Ian higginbotham, executive chairman of napthens, gives the inside track on the recent merger with Roscoes


In late 2005, I carried out – as a consultant – a business review for Preston- and Longridge-based Napthens. The firm needed to grow substantially in order to respond to the fast-moving legal environment, and it needed to build on its specialist core areas, particularly in corporate/commercial and high-level employment matters. I was appointed executive chairman to spearhead the strategic development of the business in January 2006.



The first thing I did was to set up an executive committee and two divisions, one for corporate/commercial work and the other for private client. The executive committee comprised the senior partner, the two divisional heads, the practice manager and me. In addition, each division had a marketing team that included staff from across that division.



Secondly we looked at how we were going to achieve our growth aspirations to treble in size over the next five years by increasing turnover from around £4 million to £12 million. The only real solution was to acquire, or merge with, other law firms. So we set about looking – but we set some non-negotiable ground rules in place first.



We decided we would not surrender our brand name or add to ‘Napthens’; we would keep the new structure in place; and we would not go down any path that diluted the income streams of Napthens’ partners.



We then established a framework to help us choose a merger partner. It would have to have a similar reputation to us, so that we did not risk our own. It would need competencies at least as good as ours and be run as efficiently as us. We were also looking for synergy in cultures, as it only takes one partner who does not see eye to eye to scupper the whole dynamic.



It so happened that another local firm, Roscoes, was also looking to grow. With six equity partners (Napthens had eight), it had three offices, in Preston, Blackburn and Bamber Bridge. Napthens was particularly strong in Preston and Roscoes in Blackburn, so it was a good fit. The idea of merger was a mutual one that came out of existing relationships between partners at the two firms.



Roscoes was about two-thirds the size of Napthens, with a turnover of just under £3 million. We had a lot in common – including cultures, and types of work and clients – and both had been in business for similar lengths of time (since the 1770s).



We started talking seriously in the spring, and our executive committee met every Friday morning to review progress, sort out issues and to move things along. We quickly established six joint working groups to assess all areas of both firms. The groups were finance, property, people, strongroom, backroom and due diligence. The groups were set up in May and we were looking to complete this stage of the merger process and to sign detailed heads of agreement by the end of June.



Everything was transparent between the two firms, although we kept things confidential. In late May we held a joint meeting, the first where all the partners of both firms met and the working groups presented their findings. The majority were very positive and demonstrated that there was a good fit between us.



At that meeting, a formal resolution to proceed with the merger was taken and passed by all the partners. We informed all staff on the same day in each of the five offices, and held a question-and-answer session. We did this two days before the formal announcement so that they heard it from us first.



All the details of the merger had been ironed out and included in the heads of agreement documents, so when we signed there were no surprises. This included the logo, name, structure, telephone number and people. Since June, therefore, we only had to concentrate on details such as systems and procedures.



Our new structure has three divisions: corporate/commercial, litigation and private client, with Roscoes’ partners heading the latter two. Our executive committee also includes a partner in the newly created managerial role of head of marketing.



We have not experienced any real stumbling blocks as such – even the decision to close Roscoes’ office in Preston was agreed by everyone. There was some early dissention about losing the Roscoes’ name, but we compromised by keeping the Napthens’ name but adopting the Roscoes logo, albeit in our colours. We have used Roscoes’ memorable telephone number as our primary number.



The people issues have been the hardest. The people group looked at how the merged firm needed to be staffed (as the structure had already been decided) and identified a small number of areas of overlap.



The redundancy procedures were put in place and have now been completed. Napthens lost two staff and Roscoes three. Neither firm had experienced redundancies before, so we were not fully prepared for the reaction. We had a couple of bad weeks when morale was quite low, because there were people who had not considered their jobs to be at risk and suddenly they found themselves tied up in the redundancy process.



Possibly the biggest decision was which operational system we were going to keep, and how we were going to combine the two systems into one. Both firms had used their respective systems for some time, and were happy with them and their suppliers. We set up a working group that included a mix of partners, fee-earners, secretaries and cash-office staff from both firms, and the two suppliers were invited in to present to the group before a decision was made.



In hindsight, there is nothing we would not do again next time. But we would probably do some things earlier, rather than differently. We would have made a decision on the computer system sooner, which would have given us a buffer time zone.



The impact of the redundancy process took us by surprise, and next time we would possibly instigate that as early as possible to get any negativity over as soon as possible