From within the over-crowded space that is the lower of half of the LB100, beleaguered 139-lawyer Manches has emerged as being engaged in advanced merger talks with private client firm Penningtons to create a £60m firm with over 300 lawyers.
Manches was earmarked as a firm in need of a merger in this year’s LB100 analysis, after turning out one of the worst performances of the group – in notable contrast with other firms focussed on the burgeoning private client sector – with revenues down by 13% to £26.3m, shifting the firm down 11 places to 93, its lowest rank ever in the table.
The firm’s profit per lawyer (PPL) was this year at a low of £15,000, a 67% drop from the first LB100 in 1993, when the firm’s PPL was £44,900. Profit per equity partner (PEP) at the 47-partner firm also dropped to £134,000 during the last financial year, compared to £235,000 in 2011/12, a drop of 43%.
Factors blamed by the firm for its financial decline include the loss of star family partner Helen Ward and a team of seven family lawyers, together with a flat market for mid-size transactions and the impact of the recession, particularly on the property team, where a number of projects were put on hold or postponed.
Conversely at Penningtons, where 2012/13 revenues increased by 1% to £32.5m – a 14% increase over five years – chief executive David Raine described his firm’s performance as a ‘good year in a tough market.’
Confirming the talks Richard Smith, managing partner of Manches, said: ‘I can confirm on behalf of all the Manches offices that we are in discussions with the management team at Penningtons LLP concerning the possibility of a merger between our two practices. It has been agreed by both firms that these talks are being undertaken on a confidential basis. We are therefore not currently in a position to make any further public comment on their likely outcome.’
If the merger does go through the combined firm will remain in the bottom 50 of the LB100.
For more on the challenges facing firms in the second 50 of the Legal Business 100, click here.