Consumer law firm Taylor Rose has bought struggling rival McMillan Williams in a pre-pack administration deal in what could be an early sign of an expected wave of consolidation in the High Street legal sector.
Law Society president Simon Davis warned earlier this month that more than 70 per cent of High Street firms may close in the wake of the coronavirus pandemic.
The acquisition will make Taylor Rose a top 75 UK law firm with revenue of over £40m and 32 offices across the country.
McMillan Williams, which received a £5m investment from growth fund BGF in 2015, was a fast-growing firm but lost its way in recent years.
A former partner sued the firm this year in a case that was later settled, accusing it of creating a “morally bankrupt environment” and a “culture of fear”, claims which the firm denied.
Earlier this month Taylor Rose bought client files from online conveyancing firm Fletcher Longstaff which was tipped into administration by the coronavirus crisis which has hit the housing market hard.
Adrian Jaggard, chief executive of Taylor Rose, said: “Taylor Rose aims to be a leading player in the UK consumer law market. The excellent fit of our two businesses is clear and is a major step forward in achieving our goal.
“I have been very impressed by the quality and dedication of the McMillan Williams staff notwithstanding recent uncertainty. We look forward to welcoming the legal and support teams into the Taylor Rose family.
“I am very confident that together we can maximise the opportunities of our combined business. Our resulting strength leaves us well placed to benefit as the legal services market starts its journey of recovery from the stresses of the pandemic.”
Quantuma partner and joint administrator, Sean Bucknall said: “Historic debt and limited headroom within existing facilities has meant that MW were unable to secure additional working capital to weather the current economic climate.
“The sale to Taylor Rose provides the best possible outcome for the firm and its creditors as well as protecting clients’ interests, preserving hundreds of jobs and creating a strong combined brand.
“The high fixed cost base and highly leverage model of many law-firms leaves them particularly vulnerable to the fall-out from the covid-19 pandemic. We are already seeing many law firms already in serious financial difficulty and unfortunately this administration will be the first of many”.
Earlier this month Davis said the shock to the legal system has been “sudden and severe” with law firms facing “a dramatic plunge in income”.
He said: “Although a firm may be open for business, this does not mean it is business as usual.
“Residential property transactions have ground to a halt. Reduction in court hearings has massively impacted on the amount of work available – while social distancing and the lack of face-to-face meetings is causing difficulty delivering in other areas, such as the execution of wills.”
McMillan Williams was advised by turnaround specialists Quantuma and law firm Pinsent Masons and Taylor Rose was advised by broker Arden Partners.