From within the over-crowded space that is the lower of half of the LB100, beleaguered 139-lawyer Manches has emerged as being engaged in advanced merger talks with private client firm Penningtons to create a £60m firm with over 300 lawyers.
Manches was earmarked as a firm in need of a merger in this year’s LB100 analysis, after turning out one of the worst performances of the group – in notable contrast with other firms focussed on the burgeoning private client sector – with revenues down by 13% to £26.3m, shifting the firm down 11 places to 93, its lowest rank ever in the table.
The firm’s profit per lawyer (PPL) was this year at a low of £15,000, a 67% drop from the first LB100 in 1993, when the firm’s PPL was £44,900. Profit per equity partner (PEP) at the 47-partner firm also dropped to £134,000 during the last financial year, compared to £235,000 in 2011/12, a drop of 43%.
Factors blamed by the firm for its financial decline include the loss of star family partner Helen Ward and a team of seven family lawyers, together with a flat market for mid-size transactions and the impact of the recession, particularly on the property team, where a number of projects were put on hold or postponed.
Conversely at Penningtons, where 2012/13 revenues increased by 1% to £32.5m – a 14% increase over five years – chief executive David Raine described his firm’s performance as a ‘good year in a tough market.’
Confirming the talks Richard Smith, managing partner of Manches, said: ‘I can confirm on behalf of all the Manches offices that we are in discussions with the management team at Penningtons LLP concerning the possibility of a merger between our two practices. It has been agreed by both firms that these talks are being undertaken on a confidential basis. We are therefore not currently in a position to make any further public comment on their likely outcome.’
If the merger does go through the combined firm will remain in the bottom 50 of the LB100.
david.stevenson@legalease.co.uk
For more on the challenges facing firms in the second 50 of the Legal Business 100, click here.
