Legal Business

Details emerge of terms of Cobbetts’ fire sale

DWF acquired Cobbetts’ work in progress (WIP) from KPMG in February for £3.8m as details emerge of the Manchester firm’s fire sale.

KPMG was instructed on 17 January to start administration proceedings, although Cobbetts’ lender, Lloyds TSB, had engaged KPMG in September to formulate contingency plans as the firm was beginning to falter. Continued trading was dependent on the support of Lloyds TSB, which was only prepared to provide monies to pay January wages and other outgoings if Cobbetts granted security.

Legal Business

DWF makes 38 redundancies post Cobbetts pre-pack

DWF makes 38 redundancies post Cobbetts pre-pack

Following its acquisition of Cobbetts, DWF has laid off 38 staff from its central services support team following a consultation which ended last Friday (22 March).

DWF initially placed 140 staff under redundancy risk but 83 have now been placed into roles and 21 are still in the selection process.

The firm said the move was ‘inevitable with an acquisition of this size and nature’ and that ‘there was an element of overlap of roles’.

DWF acquired Cobbetts in February after the latter filed for administration.

There are currently 40 vacancies and the firm is encouraging those at risk to apply where they see fit. DWF also said that it was providing career workshops for those affected by the redundancies.

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In a statement, the firm said: ‘Further to the announcement last month that it had acquired Cobbetts LLP, DWF has now confirmed that as a result of the move, 38 roles within the now combined Central Services teams are to be made redundant.’

The Cobbetts deal marks a busy acquisitive period for DWF. In January, the firm merged with professional indemnity outfit, Fishburns. In June last year the firm united with Scotland’s Biggart Baillie and tied the knot with Birmingham based Buller Jeffries four months later. In 2011 it took over Newcastle outfit Crutes. The firm seems intent to grow into a serious national player.

DWF recorded revenues of £102m for 2011/12 but with this recent string of mergers the firm could be set to break into the top 20.

david.stevenson@legalease.co.uk

Legal Business

DWF looks to acquire a stricken Cobbetts in pre-pack deal

DWF is set to acquire Cobbetts in a pre-pack deal, after the struggling Manchester-based firm called in administrators KPMG last month.

The top 40 UK firm announced its intentions to acquire Cobbetts almost a year after merger attempts by the two firms failed. At the time, a joint statement said talks had finished because of ‘continuing uncertain market conditions’.

Under the agreement, DWF will take on 419 staff, including partners, from the fallen firm in Leeds, Manchester, London and Birmingham. The DWF deal does not include Cobbetts’ debt recovery team, Incasso, while Walker Morris has taken the firm’s 24-strong financial litigation team.

Legal Business

Manchester market takes another hit as Cobbetts seeks saviours

Manchester market takes another hit as Cobbetts seeks saviours

With Manchester-based Cobbetts on the verge of administration, signalling increasingly difficult market conditions in the north, local rivals will surely be able to snap up some bargains and save jobs.

The firm, ranked 62nd in the LB100, announced on 30 January that it was seeking to obtain ‘statutory moratorium to enable a sale of the business and assets of the firm to be concluded in a short time’. The news has sent shockwaves across the legal market and puts Manchester at the epicentre of law firm casualties following the demise of Halliwells in 2010.

Local rival DWF, which was involved in merger talks with Cobbetts a year ago, must be thanking its lucky stars that the deal didn’t come off. Both firms cited ‘difficult economic conditions’ as the reason behind calling a halt to discussions. The truth is that Cobbetts, which was heavily geared towards corporate and real estate work, had been struggling for some time. DWF has since confirmed that it intends to acquire Cobbetts as part of its strategic growth plans.

It is believed by the members of both firms that a sale to DWF represents a solution that would secure the most favourable outcome for its creditors, members, people and clients,’ said a statement from DWF.

Last year Cobbetts posted a 2% increase in revenue, while its PEP rose by 16%. But the firm’s compound annual growth rate (CAGR) across the last five years was –5% signalling a difficulty to grow business. In 2010 revenues fell to just under £44m, down from £59m in 2008. Cobbetts’ downfall is the latest high-profile example of a firm becoming the victim of the disappearance of the transactional market and a lagging real estate sector.

Much like the Halliwells collapse, Cobbetts is now going to hope and pray that a number of white knights come storming in to swallow up and save parts of its business. Cobbetts has long maintained a reputation for quality individuals in corporate and real estate, which will present opportunities for acquisitive firms such as DWF.

One north-based management figure observed: ‘What Cobbetts tried to do was create a national brand and grow into the corporate space from a relatively smaller base. It’s a difficult task.’

‘I suspect it’s a process, they had ambitions to get to a particular point and you go out and invest in new offices, but it takes time to build those up,’ they added. ‘The recession came in so getting growth is difficult and if you’ve got new offices and you take a 5% hit on your margin – which is low anyway – it hits hard. That’s been their challenge.’

A statement from Cobbetts says:

Having regard to the difficult trading conditions in the professional services sector we have reluctantly concluded that the appropriate course at this time is for the firm to obtain the protection of an interim statutory moratorium to enable a sale of the business and assets of the firm to be concluded in a short time frame.

‘We are also working closely with our regulator, the SRA, with all stakeholders and our professional advisers to achieve the best outcome for creditors, clients, employees and members. We remain confident that we will be able to provide a further positive update in the very near future.’

This latest development shows that no firm is too big to fail and it’s crucial for all firms to ensure that they are competing at the right level in unforgiving markets.

emma.sadowski@legalease.co.uk

Legal Business

Scottish fire sale continues as DWF snaps up Biggart Baillie

Merger fever continues to grip the Scottish legal market after veteran firm Biggart Baillie announced in June that it would be joining forces with ambitious Major UK firm DWF on 1 July.

The merger between Biggart Baillie, a Scottish blueblood which can trace its origins back to 1894, and LB’s 2011 National/Regional firm of the Year DWF, is the fifth Anglo-Scottish union since the start of the year. It follows a joint venture between DAC Beachcroft and Andersons, which was announced in March; the acquisition of niche Scottish practice Anderson Fyfe by TLT, which takes effect in July; the announcement in June that Shoosmiths would acquire Archibald Campbell & Harley; and the high-profile merger of Pinsent Masons and McGrigors, which went live on 1 May.

Legal Business

Leeds market set to change markedly as top tier loses talent

Firms operating in the Leeds market have been in a state of flux recently, with the region’s mid-tier firms taking advantage of the shrinking headcount at the larger players.

Despite troubling economic conditions in the Leeds market, Gateley was not deterred, and opened its Leeds office in January, marking the firm’s eighth office in the UK.

The move saw Gateley hire restructuring partner William Ballmann and finance litigator Rob Payne from Cobbetts to launch the office. Ballmann is set to run Gateley’s Leeds outpost.