Davenport Lyons went into administration on Friday (25 April) in a precursor to its client portfolio being acquired by Gordon Dadds.
Terms of the sale were agreed with joint administrator Baker Tilly, weeks after Davenport’s chief executive Richard Williams insisted that the firm was not on the verge of administration (11 March 2014). The deal with Gordon Dadds will also see the move of around 80 staff and 30 partners to the firm.
“The only reason we’d go into administration is if it was planned as part of a deal with a much larger firm,” Williams told The Lawyer last month, adding: “There is no creditor, lender or landlord putting pressure on us.”
It is understood that Williams has not joined Gordon Dadds as part of the deal, although negotiations are underway.
The boutique, best known as the legal adviser to Private Eye, has been urgently looking for a merger partner in recent months. In Februrary HowardKennedyFsi called off merger talks with the firm (27 February 2014), weeks after it turned down a deal from Shakespeares which, one Davenport Lyons source claimed, “didn’t stack up financially”.
At the time the firm was understood to be in merger talks with at least four firms, one thought to be a US outfit hunting for a London launch. Williams told The Lawyer at the time that “being a £20m-£22m law firm in this market isn’t going to work”.
The managing partner of Gordon Dadds Adrian Biles will retain his role as head of the firm.
Average profit per equity partner at Davenport Lyons slipped by 12.5 per cent to £197,000 last year, a 20 per cent drop since 2011, while the firm closed its film and TV group in November.
“The problem is that we’re servicing debt instead of making a profit, that’s [the main reason] we’re looking at our long-term growth options,” Williams confirmed in March. “We have full support from the banks and are reducing short-term funding and managing working capital, making sure WIP is billed quickly.”
Davenport Lyons could not be reached for comment at the time of writing.