Irwin Mitchell has posted a revenue increase of 6% for the last financial year from £221.3m to £235.2m, with profit before tax of £12.3m.
The results represent a solid performance in the first full year of combined financials with south-east firm Thomas Eggar, which Irwin Mitchell combined with in 2015. Last year the firm posted an 8% turnover rise to £221.3m, which included four months of trading with Thomas Eggar.
Work highlights for 2016/17 included co-ordinating real estate advice to National Grid as part of a deal to dispose of majority stake in its gas distribution network, which included the transfer of over 10,000 properties. The firm launched its private wealth group and was also named Private Client Team of the Year for the second year in a row at the Legal Business Awards. In addition, Irwin Mitchell Group company IM Asset Management has over £500m of assets under management.
As a result of the Thomas Eggar merger, profits at the firm were ‘sacrificed’ in 2016, falling by 25%. The sharp drop in profits was put down to a deliberate decision by the board to ‘fast-track the integration’, which led to a ‘short-term impact on profitability’. Irwin Mitchell does not operate a traditional law firm partnership and partners are remunerated according to salaries and bonuses, not profit shares, therefore the firm does not publish a profit per equity partner (PEP) figure.
In the firm’s first LLP accounts since the acquisition, published late last year, showed the firm’s profit on ordinary activities had dropped by 59% to £8.4m from £20.6m.
Commenting on the recent financials, group chief executive Andrew Tucker (pictured) said the firm had made significant progress in a number of areas last year and he was excited about future prospects.
‘The group has responded positively to challenging external conditions and I’m pleased to say that this hard work is reflected in these financial results. I’m very optimistic about the opportunities across the group and our strength in breadth gives us a great platform to build on.’
Irwin Mitchell‘s first LLP accounts since the acquisition of Thomas Eggar in December last year show the firm’s profit on ordinary activities has dropped by 59% to £8.4m from £20.6m.
Irwin Mitchell claims the sharp drop in profits is down to a deliberate decision by the board to ‘fast-track the integration of Thomas Eggar which has led to a short-term impact on profitability in FY16 but which we view as being the right decision longer term to enable us to maximise the return on synergies between Irwin Mitchell and Thomas Eggar as soon as possible.’
The decrease in profits is despite the fact that LLP revenues have increased by 7% to £199m from £186m, largely as a result of the Thomas Eggar acquisition – the largest in the firm’s history. According to the report, the firm also borrowed £29m, which is due within two years.
According to the firm’s business review: ‘The merger advanced a number of strategic objectives for the LLP, including adding new offices and experts in the core London and south east market; adding significant strength and depth to the business legal services division; and adding the specialisms of a number of Thomas Eggar teams to the existing private client and private wealth experience at Irwin Mitchell and Berkeley Law, acquired by the firm in November 2014.’
The LLPs also state that members are: ‘required to contribute capital amounting to 30% of notional salary plus any guaranteed profit share within two months of becoming a partner as and when required by HMRC legislation.’
In addition to turnover, the accounts reveal the firm’s operating costs at 30 April 2016 rose – from £60m to £70m, while other operating income rose from £72m to £86m.
On the other hand, operating profit fell from £53m to £45m, while profit for the financial year before members’ remuneration and profit shares fell from £53m to £44m. Goodwill since the Thomas Eggar merger was valued at £24m, up £19m from the year before.
According to the accounts, the amount paid out to the member with the largest entitlement to profits was £4.2m, down from £14.6m. The accounts said that this related to a corporate member.
Persse was a partner at Irwin Mitchell for the last ten years, where he managed the corporate department in the London office and also headed up the firm’s international strategy group and in-house programme. He has experience in domestic and international private capital, M&A and joint venture transactions and was also previously at Baker & McKenzie.
Smith focuses on domestic and cross-border M&A, investment, joint venture and corporate advisory transactions, acting regularly for SMEs, venture capitalists, investment companies and funds.
Commenting on the hires, Greg Leyshon, head of OC’s corporate department said: ‘In Ed and Paul, we have two very strong additions to the business. As highly regarded practitioners, their broad sector focus and technical and commercial know-how make them a great fit for our clients, our business and our people. We look forward to having them at the firm, and to the contributions they will bring.’
Last month, Dentons took five partners from Irwin Mitchell in London, strengthening its London banking and finance practice with the hire of Simon Tweedle.
The firm also appointed real estate head Rob Thompson, real estate partners Lewis Myers and Rupert Dowdell and head of corporate real estate Jayne Schnider.
Additionally, head of employment Chris Tutton left for boutique Constantine Law in August after his resignation in March, while litigation partner Daniel Brumpton moved to Manchester-based Berg in July.
