Cobbetts LLP

Merger market

Having grown quickly and convincingly to join the UK top 50, the firm then needed to streamline a partnership that had become cluttered by mergers and donned a more corporate hat. It got shot of its family department, opened up a small corporate-focused London office in 2007 and fattened up its corporate department elsewhere. As if to ring in the changes, it moved into fresh offices in all locations, each one branded to look alike. Things were looking up again. The shake-up boosted the firm’s financials to a degree, and our overall impression last year was of a firm reinvigorated by change. Then of course, the recession’s emaciated fist came knocking at the door, a swathe of redundancies had to be made (largely in the property and corporate departments) and the transactional departments slowed to a four-day week.

Cobbetts’ current strategy is that “there will be no fundamental change of direction,” meaning that the long-standing focus on property and the organic growth of the corporate department is set to continue. Despite slipping in some of the Chambers UK rankings in the past couple of years, the firm told us it “has had a clear strategy that it will continue to pursue... we think that because many competitors are London focused there is a space in the market for a firm that can focus on the regions but also have a national presence at the same time.” Arguably, the firm has been wrong-footed. The recent boom years filled the firm’s coffers so an increasingly corporate stance made great business sense. But having pushed in this direction, Cobbetts was caught by the change in the economy. When property and corporate were no longer cash cows, the parts of the firm doing brisker business became commercial and banking litigation and social housing. The strategy seems now to be one of paring down and consolidating; holding on and waiting for the recession to ease. In a valiant effort to save jobs and to retailor the firm “people were redeployed internally, migrating property and banking people into banking litigation.” Cobbetts has also hired new talent (some at senior level and from the likes of Pinsent Masons), including into its busier employment and social housing departments.

Kendall Mint

This year’s interviews with trainees were rather schizophrenic. Some told us the firm was coping admirably, tackling a tough situation with steely pragmatism and giving them a great training with plenty of challenges. They said redundancies had chopped away the fat, making for ample work, even in the recession-swept departments of property and corporate. Others said the firm had taken a hammering and that there was insufficient work to keep them busy. It’s hard to know who to believe when positive and negative comments came from all offices, from trainees who’d been offered jobs and those who hadn’t. The mid-ground of the debate was best summed up by the trainee who said they “loved it when it was busy.” On a more certain note, trainees unanimously offered praise for Cobbetts’ style of working. They were won over by how friendly the firm was, many describing near epiphanies brought on by the working environment, sleek offices and the good nature of staff. Despite cutbacks, the irrepressible folk at Cobbetts told us morale had “bounced back.”

Cobbetts training has just switched to a five-seat rotation. This innovation was introduced to the trainees by way of “something we found in a photocopier.” First it looked like it was going to be rolled out in a fortnight, then it was scrapped at the behest of some partners, then it was scheduled for a September 2009 start. There have also been changes in HR: “…people coming and going. Someone left and wasn’t replaced for six months at one point.” Fortunately, trainees say new grad recruitment adviser Paul Kendall has already begun to improve communications and sort things out, for example by getting the appraisal system running smoothly again.

Going for gold

“There’s a similar choice of seats in Birmingham, Leeds and Manchester,” trainees told us. Around half of the group works in Manchester, with the remainder spread between Leeds and Birmingham. The smaller London office does not accept trainees at present. Worth knowing, too, is the fact that because “property envelops everything and provides useful foundation knowledge” most trainees will do a property-related seat.

Although trainees acknowledged that the corporate and property departments had quietened, it hasn’t all been doom and gloom. The firm has demonstrated its ability to grab a decent share of what work is going around, even in the constricted world of banking. It acted for Swinton Group on a revised working capital and acquisition finance facility for £175m from Lloyds TSB, making Swinton the UK’s biggest insurance retailer. It also worked for the Bank of Scotland on funding for the acquisition of the Grafton Shopping Centre in Altrincham. Over in the related field of corporate finance there was more work to be done for Swinton when it acquired Equity Insurance Brokers for £50m, and the firm also acted in public markets advising Royal Bank of Canada and Strand Partners on Central African Gold’s £15.6m fund-raising for gold projects in Africa. Impressively, Cobbetts is up there with the big boys when it comes to advising AIM-listed companies. The overwhelming impression of the corporate seat from trainees was that when there was work, there was decent responsibility. Alas the sporadic nature of new instructions has left some trainees “twiddling their thumbs” or doing low-quality tasks.

Following the slowdown in commercial and residential property development, Cobbetts had to make redundancies across its network. And yet even in these parched times the firm has been involved in some decent deals. The firm continues to be instructed by Orange in relation to its network of communications masts and, also in telecoms, lawyers have drafted legal precedents for Freedom4 (formerly Pipex) in connection with the roll-out of its electronic communications portfolio. Important client Whitbread used Cobbetts in all aspects of a £78m swap of 41 pub restaurants for 21 hotels owned by Mitchells & Butlers.

When the private sector dries up, law firms look to the public purse. Cobbetts was already an experienced name in the field of social housing and it has chosen to further boost its capacity here by hiring extra staff and partners. It has acted for Salford City Council on a huge overhaul of its housing strategy entailing the transfer of stock to new landlords. It has also scored work from Warrington Borough Council, which is developing a large mixed-use scheme with an eight-screen cinema, 97-bed hotel, office, leisure and retail space, residential apartments and ‘an enhanced public realm’ (which we think means a fancy pedestrianised area).

