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Manches has pulled out of merger talks with Halliwells after the two firms seriously considered a tie-up, TheLawyer.com can reveal.
Manches’ senior management wrote to staff yesterday informing them that the firm’s equity partners had examined the possibility of a merger, but decided against it.
One partner told TheLawyer.com that the prospect of a merger was “absolutely ridiculous”.
“I’m never going to be a Halliwells partner nor will anyone in my team,” the partner added.
That said, it is understood that Manches will continue its discussions with Halliwells with a view to acquiring some elements of the firm. A meeting between the firms is scheduled for next week.
Sources close to Manches said the family practice in particular refused the prospect of the merger.
A Manches source said: “There are massive cultural differences. They’re based in Manchester, we have an office in Oxford. They have a family team in Liverpool, but it isn’t very big. The family practice isn’t at all keen.”
A former Manches partner said the firm would not be attracted to a merger as it would exacerbate falling profitability at the firm, which has suffered due to a series of departures. These included litigation duo Clive Zietman and Andrew Shaw defecting to Stewarts Law and head of property and construction Robin Grove leaving to join Speechly Bircham.
Halliwells is also a prime consolidation target having seen profits plummet in recent years.
Average profit per equity partner (PEP) at the firm fell from £400,000 to £280,000 over the last financial year. Turnover was down 4.6 per cent at £83m from £87m a year earlier.
During the boom years of the last decade Halliwells carried out a series of mergers, including bringing on 29 insurance partners from James Chapman in the 2005-06 financial year. However, partners talked of a lack of integration between the legacy lawyers of James Chapman and those of Halliwells.
The firm carried out four rounds of redundancies, reorganised its finances and has since taken the unusual move of signing a debenture agreement with its bank in return for an extension of its lending facilities, following a move into new headquarters in Manchester at the end of 2007.
In the 2008-09 financial year Manches’ turnover remained steady at £34.1m down from £34.4m a year earlier. The firm has a strong family and private client practice, which helps to inflate its PEP figure. In the last financial year PEP fell 7.9 per cent to £209,000 from £227,0000.