In November last year, the firm announced a merger with south-east based Thomas Eggar to create what was billed as a £250m firm.
Irwin Mitchell has posted a disappointing profit result after last year’s merger with Thomas Eggar, with profit down by more than 25%.
The group’s chief executive Andrew Tucker said the lacklustre result was a ‘combination of investment and a necessary focus on the merger and successful integration.’
Irwin Mitchell’s revenue came in at £221.3m. This is up just 8% on the year prior and included about four months of trading with Thomas Eggar.
Tucker (pictured) added: ‘The board is comfortable that sacrificing profit in the short-term will deliver greater benefits to the business in the medium-term as we reap the return on investment and the improved strength and breadth of depth the merger has given us.
‘Our focus in 2016/17 is on completing the successful integration, maximising the opportunities for growth which arise from the greater strength and depth we now enjoy. Our vision of being the legal brand of choice continues and we have a clear strategy to ensure we maintain our progress.’
Yesterday (23 August) Legal Business revealed Irwin Mitchell had lost a fifth partner to Dentons with the departure of real estate finance partner Simon Tweedle. Last week, Dentons confirmed it had appointed four partners from Irwin Mitchell, with real estate head Rob Thompson, real estate partners Lewis Myers and Rupert Dowdell and head of corporate real estate Jayne Schnider all moving.
The group arrived from SJ Berwin as part of a 20-strong team move to Irwin Mitchell in 2010, while former colleagues Jo Footitt and Louise Cartwright also recently departed for Osborne Clarke in hires announced in June
Following six months of talks, Irwin Mitchell and Thomas Eggar voted to approve a merger last November with plans to establish a leading private wealth business.
Dentons has strengthened its London banking and finance practice with the hire of Irwin Mitchell partner Simon Tweedle, its fifth hire from the firm in the past fortnight.
On Friday (19 August), Dentons confirmed it had appointed four partners from Irwin Mitchell, with real estate head Rob Thompson, real estate partners Lewis Myers and Rupert Dowdell and head of corporate real estate Jayne Schnider all moving.
Dentons confirmed its most recent City hire to Legal Business, with Tweedle becoming the fourth former SJ Berwin partner to leave Irwin Mitchell for Dentons, after Thompson, Myers and Dowdell.
The group arrived from SJ Berwin as part of a 20-strong team move to Irwin Mitchell in 2010, while former colleagues Jo Footitt and Louise Cartwright also recently departed for Osborne Clarke in hires announced in June.
The Legal 500 cites Tweedle as a leading individual in property finance, and his previous work includes advising Raven Russia on a $180m property loan and acting for Mercer Real Estate in its £64m acquisition of Mitre House in the City.
With 18 years’ legal experience, Tweedle returns to Dentons having trained at legacy Dentons Wilde Sapte. He moved to Sidley Austin in 2003, before serving in-house as legal counsel at real estate finance service Capmark, ahead of a move to SJ Berwin in 2008.
UK top 25 firm Irwin Mitchell has seen a number of departures this year, with the real estate practice particularly impacted in this summer’s moves. Head of employment Chris Tutton also left for boutique Constantine Law in August after his resignation in March, while litigation partner Daniel Brumpton moved to Manchester-based Berg in July.
The firm said in a statement: ‘We will continue to progress our strategy and invest in profitable areas of Business Legal Services (BLS) and the wider group – including in our real estate teams across the UK, the rest of BLS and the wider Group. Irwin Mitchell (IM) has diversified significantly in recent years, notably with the rapid expansion of BLS and the development of IM Private Wealth. That diversity is a key differentiator in the market, gives us greater stability and flexibility in a changing market and is a core contributor to our ongoing financial strength.’
In November last year, the firm announced a merger with south-east based Thomas Eggar to create what was billed as a £250m firm.
London real estate head Rob Thompson joins Dentons with partners Lewis Myers, Rupert Dowdell and head of corporate real estate Jayne Schnider. London planning and infrastructure head Martha Grekos is expected to join Howard Kennedy.
Irwin Mitchell’s City real estate practice has been hit by a wave of departures this summer, with partners Jo Footitt and Louise Cartwright moving to Osborne Clarke in June.
Much of the Irwin Mitchell’s real estate team, including Thompson, Myers, Dowdell and Footit, originally left legacy SJ Berwin to join Irwin Mitchell in 2010 as part of a 20 strong team move, while Grekos arrived Irwin Mitchell less than 18 months ago from Eversheds.
