Let’s fit together

News of the Pinsent Curtis-Biddle merger was a surprise to many in the market. Fiona Callister meets Julian Tonks and Martin Lane and asks, is it a marriage of two equals?

They make a sweet couple, Julian Tonks and Martin Lane, sitting next to each other in Biddle’s offices.

While Pinsent Curtis’ senior partner Tonks might be doing most of the talking, he constantly looks to Lane, managing partner at Biddle, for affirmation, in just the way you would expect from the newly hitched.

Pinsent Curtis and Biddle managed to keep their courtship under wraps remarkably well, announcing their merger last Monday (15 January) to a certain amount of surprise across the market. But now it seems that both firms are madly in love and frankly, deliriously excited about their future together as Pinsent Curtis Biddle.

However, like the infamous post-engagement Charles and Diana interview, Tonks and Lane show their excitement in different ways. Tonks is all smiles and openness, while Lane remains a little guarded and slightly frowning throughout.

For those of you who remember the Charles and Diana interview, probably the most famous part was when the interviewer asked the happy couple whether they were “in love”. Charles replied along the lines of “yes, whatever love is”. And Lane gets pretty close to a Charles-ism with his declaration of undying love for Pinsents. “It’s about as close a fit as we could hope to get,” he says, like a groom declaring in his speech that his bride was “the best he could get”.

But based on last year’s figures, Biddle is certainly the party that could better afford to be picky. Pinsents offers operations in Leeds and Birmingham, but last year, Biddle increased profits per partner by £100,000 to £270,000, while Pinsents’ fell by £25,000 to £225,000.

Neither firm managed the sort of rise in turnover that firms of comparable size achieved last year. While Addleshaw Booth & Co saw gross fees rise by 24 per cent, Pinsents increased revenue by 8.6 per cent, according to figures in The Lawyer 100 survey. Tonks says that the percentage was nearer 10 per cent and puts the lower profits down to investment into a Leeds office and new computer system. And Biddle, while greatly increasing its profitability, only managed a 2.3 per cent rise in gross fees. But Tonks says that both firms expect this year’s profits to be roughly commensurate.

Perhaps to try and smooth any slight discrepancies between last year’s pay packet and this year’s one, the merged firm will be introducing a bonus scheme in combination with a flexible lockstep system. To start the scheme off, 10 per cent of the profits will be put into the bonus pool.

“People start off with a certain number of points and every three years people’s points are reviewed,” explains Tonks. “We also have a bonus system and a certain percentage is allocated into a pot to allow payments according to performance.”

But enough of the science; how did they get together? Both firms decided in their respective strategy reviews last year that they needed to grow faster than organic expansion would let them.

For Pinsents, the priority was to grow its London office and so a short list of possible mates was drawn up. Tonks says: “We made contact through a third party. Alan Greenough [head of corporate] made first contact with Martin and shortly after that we started talking in earnest and we were talking throughout the summer.”

Lane gives his side of the story: “We had had a strategy review and decided that we needed to grow. Merger was clearly one way to grow the practice and when the call came through it was to a receptive ear. We have a shared commitment to quality client service with a fantastic blue chip client base. We can offer strength and depth across a range of practice areas.”

This is a variation on a mantra that is repeated several times throughout the interview, mostly by Lane, along with his constant reminders that the merger is “a good fit”. And each firm says that no partners have said that they do not wish to be part of the merged firm.

They say that one of the main objectives of the merger is to become a leading player in the private equity market. “We now have both size and strength in corporate and we think that private equity is a market that is particularly buoyant and offers particular opportunities. We now have a very strong private equity group across the merged firm with 50 private equity lawyers,” says Tonks.

But he concedes that Pinsent Curtis Biddle is not going to be threatening the magic circle, at least in the short-term. “We are not going to be doing the very biggest international deals but anything down from those [the sort of deals that] Travers Smith Braithwaite and Macfarlanes are doing – that’s a market where both firms have made a lot of progress, in particular Roger Fink of Biddle.”

Lane seems to bristle at the suggestion that the merged firm has got its work cut out to encroach upon Travers Smith’s and Macfarlanes’ turf. “I don’t think anyone is untouchable in private equity,” he says. “Both firms have made sizeable strides in private equity.”

However, one independent observer within the private equity market believes that the merged firm might be slightly too ambitious in its stated goal. “Increasingly, the management teams are ending up with the main players [in the market]. I think it’s unlikely that Travers Smith Braithwaite or Macfarlanes will overnight be particularly hit,” he says. “But they have got some good people between them so there is no reason why they shouldn’t start picking up deals in a purely domestic market.”

The observer adds that he is not unduly surprised by the move and thinks that that it is “a perfectly sensible thing to do”. But others in the market are still sceptical about whether Pinsent Curtis has really bedded down its 1995 merger between Pinsent & Co and Simpson Curtis.

Tonks stonewalls the question, merely saying that the firm’s offices work very well together, which is echoed by Lane’s declaration that he has been around the offices and was impressed by their cohesiveness. Tonks also believes that the experience of going through the process once already makes the firm even more attractive as a merger partner. “There has been a very decent interval between the two mergers but we have learnt some things about doing mergers that we will be applying to this one,” he says.

It is hoped that the next linkup for the combined firm will be with a German practice. In November, Pinsent Curtis announced that it was forming an alliance with Swedish firm Magnusson Wahlin to take advantage of Sweden’s booming technology market. “We see Sweden as a model of how to do an alliance. Sweden knew that something was likely to happen in London. This now makes us more attractive in Europe.”

So now both Lane and Tonks are on the lookout for a German firm “with some technology expertise” and a private equity capability. They do not mention whether they also require a GSOH or non-smokers, but if there are any suitable firms reading this from Germany, then they would both love to hear from you.
Julian Tonks and Martin Lane
Senior partner and managing partner
Pinsent Curtis and Biddle