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Semple Fraser is understood to have issued a notice to appoint administrators a day after The Lawyer reported that its separate offices were looking for rescue mergers (5 March 2013).
In an email sent to staff at Semple Fraser this morning, which was first reported by The Firm, management said: “It is clear that the business is no longer sustainable in this market and the partners have no option other than to place the firm in administration.
“The Notice of Intention to appoint administrators yesterday is the first step in a process that will lead to the dissolution of the LLP. We expect the administrators will be appointed during the coming days, and on appointment will then advise us all of the next steps.”
Semple Fraser had launched a firm-wide strategy review amid claims that its three offices were seeking separate rescue mergers.
In a statement to The Lawyer Semple Fraser managing partner Simon Etchells on Monday admitted that the firm had been hit by the flailing economy and contraction in the property and construction sectors.
“It’s well known that the market for commercial legal services has contracted, and we’ve been weathering these challenges,” said Etchells. “We’ve reduced our costs but are currently still reviewing the business and our alternatives. This process is underway and we will not be making any further comment until it is complete, and the partners have decided on the best way forward for the business, our clients, and our staff.”
Today a statement from Etchells read: “It is with great regret that after having considered every possible option to secure the future of the business it was clear that administration is the only option.”
The firm added: “Following an exhaustive review of the business, the partners have decided that the business is no longer sustainable.”
One Scottish-based senior source said the firm’s Glasgow office was discussing a tie-up with Maclay Murray & Spens, while the Edinburgh base was in discussions with Dundas & Wilson. The firm’s Manchester office meanwhile is understood to have held similar talks with Weightmans.
The firm refused to state turnover for the 2011/12 financial year but The Lawyer estimated revenues of £10.5m. In 2010/11 the firm posted revenues of £12.2m up 10 per cent on the previous year. That was still lower than pre-2008 when, in 2006/07, the firm posted turnover of £15.4m. Semple Fraser had 21 partners and 35 lawyers in 2011/12.
According to the firm’s 2010/11 LLP “costs also rose significantly primarily as a consequence of the cessation of staff cost restrictions operated during the preceding year. The members consider the profit before taxation of £3.7m to be satisfactory. The members expect market conditions to deteriorate in the year to April 2012”.