Dentons UK managing partner Brandon Ransley said: ‘This is an excellent opportunity for us to acquire four market-leading real estate-focused partners. These partners have worked together for many years, and their arrival will add heavyweight investment expertise to our credentials, while significantly enhancing our existing capacity to deliver the corporate and finance aspects of big-ticket real estate transactions, both in the UK and internationally.’
The international firm also recently strengthened its London corporate practice with the hire of Jonathan Cantor from Nabarro, who specialises in real estate investment.
Irwin Mitchell has increased diversity within its partnership in this year’s promotion round, with six females making the cut out of 13 total appointments.
Taking effect on 1 May, eight promotions were made within the firm’s personal legal services division, four within its business legal services division and one in the firm’s asset management department. The firm focused on practices including banking and finance, real estate, corporate and commercial, personal injury, court of protection, and public law across its Bristol, Birmingham, London, Newcastle, Leeds, Sheffield and Southampton offices.
The promotion round also includes associate Ed Tomlinson appointed to associate director, the partner-level equivalent for non-lawyers.
It’s a significant leap on last year’s numbers when seven lawyers made it to partner – although notably six of those promoted were female also.
The news follows the launch of Irwin Mitchell’s private wealth business last week, and its merger last year with law firm Thomas Eggar that gave combined revenues of £250m. Irwin Mitchell has carved a name for itself in the private client space also having acquired Mayfair boutique Berkeley Law in November 2014.
Irwin Mitchell group chief executive Andrew Tucker said: ‘Partner appointments represent a major investment in our people and reflect the hard work and dedication each person has given to our clients over the past years. Added to the extensive investment we have made in our business over the past year, these appointments show the range of experience we have to offer clients and leave us in a good position to continue our growth plans.’
Partner promotions 2016:
Tim Annett, personal injury, Sheffield
Andrew Buckham, personal injury, Southampton
Rohan Campbell, banking and finance, London
James Knowles, real estate, Leeds
Rob Laugharne, corporate and commercial, Birmingham
Jennifer Lund, personal injury, London
Claire Newstead, personal injury, Leeds
Paul Smith, corporate and commercial, London
Justine Spencer, personal injury, Southampton
Polly Sweeney, public law, Bristol
Katie Thackray, court of protection, Newcastle
Charlotte Waite, court of protection, Bristol
Irwin Mitchell Asset Management
Ed Tomlinson, chartered financial planner, Sheffield
LB25 firm Irwin Mitchell has slashed the amount given to its highest paid earner by 30% from £1.22m to £849,000, despite a lift in profits, the firm’s accounts show.
The accounts, which cover Irwin Mitchell’s LLP as well as its alternative business structures, said the firm had almost 8% more fee earners in 2014/15 from 1,256 to 1,351 and eight more administrative staff to 809 people. This lead to an increase in the firm’s payroll costs by 7% to £70.13m from £65.51m.
The accounts also reveal the firm’s net cash position at 30 April 2015 has improved from a deficit of £713,000 to a positive balance of £801,000. The firm has a £45m revolving credit facility and a £15m bank overdraft which runs until March 2018.
While the firm has more cash in the bank, the amount it owes to creditors has risen – the firm reports trade creditors are owed £49.63m up from £39.94m, while other creditors are owed £90.7m from £72m. The sum owed to other creditors includes cash deferrals relating to recent acquisitions Berkeley Law and MPH Solicitors.
Irwin Mitchell announced its takeover of private weath boutique Berkeley in November 2014. The accounts show the transaction valued Berkeley at almost £9m, made up of £4.6m in shares, cash of £1.75m and deferred consideration of £2.6m.
The acquisition of MPH Solicitors, which was bought in November 2013, brought in £3.4m in turnover and £1.2m in operating profit in its first full financial year to April 2015, was also part purchased on a deferred credit basis, as such the total sum still owed to other creditors at balance day on the purchase of MPH and Berkeley was £3.25m.
In its directors’ report the firm said the 4% growth in group revenue from £203m to £211m reflected continuing growth in its complex PI and business legal services operations further offset by the decline in PI revenues as a result of legal reform in the area. Pre-tax profit was up 6% to £181m from £171m.
‘The directors plan to grow all areas of the business during FY16 with through a combination of further recruitment, investment in the Irwin Mitchell brand, organic growth and further M&A activities as opportunities allow,’ the accounts state.
The accounts were not impacted by Irwin Mitchell’s recent takeover of Thomas Eggar, which was announced in November 2015.
In a move that demonstrates consolidation is still very much on trend for national law firms, Irwin Mitchell’s continuation of its aggressive expansion policy by merging with the south-east based Thomas Eggar this month has garnered a mixed reaction from the market.
