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After the Withers fiasco, Speechly targets a more realistic link with Charles Russell
Merging firms with different histories, characters and personalities is never going to be easy. That’s a lesson Speechly Bircham has learned the hard way.
Last year’s failed merger talks with fellow private client-focused firm Withers fell flat after just two months of discussions. The collapse was partly due to the sheer size of its suitor. Withers had 12 offices to Speechly’s five, and more than twice the global revenue – £117.8m as opposed to £57.2m.
“It was definitely going to be a takeover by Withers,” says a source close to Speechly. “The partnership structure would have changed, so Speechly partners would have been a rung down from Withers. Even the equity partners weren’t happy with the idea.”
So this time round the firm has set its sights on a firm of a more equal stature: Charles Russell has six offices, a £68.9m turnover and similar legal specialisms, notably private client.
The two are well known to each other. They have distinct practice overlaps and frequently compete for the same client appointments.
“Charles Russell is accepted as a peer firm,” says one insider, while another insists that “they’re definitely a better fit than Withers”.
However, despite their many commonalities the two firms also have some fairly enormous obstacles to wrangle over.
For starters, there’s the small matter of office space. Both Speechly and Charles Russell took on flashy new City offices just as the credit crunch took its grip, in 2008 and 2009 respectively.
Speechly initially took on 80,000sq ft over six floors at New Street Square, before gradually reducing that to around 64,000sq ft. According to The Lawyer UK 200 it shelled out £3.5m in rates and rent in 2012/13.
Charles Russell, on the other hand, resides in 78,000sq ft at the City’s 5 Fleet Place which cost the firm £5.4m over the course of the last financial year.
That’s about 6 per cent and 7.8 per cent of the firms’ total revenues for 2012/13 spent on their City residences alone. And it is thought that neither has a break clause approaching soon.
The firms’ IT systems are understood to be another sticking point.
“Their IT systems are beyond incompatible,” says one source. “There’s a lot of groundwork to be done to find out if it’s viable.”
Despite these challenges, the consensus is that Speechly is not going to let this merger slip from its grasp without a fight.
As one insider puts it, “when Speechly goes for something it goes hell for leather”.
The firm will be hoping that this time it has picked the right sparring partner.