It is understood that Irwin Mitchell is set to merge with Thomas Eggar in a move that could create a £252m firm with 273 partners – but while both firms share a personal injury (PI) heritage, the synergies are not immediately obvious.
Last year Thomas Eggar’s PI practice brought in around £4m, equating to 9.7 per cent of its £41.1m total turnover.
However, Thomas Eggar’s managing partner Victoria Brackett told The Lawyer for the UK 200 report this year that the firm had taken a strategic move away from PI work, taking the view that after the Jackson Reforms PI was less profitable and no longer sustainable as part of the firm’s growth strategy.
Although it is unknown how much revenue PI contributed to Irwin Mitchell’s business, according to this year’s UK 200: Top 100 report PI and insurance-related litigation is still the firm’s biggest practice. Of the firm’s 207 partners 66 currently work within this practice, a figure equal to the total number of partners at Thomas Eggar.
For Thomas Eggar’s PI partners this level of dedication to the PI and litigation market could prove popular with Thomas Eggar partners.
What may also prove popular is Irwin Mitchell’s equity spread, which ranges from £220,000 to £800,000. In comparison Thomas Eggar’s spread is considerably lower, ranging from £158,000 to £381,000.
Should a merger take place this equity spread will almost certainly change, but the opportunity for partners to move from a firm with an average profit per equity partner (PEP) of £260,000 to one where PEP equals £568,000 could be a tempting offer.
When it comes to net profit, Irwin Mitchell’s is estimated to have increased by 2.2 per cent to £42m in the last financial year. In contrast Thomas Eggar saw profit drop 1 per cent to £5.8m on the back of flat turnover.
Irwin Mitchell’s profit figures have been achieved partly due to its strategy of outsourcing significant parts of its business services teams. In 2011, following a comprehensive strategic review of its facilities operations, Irwin Mitchell signed a five-year contract with OCS to outsource all of its facilities management work.
Under the terms of the deal OCS took over the management of facilities management including receptionists, document services and other facilities teams with a total of 81 non-legal staff transferring to the company under TUPE regulations, following a full consultation process.
This year’s UK 200: Business Services report, which will be published on 30 November, will reveal that last year Irwin Mitchell had just one member of staff in its facilities management team and 45 secretarial and document production staff as opposed to 1,363 fee-earners.
Whether the merger will go ahead is yet to become clear. Irwin Mitchell declined to comment while Thomas Eggar said only that its growth strategy “includes the potential for mergers or acquisitions”.
Despite this both firms have expanded through mergers within the last two years. In 2013 Thomas Eggar merged with Pritchard Englefield in a deal which boosted the firm’s revenue by 17 per cent.
Similarly, Irwin Mitchell acquired boutique private wealth firm Berkeley Law in November 2014. Following the merger group chief executive Andrew Tucker said the firm would continue to expand through further acquisitions.
The biggest factor in any merger going ahead could turn out to be whether Irwin Mitchell believes Thomas Eggar has a viable place in a market suffering from falling PI profitability.