Last week was a stressful few days for 36 graduate trainees at Cobbetts, a Manchester-based law firm. When administrators were called in on 30 January, trainees were among 492 staff left on tenterhooks as they waited, along with graduates who had received offers of training contracts, to discover the fate of one of Britain's oldest law firms.
This confirmation of how severe Cobbetts' financial difficulties were came just days after the firm hosted an "Afternoon Tea Recruiter Drop In" event for undergraduates at its Birmingham office and breakfast events in Manchester and Leeds.
It's not just prospective trainees that will be shocked by the news of Cobbetts' financial troubles. Although its mounting debts and lack of growth were no secret, the 150-year old firm gave no indication that its troubles were terminal. Four new senior lawyers were hired just weeks before administrators were called in, and the firm's latest half-year results, published in December, were reassuringly headed "A steady ship at Cobbetts".
And therein lay the problem: Cobbetts was too steady. Following rapid growth in the early 2000s, over reliance on its property and corporate departments saw the firm hit hard by the economic downturn. In 2008 to 2009, Cobbetts' revenues fell by 18 per cent; profits by 53 per cent. Despite these warning signs, the firm refused to adapt its no longer sustainable business model. Instead of reinventing itself, the firm simply buried its head in its good reputation and impressive client list. Some commentators have blamed Cobbetts' demise on complacency, others have called it arrogance.
That Cobbetts was acquired by DWF is one part of this story that will not have surprised spectators. The firms have flirted with the idea before. Merger talks between the pair reached advanced stages in January 2012. Publicly the firms blamed "uncertainly in market conditions" for the breakdown in negotiations, but rumours abound that Cobbetts managing partner Michael Shaw was not on board with the proposal. Mr Shaw stepped down shortly afterwards.
Although hungry for acquisitions, it's unlikely that DWF's management lost much sleep after failing to complete the 2012 deal. Even a year ago some were referring to the proposed merger as a "rescue pact" and, with DWF already in the cities where Cobbetts had offices and a significant overlap in practice areas, many were left questioning what strategic value a deal would have brought to fast-growing DWF. The firm's subsequent mergers with Birmingham's Buller Jefferies, an insurance specialist, and Scottish firm Biggart Baillie made much more sense.
Back to the future
So, a year on, what makes DWF the obvious buyer? In a word: its ambition. DWF's board isn't shy about its aim to be a top 20 UK law firm by turnover before 2015 (in 2012 it was ranked 33rd), and having accomplished four acquisitions in 12 months it's also not shy to put its money where its mouth is.
The firm is right to be confident. Over the period between 2007 and 2012 DWF saw the largest increase in turnover of the UK's top 50 firms, with revenues climbing over 159 per cent. And with turnover rising 22.9 per cent in the previous financial year alone, there's no sign of a slow-down. Its entrepreneurial DNA makes DWF an exciting prospect for the 36 or so new trainees it will take on in 2013 (this includes around 12 students holding offers made by Cobbetts).
At the time of writing, Cobbetts graduate recruitment website, which carries the headline "Future Proof", was still accepting training contract applications for 2015. However a member of the firm's learning and development team told The Gateway that students should not use the Cobbetts application system and should instead refer to the DWF website - advice that some industry insiders would have offered many years previously.