Chick: Long-term strategic planning
The pandemic has not stopped activity in the law firm merger and acquisition (M&A) market, with a series of different types of deals announced of late.
They come as the latest figures show only a modest decline in the overall number of law firms over the past year, in part due to government support.
But M&A activity could step up once firms have to start paying their deferred liabilities.
Armstrong Teasdale, a commercial law firm based in St Louis Missouri, has acquired London firm Kerman & Co.
It has expanded rapidly of late, with London its eight new office in the past two and a half years; it has 13 in total, with the UK its first overseas outpost.
The addition of over 50 lawyers and staff bolsters Armstrong Teasdale’s roster to over 340 lawyers and over 300 staff in all. It has a broad practice with a strong litigation bent.
Managing partner David Braswell said: “We have long served clients around the world, and now we’re in a position to take advantage of tremendous growth opportunities in London.”
Kerman managing partner Daniel O’Connell said: “We are excited about the opportunity to chart a new path for the firm in London, as well as broaden the offerings we can provide to clients internationally.
“As you would imagine, this is not an opportunity taken lightly and it has been carefully considered over a period of time.”
Staying in central London, Bishop & Sewell has merged with Monro Wright & Wasbrough, creating a 24-partner firm with 76 fee-earners operating in five core areas of property, private client, commercial, litigation and family.
It will operate as Bishop & Sewell LLP incorporating Monro Wright & Wasbrough, with the latter bringing 25 people over to the practice.
Mark Chick, senior partner of Bishop & Sewell, said: “Monro Wright & Wasbrough is a long-established practice, with a much-valued history of providing traditional private client services.
“This merger comes about as a result of our long-term strategic planning to build and expand the breadth and depth of our client service offering, particularly in the private client arena.”
Still in the capital, south-east firm DMH Stallard has merged with family law firm Brookman Solicitors, whose 12 partners and staff are moving to DMH’s London office. The combined firm has a turnover of £31m, with 67 partners and a total headcount of 273 working across six offices in London, Surrey and Sussex.
DMH managing partner Richard Pollins said he hoped this would be “the first of a number of mergers in London and the region for the firm over the next few years as we continue our expansion strategy”.
Henry Brookman founded Brookman Solicitors in 2000. He said: “Our merger with DMH Stallard is good news for clients of both our firms. It gives our clients access to a deep pool of expertise across a whole range of legal services, as well as better geographical access.
“It significantly enhances the service that our combined firm will be providing.”
Finally, in the midlands, Coventry and Warwickshire solicitors Alsters Kelley has acquired Stratford-based Bonell & Co, extending its presence in the region with a fifth office.
It said the move would increase turnover by an anticipated 10% in the first year.
Six members of staff at Bonell & Co, including founder Andrew Bonell, will remain at the conveyancing and family law firm, taking the Alsters Kelley workforce to more than 80.
Cathy Wahlberg, managing director at Alsters Kelley, said: “Bonell & Co boasts an impressive pedigree and has a highly talented and experienced workforce.
“It has an excellent reputation throughout the Stratford region and the acquisition seemed like the next natural step in Alsters Kelley’s own journey. It provides us with an excellent platform for growth.”
Mr Bonell said: “After 30 years of operating as a small practice, the time had come for me to seek new opportunities.
“The legal landscape has changed significantly during that time, becoming a great deal more complex with the requirement for increased technology and compliance, making it difficult for a small firm to thrive.
“It was however important that we shared the same professional ethics. In a practice such as mine, consistency and continuity are essential.
“Equally important however was Alsters Kelley’s ability to introduce new technologies and increased expertise which will serve as a major boost to the firm and mark a new era for the business.”
According to accountants Hazlewoods, the number of law firms in England and Wales held up well despite Covid-19, with 10,080 firms registered as of December 2020, down 2% on the 10,278 registered a year earlier.
It said the drop was “only slightly greater” than in previous years as the gradual consolidation of the profession continues.
“Although many law firms have seen a drop in income over the last year due to lockdown, costs have also fallen, resulting in few firms having to close,” it went on.
“The lockdown and the huge shift to home working that almost all law firms have followed has allowed firms to significantly reduce their operating costs.”
Law firms have also been able to defer tax and VAT payments during the pandemic, while some have also been able to negotiate rent holidays with their landlords or switch to paying rent on a monthly rather than a quarterly basis in order to alleviate cash flow issues.
A further reason the number of law firms remained relatively stable was that a feared increase in the number of firms unable to secure professional indemnity insurance during last October’s renewal season did not occur.
Hazelwoods said most firms were able to afford increased premiums, with some funding them through the government’s coronavirus business interruption loan scheme.
Partner Andy Harris said: “There were fears that the effects of the pandemic could drive an increasing number of law firms to close – thankfully that hasn’t been the case and the legal profession has weathered the storm well.”
He said the conveyancing boom caused by the stamp duty holiday has also helped a lot of small and mid-sized firms by making up for a drop-off in other areas.
“It will be interesting to see what happens when the stamp duty holiday ends and firms have to start repaying their deferred liabilities. We could see increased M&A activity.”
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