Dawsons and Penningtons set for imminent merger
Lincoln’s Inn firm Dawsons is close to sealing a merger with private client firm Penningtons after coming under pressure to recapitalise and keep a grip on its core partnership.
Further changes at Dawsons saw corporate partners Bernd Ratzke and Ute Mueller quit for private client firm Boodle Hatfield.
According to sources close to Dawsons, the firm has been scouring the market for months for a merger partner to help it stabilise after suffering a series of exits and being hit with two significant lawsuits.
When merger talks with Fladgate Fielder broke down before Christmas the firm was forced to introduce a four-day week and implement wage reductions.
Last month (14 February) Dawsons managing partner Martin Codd told The Lawyer: “Like many other law firms at this time we’re facing a challenging economic climate and we’re taking the necessary steps to ensure the firm remains strong and profitable.”
Both Dawsons and Penningtons confirmed the merger talks, with any deal expected to go live in July.
Codd said: “These negotiations are ongoing and we’re therefore unable to comment further at this stage.”
A statement from Penningtons added: “Part of our growth plan is to consider possible merger partners. We’ve been impressed by Dawsons’ lawyers; their practice would be a good cultural and strategic fit with our own, complementing our existing strengths.”
While Dawsons’ turnover has remained relatively static over the past few years, in July last year it was forced to settle a High Court claim for unpaid fees brought by Simmons & Simmons (The Lawyer, 5 July 2010). The firm also settled a claim for unfair dismissal brought by former chief executive Jeremy Ward that November.
Ward was succeeded by Mark Dembovsky in March last year, but the latter has since left to join Howard Kennedy as chief executive.
Meanwhile, top family partner Suzanne Kingston recently announced that she is defecting from Dawsons to Withers, taking two assistants with her.
The firm is also under pressure to vacate its Lincoln’s Inn premises to make way for Hardwicke Buildings (The Lawyer, 14 February).
In terms of turnover, the past few years have been harder on Penningtons than Dawsons, with the former’s turnover dropping by 23 per cent, from £29.1m to £22.3m, between 2006-07 and 2009-10. Over the same period its partner headcount contracted by almost a third (28 per cent), from 67 to 48.
View results 10 per page | 20 per page | 50 per page
Readers' comments (29)
Dawson's creek | 14-Mar-2011 12:49 pm
What a truly uninspiring merger this is. It looks like Penningtons are just trying to bump up their turnover by this acquisition, but the quesiton is whether Dawsons can hang onto existing partners and staff. Does anyone know if there are any lock-in agreements in place?
Unsuitable or offensive? Report this comment
Anonymous | 14-Mar-2011 1:11 pm
@Dawson's Creek
You are a headhunter and I claim my 10 pounds.
Unsuitable or offensive? Report this comment
Anonymous | 14-Mar-2011 1:30 pm
To be fair to Penningtons, they finally got their act together by appointing David Raine as the firm's managing partner. Having worked at the firm, I know David and he is a really switched on guy. He knew the firm had to be of a certain size and he has gone out to deal with this. There won't be many good candidates in London and I think he has done well here.
Unsuitable or offensive? Report this comment
Super Dry | 14-Mar-2011 1:37 pm
how on Earth is getting together with another struggling firm going to be a good idea for Penningtons? And merging to just to bump up revenues and add on a few partners? That just means higher overheads for Penningtons' partners but no guarantee PEP will rise. If the market doesn't pick up in the next financial year it could kill off the whole, over-burdened new entity taking the legacy Penningtons partners with it.
Unsuitable or offensive? Report this comment
Anonymous | 14-Mar-2011 3:05 pm
David R. is a great guy and has made the best of a bad job. But as @superdry points out, the combination of two strugglers is unlikely to make one star. I bet they had a fight over the name : use yours. No I insist. Use yours....
Unsuitable or offensive? Report this comment
Anonymous | 14-Mar-2011 3:13 pm
From the comments of the previous writers I wonder how many of them have run a law firm or understand the pressures? Perhaps, if rather than trying to make funny (sic) comments they focused on the real facts of two firms trying to suceed, then their comments might have some value.
Unsuitable or offensive? Report this comment
Anonymous | 14-Mar-2011 3:27 pm
Well said Super Dry, there are no guarantees! I'm less sure about it substantially increasing overheads however as presumably one of the drivers for the deal is to take on the additional revenue without much by way of cost other than the direct costs of the partners and some staff. Seems to me like it could be quite an astute move by Mr Raine.
Unsuitable or offensive? Report this comment
Taggart ("There's been a merger!") | 14-Mar-2011 3:48 pm
Dear Anonymous @ 3.13pm (is it Raine or Codd?)
Two moribund firms merging is hardly a strategy for success...
Unsuitable or offensive? Report this comment
Anonymous | 14-Mar-2011 4:03 pm
I suspect (very strongly) that Super Dry is one of the aggressive head-hunters that have been plaguing Dawsons and who is now in danger of losing a fee from one of his partner candidates. Oh, I feel so sorry for you.
Unsuitable or offensive? Report this comment
Anonymous | 14-Mar-2011 4:08 pm
Dear Anon at 3.13pm.
"[former chief executive] Ward was succeeded by Mark Dembovsky in March last year, but the latter has since left".
Doesn't sound positive if the old CEO left and made a claim against the firm and then his replacement did not even last a year in the job. Who is really managing this place?
Did someone say anything about lock-ins? Is there anyone left to lock in save for the man left to turn off the lights
Unsuitable or offensive? Report this comment