Opportunistic, ambitious and still hungry for more – Rose Orlik hears from DWF chief after latest merger

Merger mania may have gripped the UK legal sector, but there are still relatively few examples of firms securing multiple combinations in quick succession.

Expansive northwest practice DWF is an obvious exception, with its forthcoming alliance with Scotland's Biggart Baillie marking its third merger in little more than six months – and its fourth in about a year.

The deal, which will go live on 1 July, will create a firm with revenues of £118m – just more than £16m of which comes from the Scots firm.

In total, DWF has added about £26m in turnover and 60 partners through its recent growth spurt, which has also seen it merge with Birmingham insurance boutique Buller Jeffries in April, Newcastle insurance firm Crutes late last year and Manchester private client boutique Lane-Smith & Shindler last May.

Not to mention, of course, the failed merger talks with Manchester firm Cobbetts, which ended earlier this year, the addition in late 2006 of Ricksons – which added offices in Leeds and Preston – and the acquisition of numerous teams for moves such as its London launch four years ago.

Managing partner Andrew Leaitherland (pictured) has no intention of stopping to draw breath. "We don't have the choice of taking a break," he says. "If you want to capitalise on the current situation, you can't take it easy for three or six months."

In the short to medium term, this could mean a move into Bristol with an office built around insurance and financial services, as well as the possibility of another bolt-on in Scotland.

But despite its latest acquisition moving its business comfortably past the £100m mark, Leaitherland says DWF will avoid international expansion for a while yet to continue focusing on building its national practice.

"Our expansion is entirely client-led," he asserts, "and they're not asking for international at the moment. Our strategy is UK-focused and we are about there now. If you look at the regional centres, we have got most of them covered."

Rapid growth through mergers is not without its challenges, but Leaitherland insists the secret to success lies in careful research.

"You've got to be competent enough to implement a merger quickly and get the right partners in the first place. Inevitably, we're always in talks with three or four potential merger partners at a time.

"We don't have an ideal profile of a firm to merge with – just one with quality people and quality clients that fits with our sector focus and people."

It is a strategy that echoes one of the other law firm leaders he most admires: DLA Piper joint chief executive Nigel Knowles.

He is also a fan of Eversheds' chief executive, Bryan Hughes, pointing to both firms' expansion from northwest leaders to national firms and, indeed, international players sitting comfortably within the UK top 10 by revenue.

Leaitherland's admiration of the pair may hint at his long-term strategy. But for now, he is cagey about the next goal while outlining the thinking behind the quick-fire mergers.

"It's one of those peculiar things. People look at mergers and make negative assumptions about the firms involved. We're not merging with Biggart Baillie to be a Scottish firm. It fits with our UK national footprint.

"There is also an increasing requirement on panels to be a national firm. The merger will help us with UK and Scotland panel appointments as well as our ability to leverage growth – it's a very logical move."

Rivals have questioned how the 1,500-strong firm funds its acquisitions, but Leaitherland insists mutterings about debt levels are misguided.

He comments: "Our borrowings are the lowest they've been for five or six years, so debt is not something I worry about. We're funding expansion through improved working capital – insurance is a cash-generative business. We aren't concerned with payment cycles like some firms."

Detractors have also argued that DWF is too highly leveraged, holding its equity too tightly, making its profit per equity partner (PEP) figure of £415,000 – which came against growth in revenues of 23% to £102m, excluding Biggart Baillie – artificially high.

Leaitherland counters: "Our PEP is the highest it has ever been and on an upward trend. Lots of firms our size have a very large London contingency and therefore better recovery rates.

"London will be a bigger part of our strategy going forward, and this will have a positive impact on PEP. But we're very much sticking to our high leveraged model – it's the shape of the future.

He concludes: "Clients want a partner-led, not necessarily partner-does, service. Nevertheless, the number of equity partners has risen by 50% in the past seven or eight years. We're not moving away from growth. If you are bold enough to capitalise on it, the market will support you."

DWF – AT A GLANCE
Turnover: £102m
PEP: £415,000 (outside Scotland)
Partners: 144
Offices: Birmingham, Coventry, Leeds, Liverpool, London, Manchester, Newcastle, Preston, Teesside, Edinburgh and Glasgow.