As the partnerships of both Speechly Bircham and Charles Russell this week voted ‘overwhelmingly’ in favour of a merger that will create a firm with 170 partners, 500 lawyers and combined revenues of £135m, management at the newly-titled Charles Russell Speechlys are welcoming the prospects of becoming a top 30 UK firm.
Due to go live on 1 November, the union creates a private wealth powerhouse that Charles Russell’s senior partner Christopher Page says is ‘at the heart of the merger’.
‘We both have strong traditional tax and trust practices. But we’re trying to push private wealth which is where we are a winner – that’s where we will make sure all the divisions are covering,’ Page says.
Having begun discussions in January this year, Page and Speechlys managing partner James Carter tell Legal Business that the partnerships on either sides were always excited about the deal.
Of the pair, Charles Russell has highly-rated 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, has a highly-rated mid-market M&A practice.
The next 18 months will be a period of consolidation and maximising opportunities from cross-referrals. ‘It will be about getting the integration right,’ says Page.
From a financial perspective, the merger is far more one of equals that Speechly’s failed talks with Withers last year, where Withers’ PEP was £363,000 to Speechlys then £297,000.
As this week Speechly unveils its financials, preliminary figures show that revenue for the 2013/14 year was down slightly by 1.2% to £56.8m while net profit stands at £11.8m and profit per equity partner (PEP) rose 5% to £312,000.
Undoubtedly the larger of the two firms, Charles Russell also posted a more robust revenue growth of 7% to £73.4m in 2013/14, with growth across private client, real estate and a ‘storming year’ in litigation. But its PEP, up 5% in the same period, stands at £336,000 – far closer than its merger talks predecessor.
For Speechly, the PEP figure is not the rebound it had hoped after double digit partner exits saw it forecast a 25% growth in PEP this year.
Carter says: ‘Our approach last year was to set ourselves a target of maintaining fee income and net income levels but improve profitability. We didn’t achieve budget but then last year we didn’t assume to open any foreign offices, and we effectively doubled our foreign offices. Looked at in that light, we could have done nothing and just focused purely on profits or we could have taken steps to build the practice. It was a reasonable year.’
Looking ahead, both firms now have their eyes set on boosting their presence abroad. Speechly has offices in Paris, Geneva, Zurich and Luxembourg, while Charles Russell is in Geneva, Bahrain and Qatar.
‘In terms of expansion, we both have an appetite to go overseas,’ says Page. ‘Between us, we’re already covering a lot of the world – but we need the structure to be right. Our international committee will look at areas such as Singapore.’