Law: Another competitor enters the bullring: Will the big four become the big five? Sharon Wallach reports on the latest big merger and asks if there is room for another major law practice in Birmingham

The contrast between England's second city and its capital faces the traveller on arrival at New Street station. It is clean and attractive, as indeed is the whole of central Birmingham. A further note of prosperity is struck by the amount of new construction - including the splendid symphony hall and international conference centre.

The healthy state of commercial property in the city is reflected in the workloads of Birmingham's top law practices, whose numbers have recently been increased by a firm hungry to turn the big four into the big five.

Last December, Dibb Lupton Broomhead took over Needham & James, a 25-partner Birmingham and London practice, to complete its programme of offering a national legal service.

As a result of the merger, Dibbs becomes the UK's ninth-largest law firm. The major competition it faces in Birmingham comprises Edge & Ellison, Wragge & Co, Pinsent & Co and Evershed Wells & Hind.

According to the latter's managing partner, Ian Jollie, things are highly competitive between the four. 'Historically in Birmingham, there has been a growth of the large firm and a decline in the mass of medium-sized firms, which have either disappeared or merged,' he says. 'Dibbs will have to fight very hard to get into the top five.'

John Aucott, the senior partner of another of the top four firms, Edge & Ellison, points out that Dibbs began with some bad luck when they lost John Pratt, former managing partner at Needham & James, who decamped to Pinsents rather than join the merged firm.

'I don't dismiss them,' he says, 'but the difference between them and us is that we have a large commercial operation. I'm sure they will have too, in time, but they won't do it in a fortnight.'

The senior partner of Wragge & Co, John Crabtree, has no doubts about welcoming the newcomers. 'We wouldn't be as good as we are without good competition,' he says. 'The stronger the professional community, the more work we can all get.'

Over at Pinsent & Co, situated in one of Birmingham's glossy new office blocks, David Hughes, head of the firm's corporate department, agrees. 'The strong professional community has created an equally strong loyalty to the city and to wanting deals done here,' he says.

It does seem that there is plenty of work to go round. Evershed has started the new year with a bold move, acquiring the conveyancing section of the legal department of one of its clients, Bass. The department of four fee-earners and four secretarial staff will initially work solely on the Bass account, but the intention is to broaden their scope.

'The advantage to us clearly is a substantial strengthening of the relationship with our client,' Mr Jollie says. Elsewhere, he says, the firm's mix of clients has meant that its property work has held up 'remarkably well'. 'There has been a growth in litigation, insolvency and banking have prospered over the past year, but the greatest growth has been in pure law areas of commercial work, for instance contracts and joint ventures.'

He is optimistic about the future. 'There has been an upturn in work over the last few months,' he says. 'I think we will see 1994 turn out to be a better year than last.'

Edge & Ellison's John Aucott agrees that business is on the up. 'Birmingham is a very important market that has taken a terrible battering from the recession. But there are very strong signs that it is emerging from the period of misery.' His firm, he says, intends to continue to build on its specialist services, and to consolidate its international work, both in Europe and the United States. 'Our future is very much tied up in the international arena.'

Wragge & Co is opening at least one file a day for its international clients, according to John Crabtree. The home market has improved significantly too, he says. 'Corporate finance particularly is at least 15 to 20 per cent better than this time last year.

'Other areas have held up pretty well too, particularly property. Insolvency fell off the cliff last April but it has been replaced by bankings and lending. Litigation is always strong.'

Just before Christmas, the firm acquired BS5750, the British Standards Institute quality standard for providers of services to the public. 'We have set about trying to improve our profile and our product,' says Mr Crabtree.

A major element of Pinsent's strategy has been to target public companies, a move boosted by the opening of a corporate finance operation in London. 'We recruited specialist lawyers from the largest City firms, enabling us to provide corporate finance advice to London-based companies and institutions. But because our administration and everyday work are based in Birmingham, our overheads are cheaper and we are very competitive on fees.'

Into this competitive arena comes Dibb Lupton Broomhead, a firm that has attracted its share of criticism. Legal Business magazine, in an article published last autumn, asked: 'Can Dibb Lupton elbow its way to the top?' and talked of the firm's 'survival of the fittest' mentality, the 'chutzpah' of its expansionist strategy and its money and success-orientated culture.

But it is difficult to reconcile this aggressive image with the reality of meeting the lead partner in the new Birmingham office, John Winkworth-Smith, and the firm's senior partner, Robin Smith. Both men began their professional lives as articled clerks with the practice, which presumably bears scant resemblance to the firm of their early days.

It has grown rapidly since 1988 when the Leeds firm Dibb Lupton merged with Broomheads of Sheffield. Two years later Dibbs took over William Prior and thus acquired a London base. It now boasts 120 partners, 450 qualified staff and 1,000 employees, with a turnover last year of pounds 36m.

The 1988 merger was the first move in the strategy to become a national firm, with a corporate structure following divisional, rather than geographic, lines. The game plan to win a place in the Birmingham top five is simple.

'We spend a lot on marketing,' says Mr Winkworth-Smith. 'We shall unashamedly go out and attract clients. We have to distance ourselves from the existing competition,' he says. 'And we do that because we are a national firm.'

Dibbs believes that it has a great deal to offer. 'Size is, by itself, unimportant,' says Mr Winkworth-Smith. 'What matters is the depth of resource that size gives us and that the other firms can't match. Our structure alone makes us distinctive, but so does the corporate way in which we are structured.'

In the words of Dibbs' senior partner, Robin Smith: 'We have not merely added to the supply of legal services in Birmingham, but we have added to the strength of that supply.'

(Photograph omitted)