LB100 Central – Fighting Back

Two years of holding the dubious distinction of being the worst performing peer group in the LB100 based on revenue has acted as a call to arms to law firms in central England and Wales.

The past year has seen the region consolidate at a storming rate to reverse the slide, climbing above the South and Scotland peer groups.

Ipswich-based Birketts posted a 12% annual increase in turnover to £26.7m following its first full financial year since amalgamating with nine-partner Chelmsford outfit Wollastons in September 2010.

Nottingham-headquartered Freeth Cartwright has also been hitting the acquisition trail hard. It posted a 15% jump in revenues to £36.7m after it absorbed seven-partner Milton Keynes firm Kimbells in November 2011 and it also acquired Stoke-based debt recovery specialist KJD Freeth in April 2012.

However Shakespeares, which leapt up the main table last year on the back of significant merger-related growth, has outshone them all. In April the firm, which has completed five mergers in five years, voted to go ahead with its biggest tie-up yet: on 1 August it joined forces with Leicester’s Harvey Ingram to create a £50m, 641 fee-earner player. This should propel the combined firm to the top of the Central peer group table in 2013.

For now though, the firm can take comfort from the fact that despite only a 4% growth in turnover to £29.6m it has overtaken Hugh James, the largest law firm in Wales, in the peer group table. This modest increase in revenues has again been achieved through acquisition: the firm acquired social housing specialist Gorrara Haden Solicitors in September 2011 and Solihull’s Wood Glaister Solicitors in December.

There is no doubt that Shakespeares is fast becoming a Midlands force.

‘Currently the firm employs 450 people and is one of the largest firms in the region,’ says Shakespeares’ new commercial director Hamish Munro. ‘It’s fair to say that because of the scale of our growth we’ve fallen under the radar of some of our local competitors.’

One of the firms that should be feeling the increased competition brought about by the numerous mergers most keenly is Browne Jacobson. However, it’s too busy riding high on its own wave of success to notice.

The Nottingham-headquartered firm has bucked the merger trend to deliver an impressive 17% rise in revenues to £41.3m in 2011/12 – the largest year on year increase the firm has ever generated – completely through organic growth. This means the firm has posted three consecutive years of revenue growth; turnover at the firm has grown 35% in real terms since 2009.

ignificantly, the firm’s London office was its best performing platform nationally and saw revenues jump by 26% last year. It’s a particularly interesting statistic because investment in London seems to be where other Central firms are falling down.

Despite average revenues across the peer group rising, average net income still falls well below par at £7m. The reasons for this are obvious. The larger Major UK firms headquartered in the Central region, including Birmingham monolith Wragge & Co, Gateley and Mills & Reeve, have their sights set on national work, in some cases international work, leaving the Central peer group firms squabbling over tighter-margined local instructions. Competition is fierce and the firms left behind, with the exception of Freeth Cartwright – which has offices in London and Manchester – are not helping themselves by casting their nets too close to home rather than further afield.

 

 

Hugh James has its home office in Cardiff and a representative London office. Morgan Cole has platforms in Bristol, Oxford and Reading and two in Wales.

Shakespeares currently has seven offices, all of which are in the Midlands – the addition of Harvey Ingram will give the firm platforms in Bedford, Milton Keynes and Newport Pagnell. Finally, Birketts, which has seen its profit per lawyer fall 5% to £36,000 over the past year, has offices in Ipswich, Norwich, Cambridge and Chelmsford. Is it worth having so many offices so close together?

‘I would say there are incremental costs associated with being multi-site, but the benefits outweigh the cost. The benefits are that we are able to have a significant presence across all four major counties of East Anglia – that’s our heartland,’ says Tim Sarson, finance director at Birketts. ‘If we were concentrated in one centre we would cut down on rental and communication costs and maybe even have fewer support staff, but we really see the benefit of being seen as a major player in Suffolk, Norfolk, Cambridge and Essex. For us it’s important to be near our key clients.’

Shakespeares is resolutely against a City office, for now at least, saying that once London comes into the mix it causes imbalances in national networks. But as profit margins drop, staying out of the capital seems a riskier strategy. LB

maria.jackson@legalease.co.uk