The three way union of CMS, Nabarro and Olswang cost the partnership £28.9m in ‘reorganising, restructuring and integrating’ the merger in the year to April 2018 the combined firm’s first LLP accounts showed this week (24 January).
But operating profit at the post-merger firm rose to £160m, up 30% on the £122.5m combined profits of the three legacy firms. The last accounts published for the firms pre-merger showed profits had fallen at all three in 2016-17.
CMS acquired assets worth £66.8m through the largest legal merger in UK history in May 2017, with Nabarro’s assets worth £51.3m and Olswang’s £15.5m.
The firm set up a £85m rolling credit facility with Lloyds Bank and RBS after the merger to finance its costs, fit-out of premises, as well as provide a contingency fund. A spokesperson for the firm told Legal Business that the credit facility had since been reduced to £65m.
Speaking to Legal Business last year, managing partner Stephen Millar put the total merger cost at about £50m: ‘We took 50% of that cost last year and we’ll take 50% this year.’
He added: ‘We have taken something which was a concept, turned it into a big story and then executed it, bringing a huge amount of people along. It’s worked from the day it went live.’
The accounts published this week also shed a light on how CMS plans to resolve legacy Nabarro’s longstanding pension deficit, which last year’s accounts showed stood at £17.2m at the time of the merger. The firm set out a recovery plan to eliminate the deficit by May 2022, as part of which the partnership will pay £4.85m into the scheme in the current financial year.
The 25 offices in the firm’s UK LLP turned over £517.6m, £29m up on the consolidated results of the three legacy firms.
Staff costs stood at £184.3m, more than twice the cost for legacy CMS as headcount rose 43% from 1,650 to 2,370. The firm’s highest earner took home £1m, up from £798,000 at legacy CMS in 2016/17. The remuneration of the firm’s management personnel rose from £2.8m to £3.9m.
CMS announced last week the opening of its third office in northern England in Liverpool, complementing legacy Nabarro’s Manchester and Sheffield offices.
For more on Millar’s vision for CMS, see ‘The CMS interview: Pains and gains’ (£)