Cobbetts' path to administration
30 January 2013
Manchester firm Cobbetts has confirmed its intention to appoint administrators and is actively seeking a buyer for its business. Here we look back at the events that led the firm from a merger-hungry North West leader in 2004 to a firm on the verge of collapse in 2013.
Cobbetts sought to overtake Manchester rival Pannone in the turnover stakes after merging with Leeds-based Read Hind Stewart.
The firm launched an office in London to service international clients gained through its merger with niche Manchester mining firm Fox Brooks Marshall.
Cobbetts and Birmingham’s Lee Crowder agreed to merge on 1 May 2004, creating a top 50 firm based on turnover.
Cobbetts completed its fourth merger in 10 months after taking on the Leeds office of niche housing practice Walker Charlesworth & Foster.
The firm continued its merger frenzy by taking on Leeds-based planning boutique Wilbraham & Co, a deal that went live in September 2004.
Cobbetts planned to jettison up to 20 partners once a consultation on the firm’s future concluded.
The firm’s LLP filing revealed full extent of difficult year, leading it to set in motion plans for a new corporate structure designed to radically overhaul its routes to partnership.
Cobbetts embarked on a major overhaul of its partnership structure, leaving the futures of eight partners undecided and seeing another 17 preparing to leave within five years.
The shockwaves from Cobbetts’ dramatic partnership overhaul began to be felt with the departure of two lawyers for rival DWF.
The firm unveiled plans to restructure its real estate finance practice following the loss of five lawyers to Halliwells resulting from a firmwide partnership overhaul earlier this year.
Cobbetts made six redundancies, four of whom were associates, across its domestic conveyancing and professional support departments.
Cobbetts and Halliwells launched further redundancy consultations, with 28 support staff at risk at Cobbetts, as they sought to cut costs in the face of a looming recession.
The firm increased its bank loans and overdrafts by £4.3m from 2007 to 2008 - the equivalent of almost 10 per cent of total firm turnover - according to LLP accounts filed by the firm for the 2007-08 financial year.
Cobbetts posted a drop in fee income of 16 per cent for the 2008/09 financial year.
The firm declined to comment on its profit and mounting speculation that its margin had plummeted to unprecedented levels. It later introduced a four-day week across its transactional practice groups in a bid to avoid making and further job cuts.
The firm’s LLPs revealed that it did post a profit in 2009-10, despite its reticence over discussing its figures.
The former accounts clerk at Cobbetts’ Manchester office, James Hollingworth, was jailed for 15 months after admitting stealing £20,000 from client accounts.
Cobbetts called off merger talks with DWF because of “uncertain market conditions”, just a week after the two firms confirmed that they were discussions. Prior to the confirmation, The Lawyer reported that not everybody was on board with the move - including Cobbetts’ managing partner at the time Michael Shaw. The combination would have created a firm with around £132m in turnover and 1,798 staff. DWF later merged with Birmingham’s Buller Jeffries, Scottish firm Biggart Baillie and Scottish professional indemnity practice Fishburns.
Following the termination of its merger talks with North West firm DWF, Cobbetts’ London office took a hit as a six-lawyer team joined Canadian firm Gowlings in London. Charles Bond, Sefton Collett, Dominic Prentis and Andrew Wright - who led Cobbetts’ public markets team - joined Gowlings’ energy, infrastructure and mining industry group as partners. They also brought two directors with them - Susan Johnston and David Brennan. In the same month, its Manchester office lost corporate partner Ian Riggs to Hill Dickinson.
Cobbetts elected head of dispute resolution and board member Nick Carr as the successor to long-serving managing partner Michael Shaw, who stepped down and became a consultant after spending 16 years in the post. In the same month, the firm posted a marginal increase in turnover for 2011/12, up 1.6 per cent to £45.2m. According to the firm, business restructuring services and litigation teams both delivered “stand-out growth”, with the litigation practice posting an 8 per cent rise in revenues. A statement from senior partner Stephen Benson said: “These results provide the platform for consolidating our position as a regional leader and building on our successful and growing international work.”
Cobbetts streamlined its management structure to create three new business practice groups and an executive team led by managing partner Nick Carr. The three groups are business services, dispute resolution and real estate. According to Carr, the creation of three distinct business practice groups was to help streamline the strategic and operational management of the business, while enabling the firm to focus on its core strengths. Following the restructuring the firm promoted five partners across Manchester, Leeds and London. It also appointed former DLA Piper IP partner Marie McMorrow as a partner in Birmingham.
The firm sued food manufacturer Big Bear Group, which owns Sugar Puffs and Fox’s Glacier Mints, claiming the company owed it over £255,000 in unpaid fees. It instructed Maitland Chambers’ Dominic Chambers QC for the case.
Cobbetts entered into a strategic alliance with a Saudi Arabian lawyer in a bid to capture work coming out of the region. Its tie-up with Jeddah-based Dr Nidal Atta gave the firm a presence in the Middle East and North Africa area for public and corporate work. It’s the first strategic alliance of this kind for the firm. Cobbetts partner Mark Green, who drove the firm’s Middle East expansion, said at the time that the firm had been actively seeking to further expand its international footprint, particularly in the Middle East.
Barely a month prior to the announcement of its intention to file for administration, Cobbetts took on four lawyers from rival firms, three in Birmingham and one in Leeds.
The firm confirmed that it was looking for buyers after filing a notice to appoint administrators.