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Morris in wholesale review of strategy as average profits per partner set to dip below £300K
Denton Wilde Sapte chief executive Howard Morris has kicked off surprise plans to investigate a UK merger, as part of a bold and comprehensive shake-up of the firm's strategy.
Morris has approached competition head and former Denton Hall managing partner Jonathan Tatten about formulating a list of ideal merger suitors for the firm.
Sources say the document will detail the reasons for a merger and the strategic objectives to be obtained from any tie-up. Most obviously, the firm needs to raise its profits and bolster key practice areas such as corporate, where it lacks critical mass.
It is widely accepted that Dentons' low profitability rules out a US merger and a national merger is also un-likely, but internal sources say the firm has identified several mid-sized UK contenders already. Taylor Wessing - with its German operation - is an early possibility, as are CMS Cameron McKenna and Nab-arro Nathanson. Sources close to the firm would not rule out Simmons & Simmons and one cited Travers Smith as "perfection".
Tatten is expected to report his findings to Morris in the coming months, with the Dentons board set to debate the proposals before the summer. Morris insists the firm is not actively seeking a merger partner but is exploring all its options. Morris stated previously that average profits at Dentons would reach £300,000 this year. However, it is understood the final cost of closing the firm's Asian operation, while not stipulated in the budget, will see profits fall to around £275,000 per partner. Profits are expected to lift immediately once the firm disposes of 5 Chancery Lane, which this year will cost each partner £30,000-£40,000.
Merger was not a key element in Morris's election manifesto, although he indicated he would keep an "open mind" on the issue. Merger in the medium term was, however, a central plank of Tatten's election bid.
Dentons has a history of aborted mergers. Denton Hall was set for a three-way merger with Cameron Markby Hewitt and McKenna & Co but pulled out just hours before the deal was concluded. Another planned three-way merger with Richards Butler and Theodore Goddard also faltered after a clash over Hong Kong.
Morris said: "Merger is not a strategy in itself. It may be a means to achieve certain objectives, such as economies of scale and critical mass. We don't need a merger, but I don't close my mind to anything."