It is clear that Irwin Mitchell – a law firm traditionally known for its personal injury work as its omnipresent TV advertising campaigns have proved – has been moving further into the private client and commercial sectors following its acquisition of Mayfair boutique Berkeley Law a year ago. The national firm has needed to significantly diversify its revenue streams, with PI fees being hit hard and another government crackdown on claims recently announced in the Autumn Statement.
This push into private client and commercial services has been enhanced by its merger with Thomas Eggar, which is regarded as having a heavyweight private client practice in the south east and cited as top tier in the regional section of The Legal 500 for planning and sports law.
‘It is interesting because of Irwin Mitchell’s acquisition of Berkeley Law last year,’ says one partner in the management team at a national firm. ‘Clearly they are very interested in private client – we thought the Berkeley Law acquisition was very interesting because that was a very top quality, niche private client practice. Private client can be really profitable but you have to be in the right part of the market. You have to be doing it for relatively high-net-worth people.’
According to another peer, Irwin Mitchell had been looking in the south east for some time for the last few years in a bid to build out its national coverage. The firm already has a Southampton office, but it is one of its smaller offerings with 27 staff.
‘From their perspective I can see why it makes sense because they were desperate to get some big footprint in the south-east of England. They are strong in the north and the midlands; they have a Scottish operation. They have wide coverage but if they want to be a truly national firm I guess they had to have a proper flag in the ground in the south east.’
The acquisition of Thomas Eggar is the largest individual deal in Irwin Mitchell’s history, and those at the firm are upfront about continued expansion being a major part of the firm’ strategy – through further acquisitions and growing organically.
A spokesperson for the firm said it would be looking for further organic growth but would also make acquistions where they would clearly add value to shareholders. The firm brought in a head of corporate finance – Chris Belsham – in 2014, whose role is to look for new opportunities.
As for funding this rapid growth, many touted Irwin Mitchell as the firm most likely to pioneer a law firm IPO in the UK before Gateley broke that particular ground this year. Irwin Mitchell had turned to its banks for finance in 2014, converting its overdraft facility into a £60m loan package.
But while Irwin Mitchell appears to have all but abandoned the idea of going to the public markets for now it was particulalrly vocal about the advantages of floating on the stock exchange back in 2011 and is known to have brought in some heavweight lateral hires on the basis that a signifcant capital payout was likely.
The firm says it has not ruled an IPO out. ‘As far as an IPO is concerned we are often looking at it because why wouldn’t we in terms of understanding if it’s right for our business in terms of raising money?’ says the spokesperson. ‘It’s not something that’s key to us, it’s just an option like it is for lots of other companies.’
Overall, this latest tie-up with 175-lawyer Thomas Eggar – which has six offices in Chichester, Gatwick, London, Newbury, Southampton and Worthing – looks to be a good bolt-on for Irwin Mitchell. However, some in the market are sceptical about the benefits for the smaller south-east outfit.
Irwin Mitchell may have originally approached Thomas Eggar regarding the tie-up but one partner at a rival regional player firm suggests that Thomas Eggar would have been only too happy to merge, given recent struggles with profitability. The firm announced flat revenues of £41.1m for the financial year 2014/15, although revenues are up 18% since 2010. Profitability is weaker than a number of LB100 firms based in the south, including Stevens & Bolton, Cripps and Birketts.
‘Profits per equity partner were £259,000 last year,’ adds the partner. ‘For a firm of that size in terms of headcount and turnover – it’s just not good enough really. And I suspect that Vicky Brackett [Thomas Eggar’s managing partner] was desperate to find some solution to try and improve profitability because when you have low profits you can’t keep your best people. It’s a fact of life. Nor can you attract good new people. Whether this is the answer, I just don’t know.’
Speaking to Legal Business earlier this year, Brackett said the firm had been approached almost every day for a merger and would merge in the right circumstances, including geographic advantage, and the deepening of a particular service line that is selling well – ‘ the ‘expertise merger.’ She also mentioned that consolidation was ‘certainly on the radar.’
On that basis certainly there are obvious attractions to the union. Yet for all the talk of practice synergies and geographic spread coming out of the two firms, there remains little information on the cultural fit. It remains to be seen how a predominantly northern personal injury firm known for its acquisitive nature will gel with a traditional south east firm with a strong focus on private client work.
Not that cultural fit particularly matters in what is by any measure a takeover by the sprawling national player. Thomas Eggar will adopt Irwin Mitchell’s brand in the first half of 2016, while Brackett will join its executive board. The 22 equity partners at Thomas Eggar will be become full share partners at Irwin Mitchell, according to the firm.
The interesting question is whether being ‘the legal brand of choice’ will carry much weight with wealthy landowners in Sussex, or with some of Thomas Eggar’s experienced private client partners.