Champagne at dawn as LG pops cork on Wragges merger
1 May 2014 | By Lucy Burton
27 January 2014
11 December 2013
25 November 2013
17 February 2014
18 November 2013
The combination of LG and Wragge & Co will go live today with the new partners admitted to the combined equity. The new entity will be known as Wragge Lawrence Graham & Co, although as Lucy Burton discovers, this is a name that will be kept under review.
Lawrence Graham (LG) officially merges with Wragge & Co today, although questions remain over just how many LG partners have been admitted to the combined equity partnership.
The bar to equity will be lower at merged firm Wragge Lawrence Graham & Co (a tongue-twisting name which is under review) than it was at LG. As a result, a combined remuneration committee has spent the last few months assessing LG’s 35 non-equity partners to decide if any cut the mustard.
Getting rid of its sacred all-equity partnership was a tough choice for Wragges, which had built an entire culture on the assumption that all-equity equals collegiality and internal efficiency.
But it was a necessary move if the merger was to happen, the choices being either to make all of LG’s non-equity members part of the merged entity or to create a two-tier partnership (27 January 2014). The merged firm is to return to an all-equity model once the merger is bedded in, a decision which was possibly agreed as part of the deal.
Following recommendations from practice heads, sources claim that at least ten of LG’s non-equity partners have now joined the merged firm’s equity. Senior partner David Fennell says a “decent proportion” made equity, but would not confirm or deny the exact figure.
The two firm’s senior partners, Fennell and LG senior partner Andrew Witts, hosted a meeting this morning (1 May) to celebrate the merger over a glass of champagne.
“The idea is that today won’t feel like a huge change, other than the changed name plates on our stationary,” Fennell comments, emphasising that the ambition was to make the transition as seamless as possible.
Asked if the firm would consider shortening its name from Wragge Lawrence Graham & Co, Fennell says it is a “possibility”, adding that the brand would remain under review.
The merged firm’s aligned remuneration structure, which was proposed to partners in a 100-page prospectus just before the merger vote, is a meritocratic system based on performance. A combined remuneration committee will retain control of decisions surrounding partner salaries and there will be no bonus pool.
HR directors have also aligned LG and Wragge’s employee benefits, such as rail passes and gym memberships, but the firm would not elaborate on any final details.
LG was slightly over-partnered compared with Birmingham-based Wragges; it logged a revenue per partner of £740,000 compared to Wragges’ £1m in the previous financial year. If the firms had fully merged net profit and equity partners it would have created a PEP of £322,000, not far under Wragges’ current figure of £339,000 (25 November 2013).
Meanwhile LG’s revenue per lawyer of £305,000 at the 2012/13 year end, benefiting from a London weighting, stacked up well against Wragges’ £263,000.
The two firms started speaking in 2009, when Wragges began drawing up a list of London merger targets as it looked to invest £20m in reserved cash (18 November 2013). However they decided not to go ahead with the tie-up, with Wragge’s partners showing little appetite to pursue a merger a year into the recession.
After the recent merger vote got the go ahead, Wragge’s senior partner Quentin Poole said: “Neither firm has gone through a metamorphosis since 2009. [The previous talks] were just after Lehman, everyone was very risk adverse and you didn’t know where the world would end up. It was a mighty, mighty uncertain time. Fundamentally, the waters are much calmer [now]. The environment looks more user-friendly.”
Much of this merger has been led by Wragge’s leadership director Jenny Hardy, who will continue to oversee the integration process.