While the legal market is never short of speculation about the next potential merger, last month saw news of an eye-catching deal bringing two parties from very different markets together with a fresh approach.
On 22 July, US turnaround firm Alvarez & Marsal (A&M) and UK mid-market player BDB Pitmans (BDBP) announced that they had teamed up to launch Broadfield, described as a ‘new international law firm’, setting out a bold intention to ‘target rapid expansion through talent and firm acquisition in the UK and US markets, with the aim of extending into continental Europe.’
This will be no conventional law firm, however; instead, BDBP is the first member firm in what will be a branded network of mid-market firms, all of which will be able to draw on A&M’s substantial resources including technology and back-office services.
A&M established a legal services arm (AMLS) this May, trumpeting what it could offer in terms of outsourcing and access to capital to fund growth. Former McDermott Will & Emery chair Peter Sacripanti was installed as global head of AMLS, with ex-EY financial services UK managing partner Christopher Price joining in June to head EMEA operations.
The initial plan is to target other firms in the UK and the US to join the Broadfield network, with advanced discussions already underway with a New York firm – described by BDBP managing partner John Hutchinson as ‘pretty similar to us in terms of size’ (BDBP has approximately 220 lawyers and revenues of £53.8m, according to last year’s LB100 rankings).
In terms of ambitions for the next 12 months, Price said that Broadfield was aiming to be ‘heading towards transaction number two in the UK’ and to have completed two other similar deals, including one in the US.
BDBP, which itself the product of the 2018 combination of UK law firms Bircham Dyson Bell and Pitmans, is known to have been considering options for expansion for some time, with a proposed merger with Womble Bond Dickinson faltering in early 2023.
Speaking to Legal Business, BDBP’s Hutchinson cited the greater independence allowed by the Broadfield arrangement as a key attraction, in contrast to a merger with a larger law firm which could have seen BDBP swallowed up. ‘We don’t want to lose the character of the firm that we have. The object is not to suddenly just completely adopt someone else’s culture.’
The announcement of the deal specifies that ‘all Broadfield firms will retain their own governance… to best manage their business with respect to local market conditions.’
On the issue of independence, Price confirmed to Legal Business that while member firms would be free to retain their own governance, there would be ‘advisory or planning boards that determine the overall direction of Broadfield’s growth ambitions’, adding that while the planning boards would issue ‘recommendations’ to member firms, ‘the intention would never be to force an entity to do something that it otherwise wouldn’t want to do’.
There are limits to this independence, however, with Price confirming that member firms in the same jurisdiction would need to adopt a common approach to partner compensation. He added that ‘at the moment’ there were no plans to plans to implement a global approach to partner compensation. ‘We think that one of the advantages of this model is the ability to say we can accommodate somewhat different models within the Broadfield landscape.’
The access to A&M’s tech resources will unquestionably hold appeal for cash-strapped firms looking to upgrade their systems. As Price argues: ‘It’s a very brave – or very short-tenured – managing partner who stands in front of their partnership and says, “folks, we need to invest £10m in our IT infrastructure, so apologies for the dip on partner profits for this year and the next.”’
However, the deal has raised eyebrows among fellow mid-market firms, with opinions divided over prospects for success.
Wedlake Bell managing partner Martin Arnold told Legal Business: ‘It will be interesting to see how this develops – for a law firm being acquired and receiving external capital, the maintenance of culture needs to be carefully managed if things are not be changed out of all recognition.’
Another managing partner at a mid-market firm echoed concerns over the potential impact on culture: ‘I can see why BDBP might want to do it in terms of work in the pipeline, but as a business, I don’t understand – it could impact motivation for their partners.’
The success – or otherwise – of the venture will inevitably be closely followed by other firms in the mid-market, as Boodle Hatfield senior partner Andreas Zavos sums up: ‘A lot of firms will be watching with interest to see whether this idea of a national law firm funded by the US is going to work as a model.’