Addleshaws' business is by all accounts stable, but about to get smaller

Given that it was regarded as one of the most upwardly mobile mid-market practices in the UK top 50, the question begged by Addleshaw Goddard's decision to remove 19 partners from its ranks is whether it has been mobile enough. Yet Addleshaws, with a practice built on top-tier regional strongholds in Manchester and Leeds and a well-regarded City practice, maintains that the move does not signal weaknesses in its underlying business.

The firm talks a decent game, pointing to a solid run of successes in recent months. Among the highlights are debut corporate instructions for six FTSE 100 companies, including Rolls-Royce and Wolseley, as well as new panel appointments to ITV and William Hill. In deals, the firm is understandably proud of its work for the Co-operative Group on its £1.57bn acquisition of Somerfield, a transformational deal for the client. Underlining the firm's strength in the mutual sector is Adam Bennett, who acted on 15 of the last building society mergers. And Legal Week's data provider Mergermarket ranked the firm 10th for volume of UK deals in 2008 – a key benchmark of mid-market strength.

Recent years have also seen the firm bolster its much-touted partnership team with the hires of Mayer Brown duo Richard Linsell and William Wastie and Allen & Overy's Rachel Khiara. Yet, while Addleshaws is widely acknowledged to have performed respectably since the 2002 cut of 11 partners and the 2003 merger with Theodore Goddard, it has not all been plain sailing. Given its historical strength in private equity and early links with 3i, the firm arguably should have done more to ride the buyout wave when it was in full flow. Some might argue that Addleshaws has become a little too focused on property in recent years, a factor which explains some of its current retrenchment. Property had come to account for over 30% of the firm's £195.4m turnover in 2007-08, a proportion that is expected to drop to below 25%, though firmwide revenues will shrink this year.

In litigation, Addleshaws – which is not the strongest national player in the other main counter-cyclical area of insolvency – has been investing and, under department head Simon Twigden, has been innovative in embracing external funding.

So if the firm has a good geographic and full service practice spread, what – apart from a somewhat bloated property team – is driving the current partnership restructuring? Addleshaws maintains, and rivals agree, that this practice is one of the most stable and robust in the UK top 25. As such, the firm is billing this move as different to the 2002 restructure, which was aimed at galvanising the partnership and dealing with underperformance.

In contrast, the current exits are billed as a direct response to the recession. And that is what seems so surprising. However tough the market will be for the next two years, partnership is a long-term commitment. Critics say – and it's hard to disagree – that cutting 10% of your partnership when the business is sound smacks of being more than just ruthless – it's short-term.

For more analysis, see Editor's Blog: Addleshaws goes nuclear.

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