Addleshaw Goddard and Nabarro have confirmed that they were in merger talks at the start of the year but the former is understood to have called the talks off.
In separate statements released by both firms, Addleshaws and Nabarro said that discussions would not progress any further.
Nabarro said: ‘Nabarro and Addleshaw Goddard did hold very preliminary conversations to explore a possible merger. However, both firms agreed not to pursue discussions further.’
It is thought that Addleshaws decided that there weren’t sufficient business interests for the firm to merge with Nabarro. One former Nabarro partner said the talks were being held before Christmas, with the firms exchanging financial information, although both firms declined to comment on this point.
Addleshaws said: ‘We confirm that we held preliminary discussions with Nabarro to explore the potential benefits of a merger. Those preliminary discussions have now ended and will not be progressing further.’
‘Addleshaws needs a merger. Where it is placed in the market now compared to five to ten years ago is not good.’
Said one of its former partners: ‘Addleshaws needs a merger. Where it is placed in the market now compared to five to ten years ago is not good. It is falling behind in terms of international coverage.’ They also added that half the partners thought the firm needed a merger when they were there.
The ex-Nabarro partner said: ‘Both firms are in the top five of the worst-performing firms in the last five years. Neither firm has done well.’
A look at the firm’s recent activities adds some weight to that claim. Addleshaws laid off 24 fee-earners last year in London, Leeds and Manchester, its second round of redundancies in a 12-month period. It posted a 5% hike in revenue during 2011/12 to £169.5m, but the firm’s five-year compound annual growth rate is -1%.
Similarly, Nabarro’s business shrank by 2% over the same period. The firm posted a 1% increase in revenue during 2011/12 to £113.4m. The firm also saw long-term senior partner, Simon Johnston, step down from his role last September. His replacement, Graham Stedman, is viewed as having a considerable task on his hands reinvigorating the firm.
The talks – which were exclusively revealed last month on Legal Business’s website – come amid a period of consolidation in the UK mid-tier in the wake of a string of talks and agreed mergers.
A merger between Addleshaws and Nabarro would have created a £282.9m firm and would have placed it in the top 20 of the LB100.