Cobbetts to call in administrators as firm heads for fire sale of business

Cobbetts is set to enter administration as the firm looks to secure a fire-sale of its business, marking the first failure of a major UK law firm since the fall of Halliwells in 2010.

The Manchester-based firm has filed a notice of intention to appoint administrators and will look to sell off its business and assets as soon as possible.

The firm, which has offices in Birmingham, Leeds and London, employs 492 staff and has 74 partners and posted revenues of £45.2m for the 2011-12 financial year.

A statement from the firm reads: “Having regard to the difficult trading conditions in the professional services sector we have reluctantly concluded that the appropriate course at this time is for the firm to obtain the protection of an interim statutory moratorium to enable a sale of the business and assets of the firm to be concluded in a short time frame.

“We are also working closely with our regulator, the SRA. with all stakeholders and our professional advisers to achieve the best outcome for creditors, clients, employees and members. We remain confident that we will be able to provide a further positive update in the very near future.”

The news comes after merger talks between DWF and Cobbetts were called off in January last year, with the firms citing “current uncertainty in market conditions”.

Cobbetts, which in 2007-08 had revenues of as much as £59.3m, and in 2004-05 ranked as high as 42nd in the UK top 50, has suffered in the wake of the credit crunch, with three separate redundancy rounds during the downturn resulting in 69 jobs losses across the firm.

The firm’s 2010-11 limited liability accounts revealed last year that the firm had agreed to refinance £10m in existing loan and overdraft facilities with Lloyds Banking Group, while the firm saw the exit of four partners to the London office of Canada’s Gowlings and a further two partners to Gateley early last year.

Former managing partner Michael Shaw subsequently announced last March that he was stepping down after 16 years at the helm of the firm, with national head of dispute resolution Nick Carr named as his successor.

One partner at a professional services firm said: “From my perspective, putting out an announcement at this stage is a very grown up and sensible thing to do.

“Whilst they have had a few merger discussions that have not worked out, by doing this, they have given themselves a chance to find a white knight to come in and take them on. The maximum value would be for someone to take them on and come to a sensible compromise.

“Hopefully they can come to some useful administration, which would leave partners in a position that they can walk away from the firm.”

For more, see DWF and Cobbetts call off merger talks due to ‘market uncertainty’.