Lawrence Graham (LG) and Wragge & Co are in merger talks to create a £170m firm, partners were told today.
Wragge & Co senior partner Quentin Poole confirmed the talks, stating: “We have been open about our strategy and the fact that we are looking at opportunities to strengthen our ability to serve clients in strategic practice areas, sectors or locations, particularly in London.”
He cited LG’s real estate, equity capital markets, investment funds and private capital practices as the main attractions for the firm, and added: “We are exploring how clients might benefit from our two firms forming closer ties.”
Wragge & Co began drawing up a list of London merger targets in 2009 and said at the time that financial services, private equity, property finance and property funds were top of the wish list (7 February 2009).
LG announced a sizeable drop in profitability this summer, with average profit per equity partner (PEP) sliding by 14 per cent between 2011/12 and 2012/13 to £260,000 (26 July 2013), while the firm’s latest LLP results reveal an annual property bill is costing the firm £5.1m a year (4 February 2013).
The firm had been in talks about a tie-up with Field Fisher Waterhouse (FFW) but were called off last summer (28 June 2012). Sources at the time suggested that issues with LG’s London-headquarters costs were problematic for FFW.
Managing partner Hugh Maule told The Lawyer in July that the firm was hoping for a significant boost to profitability at the end of the next financial year, after the firm sublet surplus office space to Bond Dickinson and an international property developer.
Wragges has long had an eye on the development its London base with Poole telling The Lawyer in 2009 that it was drawing up a list of London merger targets to boost its presence in the city (2 February 2009).
At the latest year-end the firm pushed turnover up 1.9 per cent to £120.5m, compared with a 7.5 per cent fall at LG from £56m to £51.8m. Wragges’ average profit per equity partner (PEP) figures also outweighs LG, at £329,000 compared with £260,000 for LG.
Both firms have seen departures in recent months.
In April LG property litigation head Jane Fox-Edwards quit the firm to join Allen & Overy (12 April 2013), she was followed by pensions partner Ron Burgess who left for Olswang and white collar crime partner Eoin O’Shea who quit for Reed Smith.
Wragges was hit by DWF in Birmingham in August for real estate partner Toby Askin who joined the firm as practice head (28 August 2013).
In October, the firm moved to transfer a cohort of its support staff to third-party provider Intelligent Office, resulting in 26 full-time equivalent (FTE) staff members opting to take voluntary redundancy (14 October 2013).
A vote is yet to be scheduled on the tie-up.