BACKGROUND: The chance encounter that led to legal merger

THE merger between two of the Midlands’ most well-known legal practices came after lawyers for the firms found themselves working on different sides of a corporate deal six months ago.

Now that chance encounter has seen Shakespeare Putsman – itself the product  of a merger in 2007 – join forces with Stratford firm Needham & James. The deal represents the meeting of two worlds. On the one hand, the partner-led, shires-based firm of Needham and James, and on the other, the expansionist, service-led model of Shakespeare Putsman.

In 2008, Birmingham-based Putsman consumed (or merged as the press releases put it), the neighbouring practice of Shakespeare’s, founded in the middle of the 19th century. The bringing together of the two has not been without its challenges – staffing was almost halved when the recession arrived soon after the merger. But chief executive Paul Wilson, the ‘marmite man’ of the West Midlands legal scene is on a mission to modernise.

He is the embodiment of the ‘new way’ for law firms who, liberated by the Legal Services Act, can now allow non-legally qualified managers to become partners, and even look towards stock market flotations and management buyouts. Originally from a background in financial services, Wilson moved to Birmingham in 1994 with Allied Irish Banks. After a short spell with RBS, he  became chief executive of St Philips Chambers 2001. Five years later, he joined London media firm Olswang as CEO of their Thames Valley operation. Six months later he returned to Birmingham chief executive of Putsmans and initiated the merger with Shakespeares in 2007.

A shrewd – some say ruthless – manager, Wilson keeps a tight rein on costs, and has avoided some of the property-led profligacy that led similar-sized legal firms in the region to over-extend themselves when business was good, only to catch a cold when the recession started.

That hard-edged, business-led approach didn’t win Wilson any friends – more than half of the combined practices’ 50-plus partners left shortly after the merger – but it did put the firm on a solid financial footing, just as others in the Midlands started hunkering down to weather the recession.

Which made the Birmingham-based firm a perfect bedfellow for Needham &  James, who, although by no means facing financial meltdown, realised it would be better able to face the future in partnership with another practice. It is believed that the firm’s purpose-built head office overlooking the Swan Theatre on the riverbank at Stratford-upon-Avon is somewhat under-occupied, as were its new premises at One Colmore Row in the heart of Birmingham’s business district. The closure of the latter will be one of the first acts of the new merged company.

In January this year, Needham’s senior partner John Hughes told The Lawyer magazine the firm was actively looking for a new partner. He said: “Like most firms we’re reviewing our position. Will a firm with a £7.3m turnover be able to keep its key clients and remain competitive as the market changes? In practice the question is, do we look for smaller firms to take over or similar sized firms to merge with?”

So it was only a matter of time before Needham & James identified the right suitor, which they did when a member of their team found themselves chatting with their counterpart at Shakespeare Putsman. A meeting was soon arranged between Wilson and Needham’s managing partner Herbie Andrews, and by April a deal was well underway.

Now the merger is announced, and Wilson is bullish about the future, shrugging off rumours in the Birmingham legal community that the deal was somehow forced by the firms’ bankers unsettled by the impact of the recession on law practices. He insists that prudent financial management following the Shakespeare-Putsman merger put the new firm in a positive cash position, enabling it to move quickly when the Needham & James opportunity came up.

The merger will catapult the new firm straight into number 85 in the Legal 100, with a turnover of £24m.
 
“Straight away we’ve created a legal hub in the Midlands with reach across the region,” Wilson said. “The only differentiator for a law firm is its people, and the new business makes us very attractive for ambitious lawyers, who don’t always want to work in Birmingham city centre.”

Wilson will split his time between Birmingham and Stratford-upon-Avon. “It makes no sense for fee-earning partners to be driving across the Midlands for meetings. It’s my job to manage the business, so that’s what I’ll do.”

With a re-branding to get underway in the autumn – Wilson confesses to having no idea yet what the new entity will be called – he also makes no secret of his desire to expand the empire still further.

“We’re looking at more acquisition targets,” he said. “We want to have a number of satellites where good lawyers will be attracted to work without having to go into Birmingham all the time.”