‘We have worked very hard since the outset to demonstrate that we are not simply a private client firm,’ says James Carter, managing partner of Charles Russell Speechlys (CRS). His comments come nine months after the union of Charles Russell and Speechly Bircham, creating a 530-lawyer practice that moves into the UK top 30 with revenues of £134.5m, slightly ahead of the legacy firms’ combined income for 2013/14.
When Carter says private client, he means old-fashioned trusts and estates work. The firm is looking to position itself as a leading private wealth player, covering the full range of commercial legal services for the privately wealthy, including litigation and corporate. Carter wants CRS to leverage its strong reputation in areas including employment, media, sport and fraud practices, alongside private client in all its guises, including a second-tier family practice. Speechly Bircham, alongside its recognised strength in both contentious trusts, personal tax and probate, had a well-regarded mid-market corporate practice.
Still, CRS faces a considerable challenge to galvanise two brands that have struggled to sustain momentum, particularly in the case of Charles Russell, which achieved little growth between 2009 and 2014.
‘We look to combine private client services with commercial services,’ says Carter. ‘We talk far more about private wealth than private client, and private wealth means entrepreneurial, commercial services as much as traditional trusts and estates work,’ says Carter.
It is a strategy that has been deployed with startling verve and results by Mishcon de Reya over the last five years, the firm having seen its revenues grow 146% over that period.
Carter resists the suggestion that a key strategic imperative of the merger is to emulate Mishcon, suggesting that CRS has a broader international commercial service offering. (Speechly had offices in Paris, Geneva, Zurich and Luxembourg, while Charles Russell was in Geneva, Bahrain and Qatar.)
Indeed, CRS has some way to go to match that kind of financial performance – its PEP at £325,000 is halfway between that of the two legacy firms, and Carter concedes that investment in integrating accounting and document systems has had a perceptible impact on the bottom line. Such profitability also lags well behind its weight class, with the firm surely wanting to reach well over £400,000 in the near future.
Another area to tackle is completing the integration of the two firms’ remuneration systems. Although Carter says they are ‘not too dissimilar to each other’, a process needs to be followed and proposals should be put to the full partnership later this year. This means the firm is well on track to meet its target of using one remuneration system by 1 May 2016.
LB: How do you assess the nine months since the merger?
James Carter: ‘We’re 3.5% up on the combined revenues of the legacy firms. It’s fair to say that the integration of the two firms diverted the attention of some key rainmakers in the last trading period, which had a knock-on effect on turnover, which was below budget. However, we’re trading well for the first two to three months of the financial year.’
Has integration led to a significant hit on costs?
‘We had two office buildings on fairly long leases that we’ve been trying to consolidate to reduce overheads. We’re ahead of schedule on that, hopefully reducing our office space by about 30,000 sq ft, and the financial benefits of that cost saving should be evident in our 2016/17 accounts. IT costs have been significant; we had two different accounting systems that we’ve had to integrate as well as [two document management systems]. We’re already using one billing system and we should be rolling out a new document management system in September, so we’re ahead of schedule in terms of timetable, but there has been a notable impact on net profit, which is down around 10%. However, our equity partner drawings will be somewhat higher than we have reported as we will be spreading a chunk of the cost over five to ten years.
Other firms known for their strength in the private wealth space, such as Withers, have pushed hard internationally. Will you have to develop this side of your practice soon?
‘We will be looking at our international strategy over the next 18 months; it is key – that is why we opened in Luxembourg, for example. Singapore and Hong Kong are obviously key markets that we will take a look at. But we always said there would be an 18-month bedding down period for us first to integrate the two firms in London.’
mark.mcateer@legalease.co.uk
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