Legal mergers and acquisitions
PUBLISHED: 10:37 08 January 2016 | UPDATED: 10:37 08 January 2016
It's been another interesting year of legal mergers and acquisitions. We review the changing legal landscape across the region
High-profile mergers, such as those that created Penningtons Manches LLP in 2013 and Blake Morgan LLP in July 2014 seem to have exhausted the appetite for market-changing combinations in the South East, according to the Legal 500, with firms concentrating on boosting private client offerings through the acquisition of high street teams; Spratt Endicott’s and Withy King LLP’s respective combinations with Alfred Truman Solicitors and Edward Pilling & Co are two examples from the latter half of 2014.
The big story of the year in the West Midlands was the merger between Shakespeare’s and long-standing market leader SGH Martineau LLP in June this year. The new firm, Shakespeare Martineau LLP, is expected to be a significant player in the market for years to come. When merged, the firm had more than 900 people across nine offices and an annual turnover of £75 million. According to reports, this was Shakespeare’s eighth merger in nine years.
In Gloucestershire, the latest law firms to join forces are Tayntons Solicitors and Rowbis. The firms merged in October to become the city of Gloucester’s largest practice when Tayntons Solicitors, whose heritage dates back to 1857, acquired Rowbis, formerly known as Rowberry
Morris.The newly-formed law firm, called Tayntons Solicitors (incorporating Rowbis), is based at Tayntons, Clarence Street, Gloucester.
The acquisition saw the number of staff at Tayntons grow to more than 70, making it the biggest Gloucester-based law firm.According to a report, The Art of the Law Firm Merger, written by Jeff Gillingham, there is a simple rule that should apply to all mergers and that is the absolute need to ensure that the resulting business adds up to more than the sum of its means, but big doesn’t always mean more profitable, though for some, the prospects are looking good.
Charles Russell Speechlys marked the first anniversary of the merger of the firm on November 1, 2014 with improved Legal 500 and Chambers rankings, and major wins at the British Legal Awards and 2015 Legal 500 Awards. James Carter, Managing Partner at Charles Russell Speechlys, said: “In our first year, we have made internal partner promotions in all three UK offices across all four business divisions, and have seen lateral partner appointments in Luxembourg, Paris and the Middle East.
“Our enhanced, combined offering has generated a number of significant client wins.”
In November it was reported that Knights Professional Services, which bills itself as ‘the UK’s fastest growing commercial law firm’ was in advanced talks to acquire Darbys Solicitors LLP, a major regional player. The acquisition is expected to complete this month.
Mid-tier firms performance beats that of top 10
According to professional services firm PwC’s annual law firms survey of the 100 largest firms in the UK, there was a ‘somewhat disappointing’ performance from the Top 10 firms, while at the same time a resurgent Top 11-25 seem to have re-focused their strategic intent.
Key survey points include the number of UK firms increasing their UK fee income is higher than at any time since 2008, at 82% of all firms. However, only half of Top 10 firms achieved fee income growth, the worst performance across all bandings.
The top 11-25 firms posted an impressive 4.2% increase in fees per fee earner too. This compares to a small 1.3% increase for Top 10 firms and a 1.4% fall for Top 26-50 firms. The top 26-50 firms experienced a fall of 12.2% and 13.2% in fees and gross profit per hour and there is now little difference between this banding and the top 51-100 firms.
Profitability continues to improve for some firms, though only 46% of all firms generated increased profits at a rate ahead of growth in fee income. Less positively, 14% of firms continue to struggle, reporting a decline in fee income and profit.
According to Gary Hinton, of PwC: “While the past few years have seen a few significant UK tie-ups and number of successful heavyweight cross-border mergers, the ranking of the UK’s top ten firms remains remarkably little changed from 2010. And the ongoing cooling of the law firm merger market is underlined by figures from Jomati.com, which show that both the volume and size of UK law firm mergers in 2014 were down from 2013.”
Recent and notable mergers and acquisitions
Tayntons acquisition of Rowbis, October 2015
BPE acquisition of Leigh Young, June 2014
Charles Russell merger with Speechlys. Now Charles Russell Speeechlys
Sewell Mullings Logie acquisition of Sanders Brickwood, September 2013
Harrison Clarke merged with Rickerbys, July 2013. Now Harrison Clarke Rickerbys
Macnab Clarke Solicitors, Abingdon merged with Cartwright King in Birmingham, June 2015. Now Cartwright King
Spratt Endicott merged with Alfred Truman Solicitors, October 2014. Now Spratt Endicott
Blake Lapthorn merger with Morgan Cole, July 2014. Now Blake Morgan
LLP Manches were merged with Penningtons, October 2013. Now Pennington Manches
Henmans merged with Freeth, February 2013. Now Henmans Freeth LLP
Warwickshire & Worcestershire
De Marco Solicitors and Askews Legal LLP merged in September 2014. Now Askews Legal LLP, incorporating De Marco Solicitors.
MFG solicitors takes over Scotts Holt & Sellars, September 2013
Band Hatton Button formed in Spring 2013, following the merger of three of Coventry’s leading law firms Varley Hibbs, Band Hatton and Button Legal