The three way union of CMS, Nabarro and Olswang cost the partnership £28.9m in ‘reorganising, restructuring and integrating’ the merger in the year to April 2018 the combined firm’s first LLP accounts showed this week (24 January).
But operating profit at the post-merger firm rose to £160m, up 30% on the £122.5m combined profits of the three legacy firms. The last accounts published for the firms pre-merger showed profits had fallen at all three in 2016-17.
CMS acquired assets worth £66.8m through the largest legal merger in UK history in May 2017, with Nabarro’s assets worth £51.3m and Olswang’s £15.5m.
The firm set up a £85m rolling credit facility with Lloyds Bank and RBS after the merger to finance its costs, fit-out of premises, as well as provide a contingency fund. A spokesperson for the firm told Legal Business that the credit facility had since been reduced to £65m.
Speaking to Legal Business last year, managing partner Stephen Millar put the total merger cost at about £50m: ‘We took 50% of that cost last year and we’ll take 50% this year.’
He added: ‘We have taken something which was a concept, turned it into a big story and then executed it, bringing a huge amount of people along. It’s worked from the day it went live.’
The accounts published this week also shed a light on how CMS plans to resolve legacy Nabarro’s longstanding pension deficit, which last year’s accounts showed stood at £17.2m at the time of the merger. The firm set out a recovery plan to eliminate the deficit by May 2022, as part of which the partnership will pay £4.85m into the scheme in the current financial year.
The 25 offices in the firm’s UK LLP turned over £517.6m, £29m up on the consolidated results of the three legacy firms.
Staff costs stood at £184.3m, more than twice the cost for legacy CMS as headcount rose 43% from 1,650 to 2,370. The firm’s highest earner took home £1m, up from £798,000 at legacy CMS in 2016/17. The remuneration of the firm’s management personnel rose from £2.8m to £3.9m.
CMS announced last week the opening of its third office in northern England in Liverpool, complementing legacy Nabarro’s Manchester and Sheffield offices.
marco.cillario@legalbusiness.co.uk
For more on Millar’s vision for CMS, see ‘The CMS interview: Pains and gains’ (£)