Shakespeares: Much ado about mergers
10 July 2013 | By Hannah Gannagé-Stewart
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As you might expect from the CEO of a firm with a track record of making as many acquisitions as Shakespeares has, Paul Wilson is a pragmatic chap.
He has already stated publicly that he aims to grow his firm into a £50m mid-tier heavyweight by 2014. This year’s financials show a turnover of £39.6m, up 34 per cent on 2011/12 but still some way off the £50m target. Still, few would doubt Wilson’s ability to get his firm there (1 July 2013).
In fact, he says had the four months of 2012 during which legacy firm Harvey Ingram (16 July 2012) operated independently been included in the latest figures, Shakespeares would have been reporting a turnover of around £45.4m at the end of 2012/13. One more merger and Shakespeares - and Wilson - will be there.
One result of all the mergers is a rapidly growing staff at the firm. In April 2012 Shakespeares had a total of 398 lawyers and support staff. By the end of the last financial year the total headcount had almost doubled to 680.
Mergers are notorious for getting people’s backs up internally, so has there been any difficulty fitting members from the new firms into Shakespeares’ meritocratic partnership?
“People join us on the basis that they have to join our schemes. There’s a written standard of what a partner should look like and then each year they’re paid against that score”, Wilson says. “So, in theory, you could join the partnership and be right at the top of the equity in the first year”.
That would be pretty hard to do, he hastens to add, but the point is the possibility is there.
The firm’s governance structure is heavily decentralised as Wilson goes on to explain.
“All budgets are split across 25 teams of around £2m each and each team is measured on their own targets,” he says. “We don’t tend to drive from the centre because we believe in a proper partnership and we want small groups to work on their business as proper partners. There are 33 people actively involved in running the businesses and the board consists of only seven people, four of which are practice leaders.”
The firm’s sixth tie-up since 2010 with planning boutique Marrons is due to go live in September (31 May 2012). Along with another merger with a niche practice which is in the pipeline, Wilson expects the deals to add between £5 and £6m by the end of the 2013/14 financial year.
The team from Marrons includes two non-lawyer planning experts. Is that what prompted the ABS licence? Does Wilson envisage a greater role for non-lawyer input in future?
“We already had two non-lawyer members of the legal disciplinary practice so we had to convert to ABS,” he says, adding that he hasn’t yet decided what to do with the firm’s ABS licence.
“We’ve yet to see a serious impact from the introduction of ABSs in the UK legal market. We’re in the business of providing legal solutions to clients - and each year competition increases - the new entrants to our markets will change that competition and we’ll need to respond quickly and decisively. We don’t see the need for external investment at this point in our journey. We have a successful business model funded by our partners with very little debt.”
Wilson is straight up when it comes to the economic context in which all law firms are operating. He says there are too many lawyers in the market at a time when everyone’s seeing pressure on price and redundancies stories are frequent.
That said, it’s not in Shakespeares’ interests to see people leave the firm. Although there was some rationalisation of the business after the Harvey Ingram merger, namely the closure of the firms private client practice in the Cotswolds, Wilson does try to make the firm a place that people want to stay a part of.
“We want people to be part of us, but we’ll try to help people if they do want to leave. We release equity to departing partners straight away – we tend not to hold to to it – it’s returned very quickly, not within months or years” he says.
He is matter of fact on the firm’s pricing policy and remaining competitive, saying “we understand the cost of an hour. You’re trying to price jobs as a GC would want them priced – you have to look at what the clients want. Process law can be done very cheaply, but more technical law cannot so it depends very much on what the job is.”
He says there’s a broad range in Shakespeares’ prices, but for process-driven work that is performed by paralegal staff you might expect a rate of around £60 per hour, and for more complex advisory work from the firm’s top-earning partners it would be around £325.
He’s not easily drawn on fixed pricing but says if the client wants it, Shakespeares accommodates it. But it would be hard to generalise the prices that are offered.
Average lock-up at the firm stood at 160 days last year with clients expected to pay within 85 days of billing. But Wilson says there is less concern over WIP across the firm and more of a focus on performance and efficient delivery because, with 10 per cent of the business coming from personal injury and a substantial proportion of large property deals, it is expected that lockup will be reasonably long.
Wilson’s main objectives for the year ahead relate to his £50m turnover target. There will be more mergers and as clients place increasing pressure on price, teams will be asked to tighten their budgets by looking for efficiency savings. It’s the story of lawyers’ lives.