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Senior lawyers at other regional firms have suggested that a lack of clear strategy and failure to capitalise on rapid growth in 2003 and 2004 may have contributed to Cobbetts’ financial difficulties.
Sources said they were saddened by the news that Cobbetts was going into administration (30 January 2013), but added that, following the collapse of the firm’s merger talks with DWF last year (31 January 2012), it was not a complete surprise.
“They never really developed a commercial brand, never really became a serious player,” said a partner at a rival regional firm. “They were always a Manchester firm trying to break out of their straitjacket. I’m not sure they ever really did anything on their acquisition trail that really paid off. One of the lessons of Cobbetts is don’t do too much too quickly.”
Cobbetts expanded rapidly outside Manchester in 2002 to 2004, picking up Leeds firms Read Hind Stewart, Wilbraham & Co and Walker Charlesworth & Foster as well as Birmingham firm Lee Crowder.
Sources said they thought the firm had failed to capitalise on the mergers and had not clearly articulated its strategy in recent years, with the failure of the DWF talks signalling the nail in the coffin.
“I suspect they’ve not moved with the times enough,” said Frank Maher, a partner at Liverpool professional indemnity specialists Legal Risk.
“Something along these lines was relatively inevitable if they couldn’t find a merger partner,” said a partner at another Manchester firm.
Lawyers said the Cobbetts situation was different from that of former Manchester competitor Halliwells, which filed for administration in 2010 (25 June 2010), but suggested that the crowded Manchester market may be partially a cause of Cobbetts’ difficulties.
“I don’t think it’s necessarily a Manchester thing, but it’s at least partly because the Manchester market is crowded with small to mid-sized firms,” said one source. The partner added that Cobbetts’ large real estate practice would also have suffered from the financial crisis and competition from larger players in the local market.
Jomati principal Tony Williams added: “I think certainly in the last few years, London and the South East economies, despite their reliance on the financial sector, have been performing better than the rest of the country. I suspect things have been tougher outside London. Quite a few mid-sized regional firms also have a considerable exposure to NHS and local authority work and they’ve been cutting back themselves. In a flat market generally the winners and losers are starting to emerge as firms adjust or not to the new business environment. We have now witnessed what appears to be one of the losers in this process.”
Maher said the collapse of Cobbetts, a relatively short time after the Halliwells’ administration, could prompt insurers to look more closely at the finances of large firms as well as smaller ones.