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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.