After years of rejecting the need for a City presence – and subsequent years hunting for a major London deal – Midlands giant Wragge & Co has finalised its tie-up with Lawrence Graham.
The proposed deal, which was confirmed last month, was backed in a partner vote earlier this week, with the combined firm set to unify as Wragge Lawrence Graham & Co from 1 May 2014.
With a majority of more than 75% required from both partnerships, the combination will create a £171m business with 1,300 staff, including 770 lawyers, operating from ten offices worldwide.The two firms had previously held merger talks in 2009 which floundered amid the post-banking crisis recession but rekindled the discussions in July this year.
The combined practice will most likely push Wragges into the UK top 25 for the first time, ahead of national rival Addleshaw Goddard. The 119-partner firm is currently the 27th largest UK law firm with revenues in 2012/13 of £120.5m and profits per equity partner (PEP) of £338,000.
Lawrence Graham, meanwhile, had fallen outside of the UK top 50 after a prolonged period in which it has struggled for growth. The 200-lawyer firm saw income of £51.8m in 2012/13, a decline of 23% over the last five years. PEP declined 14% over the year to a current total of £260,000.
The merger vote came shortly after Wragges confirmed former head of projects David Fennel was to become managing partner next year. Fennell now becomes the new firm’s chief executive, with Wragges’ senior partner Quentin Poole (pictured) retaining his role. Lawrence Graham senior partner Andrew Witts will become chairman of the combined practice, while managing partner Hugh Maule will sit on the firm’s management board. The new firm’s non-executive directors will be Helen Owers and Alastair McLeish.
The combined firm will not have geographic heads, favouring instead movement between the firm’s two UK offices in Birmingham and London. The combination is likely to lead to some job losses due to staff overlap but these are expected to be limited.
Poole comments: ‘This merger brings together complementary cultures, locations and practice groups to create a strong and distinctive offer to clients. It gives huge strength in areas where we are both strong and also offers both sides additional strength. Wragges can offer strength in intellectual property (IP) for example.
‘What the merger will deliver is a firm that is truly exceptional with almost equally sizable bases in both London and Birmingham. No other firm in the UK has the number of lawyers we have in any office other than London as we have in Birmingham at around 380 lawyers. With Lawrence Graham’s 200 lawyers in London, the combined firm will a City base of around 330 lawyers.’
Poole said that following the merger, the two firms will move into the same building in London, with current Wragges staff likely to move out of the Waterhouse Square premises and into Lawrence Graham’s current More London base by 2015 when break clauses in lease contracts allow.
Witts commented: ‘We are very excited about this opportunity to forge a bigger, better and stronger firm for our clients and people. We will enhance our capabilities in core services such as real estate, corporate and litigation, while creating major new business opportunities for our renowned international private capital team. Broader international coverage also enables us to better service the needs of our global clients.’
The firm’s practice will cover ten locations: Birmingham, Brussels, Dubai, Guangzhou, London, Monaco, Moscow, Munich, Paris and Singapore.
Its core practice focus will be on real estate, equity capital markets, investment funds, private capital, IP, pensions and construction.
There may be some surprise that the firm has not made more of its corporate practice in the post-merger announcement given Wragges’ prized legacy as having built the best UK deal team operating outside of London. However, the firm’s core corporate practice is perceived by some to have lost some potency since its 1990s heyday.
The combined firm will have one of the largest property practices in the UK with 246 lawyers; both firms generate around 30% of their revenues from real estate.
It is expected that the combined practice will move to the all-equity, merit-driven partnership model of Wragges after an integration period. Lawrence Graham had 28 equity partners at the end of the 2012/13 financial year, with a further 42 on fixed-share status, including foreign offices.
Lawrence Graham’s UK LLP has around 30 fixed-share partners – of these between 10 and 15 are expected to be admitted immediately to the combined firm’s equity ranks alongside all of its current equity partners. The combined firm is likely to maintain a slim rank of 15 to 20 fixed-share partners for an interim period before ultimately reverting to all-equity.
Both firms operate merit-driven equity systems, making the two models relatively flexible and easy to combine. Wragges’ equity spread currently ranges from £140,000 at entry to around £600,000 for plateau earners.
francesca.fanshawe@legalease.co.uk
For more comment on the merger, see ‘Mishcon’ no more but a City player at last? Wragges needs a big deal and the old magic