The recipe for business longevity: firm celebrates 225th birthday

The number of UK law firms open for business is decreasing. In November 2013, 141 firms were given just five weeks by the Solicitors Regulation Authority to find professional indemnity insurance or close for good. It was also reported at the beginning of this year that merger activity among the top 100 UK law firms in 2013 reached record levels.

With the legal market still in a state of flux and trying to find the equilibrium it had prior to the financial crisis of 2008, it seems unlikely that we will see many firms celebrate great milestones in years to come.

Friday 27 June 2014 however, saw Hedges Law celebrate its 225th year in business. To put Hedges' history into context, the firm was established in the same year as the French Revolution and American Independence. It witnessed the Napoleonic wars and the industrial revolution. It has survived 14 recognised recessions and two world wars, 61 prime ministers and eight monarchs.

As a family law firm, Hedges had a family member as senior partner for 193 years until the retirement of Sir John Hedges in 1982. Yet the last decade has seen a revolution take place at the firm, partly out of the necessity of market conditions and partly because of the vision of its current owner.

Hedges' managing director, Nicola Poole, first came to the firm in 2003 having spent nine years practising at what was until recently Morgan Cole. "I had been at home for a year as I wanted to have time with my new baby but then started to climb the walls as most professional women do. A friend of mine was going on maternity leave and asked if I wanted to cover at Hedges for three days a week," she says.

However, Poole openly admits that she found herself embarrassed upon starting at Hedges as it wasn't the type of firm that she had ever associated herself with. "I was all about progressive modern firms. I had been at Morgan Cole from the very start, back when they were still Cole & Cole. They had seen this great transformation from a very old style practice, with maybe ten different offices, to being the first Oxford firm to go out to the Ring Road amid gasps of horror."

Having spent several years at a forward thinking, modern firm, Poole describes her first stint at Hedges as being akin to the "Dark Ages". Poole recalls: "It was very old-fashioned, and crusty and fairly male-dominated; all the partners were still addressed as Mister and most of the staff had been there for decades."

A gold mine

Yet quickly Poole recognised the potential for the business. "It was an absolute gold mine. I had never worked anywhere where there was such unbelievable client loyalty. There were third generations of families using the third generation of Hedges' lawyers."

The firm's history was so interwoven into that of the surrounding Wallingford area that Poole began to wonder if it was possible to take the best bits of the firm's traditional values and pull them into the 21st century: "I think what is often lost in some progressive firms is old-fashioned service. People still love to buy from people and want to feel that they matter."

Returning to Hedges for a second stint - having left to have a second child - Poole was made partner and the revolution at the venerable old firm began. "Gradually, and due to natural wastage, my partners retired until there was just three of us left; two of whom were both coming up to retirement age at the same time," says Poole.

What could have been a big problem for Poole actually presented the firm with an opportunity: "We restructured and decided to fully incorporate so that we became a limited company. Historically, when I qualified, getting partnership was like the Holy Grail but increasingly it is being seen as a poison chalice. People question what they are putting their equity into and what they have to show for it."

Incorporating the business and bringing in directors with much smaller amounts of cash equity allowed Hedges more flexibility and helped it with partner exits and succession planning.

Poole then began to make fundamental changes to the firm: "We had to look at the culture of the business. We had to turn on its head the idea that clients were lucky to have us. That really was the old-fashioned way of things. We had to change the whole ethos of client care and service."

Investments had to be made too. "With partners looking towards the door with retirement upon them no investment had been made in the firm's IT equipment. We were using hand held dictaphones and vinyl tapes when I first arrived," recalls Poole. "Now we have digital technology, speech recognition, laptops and mobile working. We have a new case management system, where previously everything had been written in ancient great logbooks."

Call to action

Of course, it was not all plain sailing, especially during the financial crisis. "About 40 per cent of our work involved property. I can remember ringing the landline to check that the phones were working because they just weren't ringing. We were doing a lot of residential conveyancing work but we only made one redundancy and put everyone else on shorter hours, but we still have that team with us now."

Hedges' management had to take drastic action to keep the firm afloat and competitive which they achieved out of their own pockets. "If you look at the hourly rate of the partners at that time - I was getting less than my cleaner," admits Poole. "As partners, we halved our income, nobody else's, just our own drawings. We just thought, let's batten down the hatches and get through this. We were not glib, it was scary for everybody but we did what we needed to do and what was amazing was that our clients were loyal and didn't just go off to the cheapest factory conveyancer."

Tough choices also had to be made over the firm's provision of legal aid services. "We pulled out of legal aid in 2010, once the changes became so radical that it was impossible for us to break even on the work. It was a big decision as I have supported legal aid clients for over 20 years. But it just wasn't viable for us to continue. It made us look really hard at our clients and decide which of them we really wanted and where we were positioning ourselves in the market," explains Poole.

Seizing an opportunity

Poole is now the sole owner of the firm. Having started her career in Oxford, Poole had dreamed of opening a Hedges' office in the city centre. With the financial crisis lessening and the economy beginning to pick up she grasped the opportunity. "A lot of firms were moving out of Oxford and getting bigger. There were not many left in the heart of the city that could be described as a real Oxfordshire law firm."

At the time Hedges was coming towards a break clause in the lease of its second office in Didcot leaving Poole with an important decision to make: "We could dilute the brand and do a 'Hedges Local', or an ABS, or hive off the Didcot office and join QualitySolicitors. Ultimately I decided that it was just going to confuse everyone as to our identity. I decided to close Didcot and open an office in Oxford."

Having opened its Oxford branch in January 2013, Hedges seems to have gone from strength to strength. Along with its ancestral home in Wallingford, Poole has grown the business from a turnover of £1.35m to £2m in less than two years.

The next chapter

Hedges' recent anniversary also coincided with the retirement of its senior partner, Adrian Hatt, who spent 34 years at the firm where his father also built a career.

"When Adrian retired there was a concern that we might lose some of our long established clients who may have thought that the modern Hedges was not the Hedges that they knew," admits Poole.

It seems, however, that her fears were unwarranted: "I recently received a postcard from a husband and wife couple who are our clients," says Poole. "It reads: 'Adrian will be greatly missed as a valued friend and adviser to so many of us in the local farming community. However, with your impressive line-up at the "new" Hedges we are sure that we will be looked after for the next 30 years and beyond'."

So what does the future hold for the 225 year-old firm? "Running a law firm is a bit like a Swiss watch, you don't own it, you just keep it running for the next generation," says Poole. "We are doing a lot of work on succession planning. We have a vehicle whereby anyone in the business could potentially invest within it.

"ABS may be an angle to explore in due course, but the fact that we are fully incorporated and that shares can be divided in a much more nimble way than the old style may well mean that in a couple of years we move to a John Lewis style partnership where everyone has a share."

Finally, what advice would Poole give to other firms looking to expand and become more progressive? "The biggest saying to avoid is, 'We've always done things this way'. You have to put aside the fact that you are a firm of lawyers. At the end of the day this is a business and you have to think like a business person first and a lawyer second."

John van der Luit-Drummond is SJ’s legal reporter