Proposed merger promises Birmingham firm significant City presence.
The announcement last month that Wragge & Co and Lawrence Graham (LG) are in merger talks makes a lot of sense on many levels, although competitors have inevitably been quick to point out obvious pitfalls.
Both firms have been hunting for suitors for a long time and for Wragges, the talks could provide the serious London foothold that has so long eluded it, despite a series of high-profile Birmingham transfers and London hires.
Senior partner Quentin Poole last month told Legal Business that the union would fit in with Wragges’ strategic priorities, adding: ‘Lawrence Graham has a good reputation in areas that fit well with our practice in London.’
Both firms are highly rated in commercial property and both have reasonable mid-market corporate and commercial and TMT practices, although Wragges’ IP department, headed by Gordon Harris, is very much the stronger of the two.
Neither would this be a merger of financial equals. Currently number 27 in the LB100, Wragges had revenues in 2012/13 of £120.5m and profits per equity partner (PEP) of £338,000. LG, on the other hand, has fallen outside of the UK top 50 after a prolonged period in which it has struggled for growth.
The 204-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.
There are also questions of how this merger fits into Wragges’ more ambitious international strategy, although here LG’s senior partner Andrew Witts points out that both firms could benefit from each other’s international reach, with both gaining three new jurisdictions apiece.
One peer group managing partner said: ‘The question has to be: what does Wragges want to be? If it’s international then it needs to look for a completely different tie-up, because becoming a massive UK firm when actually you want to be playing the international market isn’t going to work.’ However, they added: ‘If they get this right, the one thing it would give them is a significant presence in London and to have any appeal on the global stage you have to have that.’
Rivals have also pointed to the not-to-be-underestimated logistical issues, such as both having premises in London, particularly when one of those premises is LG’s expensive More London real estate, the cost of which has been in part blamed for its decline.
A peer group senior partner said: ‘The problem is that infrastructure is very slow and difficult to unwind.’
francesca.fanshawe@legalease.co.uk