Lack of succession planning and competition from the biggest and niche practices will see more mid-tier firms disappear in the coming months, experts have predicted.
They were commenting following last week’s sale of London firm Manches to top-100 rival Penningtons after Manches entered administration, with all 265 staff transferring to the new firm Penningtons Manches.
The scale of Manches’ liabilities was unknown as the Gazette went to press. It is the second top-100 firm to be acquired through a pre-pack administration this year, following the demise of Cobbetts.
Andrew Sheridan, partner at restructuring specialist FRP Advisory, said: ‘The rescue of Manches through a pre-pack administration deal is likely to be one of many similar mid-sized UK law firm rescue deals over the coming year.
‘Many mid-sized UK law firms have struggled to find a profitable identity, amid fierce competition from both larger firms with greater reach, and scale and niche players.’
The SRA’s executive director Richard Collins (pictured) said no firm was too big to fail in the current climate. ‘We’re seeing firms people always felt would have been safe but they’re exiting the market in a disorderly way in a moment of crisis,’ he said.
‘It’s even more important for firms to have robust plans about the future. This is an issue affecting firms in the top 100. It’s no longer inevitable firms of a particular size will survive, the market will not let them.’
The combined turnover of Penningtons and Manches is £58m. David Raine, chief executive of Penningtons, will remain in charge of the combined firm.
He said: ‘The legal market is constantly evolving and we do not believe that standing still is an option for any strong, progressive law firm.’