the next deal is not necessarily around the corner, and suddenly that breech warranty claim is looking pretty good."
Clifford Chance, as well, is anticipating the growth of litigation as it tried to regain ground on its competitors. In July, the firm revealed a 37 per cent slump in full year profits to £733,000 per partner — less than half the figure posted by Freshfields Bruckhaus Deringer, its “magic circle” rival, as The Times reports.
Clifford Chance has appointed one of its senior partners to run its global litigation practice in an effort to bring the firm out of the red. Jeremy Sandelson, head of the firm's British division, has been promoted to spearhead its £200 million dispute-resolution group.
Simpson Grierson, a New Zealand-based firm, has also boosted its litigation practice this month with the promotion of commercial litigation specialists James Craig and Ben Upton to partner.
Upton, who joined the firm four years ago from international firm Herbert Smith, said the economy has bolstered litigation practices.
"The worldwide credit crunch has led to significant problems for many local businesses as well as foreign companies who have invested or undertaken businesses in New Zealand," he said.
