With mergers and performance across the pond enduringly hot topics in this year’s LB100 report, LB checked in with Womble Bond Dickinson to see how the firm has performed since it became a transatlantic law firm, and how its strategy looks after its tie-up talks with BDB Pitmans fell through
‘They were the right discussions to have,’ says Womble Bond Dickinson (WBD) managing partner Paul Stewart (pictured) of the talks with Pitmans. ‘But law firm mergers are not easy things to do. I wouldn’t rule anything out, but there’s certainly nothing I would talk about at the moment in terms of that kind of transactional activity.’
Nevertheless, WBD is no stranger to mergers. The firm assumed its current form following the 2017 combination of UK-based Bond Dickinson and US firm Womble Carlyle. And Bond Dickinson itself came into existence as the result of the 2013 merger between Newcastle’s Dickinson Dees and Bristol’s Bond Pearce.
This history has produced a firm with a unique geographic profile. In the UK, the largest of its eight offices is in Newcastle, and it has a strong presence in both the North-East and South-West of England.
It is worth noting that, if you were to draw up a law firm from scratch, you would probably not design one with this geographical footprint. Stewart laughs in response: ‘Perhaps. But it does give us some unique opportunities. We have a network that allows us to work across our offices, and we have space to grow in the biggest commercial centres.’
For some in the market, though, WBD’s spread looks less unique than confused. Many leaders at other LB100 firms express a lack of familiarity with WBD in key markets. One chief executive goes further: ‘Dickinson Dees was a decent Newcastle-based firm. I didn’t understand the Wombles deal – it made them look and sound different. I’m not sure what they’re doing with their American practice.’
Transatlantic collaboration
Unsurprisingly, Stewart takes a different view. ‘The UK and US parts of the firm have a very similar outlook,’ he argues. ‘We both believe that we offer a similar excellent value proposition to our clients.’
And the firm aims to make more of this combination moving forward. ‘Something we’ve been particularly keen to do, especially coming out of Covid, is to look at areas of focus across the combination. In particular, we’re targeting energy and renewables, data and financial services, and international trade. We believe we’re in a strong position to increase our advice to clients on cross-border investment between the UK and the US.’
At the core of WBD’s plan to achieve this is increased internal collaboration. ‘We held a transatlantic M&A workshop in Charleston in February,’ says Stewart, ‘looking at the similarities and differences between the UK and the US and the issues that arise when working on cross-border transactions.’
The event was held as part of WBD’s Transatlantic Lawyer Network (TLN) programme, which will next see the firm put on a summit focused on the energy and renewables sector, this time held in the UK, across the London and Newcastle offices.
In September, Stewart also hosted what the firm calls a ‘transatlantic town hall’ alongside WBD US chair and chief executive officer Betty Temple. In this meeting, the two leaders announced the details of a plan for increased UK-US collaboration to lawyers and staff across the firm. ‘We’re setting up an exchange programme,’ explains Stewart. ‘It will give our lawyers in the UK the opportunity to travel to and work in the US, and vice versa, for six to eight weeks. It’s the sort of opportunity that I, as a younger lawyer, would have jumped at.’
An increased level of collaboration across its UK and US branches would certainly be a boon for WBD’s perception in the market. At present, the firm’s two arms are viewed as somewhat distinct. The most one law firm leader has to say on the matter was that WBD ‘half-copied the Eversheds thing’.
The firm posted solid results for 2023, with total revenue up 12% to £424.8m, and profit per equity partner (PEP) up an eye-catching 18% to £554k – the largest PEP increase of any firm in the top 25. The figures are even more impressive on a longer track. Since 2018, PEP rose by over 100%, and revenue by a staggering 305%, though these figures are of course significantly bolstered by the US combination.
‘Trading conditions have certainly been difficult over the last year, for reasons we’re all aware of,’ comments Stewart. ‘That said, we had our best year for revenue, and achieved our best outcome since, not just the US combination, but the 2013 merger of Bond Pearce and Dickinson Dees.’
Looking at the UK business only, however, the figures are more muted. While the UK is home to nearly half of the firm’s 903 total lawyers, 29% of its equity partners, and 36% of its non-equity partners, it generated only 29% of its revenue, at £118.6m. When calculated on a UK-only basis, meanwhile, PEP comes in at £281k.
‘Trading conditions have certainly been difficult over the last year, for reasons we’re all aware of. That said, we had our best year for revenue, and achieved our best outcome since the 2013 merger of Bond Pearce and Dickinson Dees.’ Paul Stewart, Womble Bond Dickinson
These numbers place WBD’s UK outfit closer to second-quartile firms like Burges Salmon and Hill Dickinson than to the likes of Addleshaw Goddard, Taylor Wessing and Osborne Clarke, alongside whom it currently occupies the lower reaches of the top 25 at 21st place.
While the LB100 assesses performance of firms as a whole, these figure go some way to explaining some of the less flattering market perceptions of WBD.
‘Difficult place to be’
In the words of one LB100 firm leader: ‘The regional mid-market is a difficult place to be.’ And several commentators canvassed for this year’s report argue that a merger is necessary for such firms to attain the scale that they would need to compete with the London-based market leaders.
Another chief executive notes that they were ‘surprised’ when they first heard about the proposed merger between WBD and Pitmans, ‘especially on the Wombles side of it – that they would even need to look at a firm like Pitmans’. And Pitmans is indeed significantly smaller than even WBD’s UK arm alone, with turnover of £53.8m this year.
The combination would have offered WBD the opportunity to gain a presence in the South-East and East of England, as well as to build on Pitmans’ complementary strengths, especially in real estate and private client work.
‘I wouldn’t rule out the possibility of continuing to work together with Pitmans on certain things,’ says Stewart. But WBD’s focus in the UK remains both on the sectors identified as synergies with the US, and on expanding in the newer offices in Edinburgh, Leeds, and, crucially, London.
Stewart cites a refurbishment of the Leeds office as one example of the firm’s recent investment in its infrastructure, and speaks with enthusiasm about the potential of technologies such as AI, though he admits the firm is at the early stages of exploring how it can use AI.
However, he goes on: ‘The most important thing we have is our people. And you can see the number of our recent hires that were in London.’
Of eight lateral partner hires WBD made over the last year, five were in London. The firm bolstered its corporate team with the hires of Ince’s former head of capital markets, Rebecca Ferguson, and Shepherd and Wedderburn partner Carl Powlson, announced in February. Then in April, the firm brought Amy Gallimore into its restructuring and insolvency team from Ashfords, and Hewitsons’ Bela Zavery into its real estate team in June. In September, the firm hired Michael Lewis from Osborne Clarke into its financial services team.
‘London is a world financial and commercial centre,’ concludes Stewart. ‘Building up here offers us the chance to develop in ways that can then feed into our wider network.’
Collaboration with the US will likely play a key role in WBD’s further expansion in London. But many in the market remain unconvinced. One managing partner is blunt: ‘To grow beyond being a mid-size firm in the UK, you need a merger. There’s just a limit on what you can do with lateral hiring.’
Stewart is alive to the pressures of the moment. ‘Investment that is required, especially in technology, is likely to be at a scale that may fuel merger activity among firms,’ he says.
But, ultimately, he is sanguine that WBD, working with its US practice, will be able to invest and thrive without the imminent need for another merger. LB
alex.ryan@legalease.co.uk
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