Pizza the action

A trainee in the “quite exciting” litigation department reminded us about the old adage of ‘when in doubt, sue.’ This motto has clearly been adopted by enough of Cobbetts’ clients to make the litigation department the busiest. The experience and training was considered to be good, and trainees spoke of working some of the longest hours here. Our sources had been kept busy on “windingup petitions and bankruptcies,” meaning that they’d been able to attend court to obtain charging orders and other rulings. Some had also assisted on injunctions and mediations. Notable cases from the past year include advising the Secretary of State for Business Enterprise and Regulatory Reform on the winding up of an unregulated debt management company. This case involved some serious allegations and a five-day trial.

The firm’s strong property focus means that trainees can take a contentious construction law seat. They spoke of a “good, sociable team” and detailed what had kept them busy, for example establishing culpability for delays and missed deadlines on building projects. To gain a better understanding of matters, trainees sometimes go on site (sporting snazzy Cobbetts-branded hard hats). A seat in non-contentious construction is “very contract-heavy” and largely involves wading through documents in order to “make sure that the chain of contracts links up.” One trainee spoke of the satisfaction gained from “walking past a building that you have prepared the collateral warranties for.”

If the recession has been like a cloud over some departments then the increased workload experienced by the banking litigation, employment and insolvency teams is the silver lining. The firm recruited from HSBC to boost its banking litigation team in order to deal with the volume of new cases, and trainees said there was “plenty of work to get on with” as banks take stock of the debts on their books. One trainee had gone into the seat feeling apprehensive about the idea of a busy six months spent foreclosing on mortgages and recovering properties, but they felt welcomed by the team and fulfilled by the work, especially mortgage fraud cases where “there’s a lot of research and investigating – it became quite sophisticated and involved the Serious Fraud Office.”

The insolvency seat is a good place to develop drafting skills and observe transactions involving distressed businesses. One source summed it up as “lots of sales and purchases, debentures, guarantees, and management and trading agreements to work on.” The scope of the cases varies considerably, so sometimes trainees will make a small contribution to bigger matters and at other times they will handle their own files. Proving that financial problems can hit anyone, one trainee worked on the case of an insolvent Premiership footballer. 

In the employment department clients range from pizza manufacturer Dr Oetker to home shopping group Shop Direct and local authorities in Blackpool, Stockport and Blackburn. Trainees gain good insight into contentious cases, with multimillion-pound equal-pay claims, TUPE class actions and discrimination tribunals all covered. One trainee told us that they reached the point where they were “running files on my own like an NQ.” In other practice news, the firm is starting to assemble an energy team, and trainees have hinted at “a big push in renewables.”

Future tense

Our sources heaped praise on those supervisors who made efforts to ensure they were up to date on matters and happily pointed out that there was always someone they could go to with questions. Nevertheless, they did find some supervisors more attentive than others. Trainees asserted that claims of a good work-life balance were well founded at Cobbetts. Save for the litigation department, where sometimes people are there until 8 or 9pm, “in all other departments there’s no reason you can’t be out the office by 5.30 or 6pm.” Manageable hours mean plenty of time for extra-curricular activities and we hear that “the amount the firm spends on activities is amazing.” Drifting briefly into hyperbole, someone described the Cobbetts Young Professionals group as “the future.” The networking group is certainly popular and well invested in. Strictly speaking, involvement isn’t compulsory but “if you weren’t involved people would wonder why.” The Junior Lawyers Division of the Law Society offers yet more activities, and then there are charity events and impromptu meet-ups between trainees. In general the firm has a pretty lively social calendar.

Right now, Cobbetts’ long-term direction is a “slightly mystifying” subject to some trainees. There was wildly disparate feedback on how busy the firm is; that said, looking at deals it has been involved with in the past year, Cobbetts is clearly still getting good instructions, especially in the silver lining areas of litigation, insolvency and employment. In terms of retention, the firm has done reasonably well: out of 25 qualifying trainees, 17 got jobs in 2009. Much to the horror of some of of our sources, the firm cut the NQ salary from £38,000 to £30,000 to keep more people on. A few sources worried what signal this would send to the market about where Cobbetts sat in the pantheon of large regional law firms. For those without jobs, the firm took the praiseworthy steps of offering advice sessions and talking to clients to scout out possible vacancies. The 2009 intake of trainees were given the option to defer, and in light of some of the comments we heard this year, some deferrals were clearly necessary, especially given the relatively high number of new NQs that will now be soaking up simpler instructions and tasks.

It’s possible to see something of Voltaire’s Candide in Cobbetts’ personality. As much as we enjoyed speaking to the trainees, who largely seemed very happy with their choice of firm, we were left with concerns over just how hard the recession had affected the firm’s financial performance. Cobbetts has a relatively narrow profit margin compared to many rivals and in 2008/09 revenue plunged by 16%. Logic says this will have hurt profits badly, which is surely a real concern. Do look into this further, as we were unable to before going to press.

And finally...

This is one firm that is hoping the bear market will metamorphose into a bull again soon. If so, Cobbetts should be ready for things to take off.