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Perfect storm could scupper economic recovery

It has been some time that I have talked about the big beast stalking the long grass of the UK economy. But we can all now see that inflation has pounced not just in the UK but also in the global economy as it ravages all of the 38 countries in the OECD (Organisation for Co-operation and Development) to a greater or lesser extent. Being in the midst of inflationary pressures, the question people are all asking is when will it end? But to answer this we need to know what has led to the current situation. In one word: Covid. This has played a large part as it has caused the “workshop of the world” (a phrase originally coined for the UK economy at the start of the Industrial Revolution) China to effectively shut-up shop to prevent Covid outbreaks. This is still the case in large parts of China, making the distribution of goods very erratic. At the same time as furlough fuelled the Western world’s demand for consumable sourcing became an issue given in China’s zero policy on Covid. Then there has been quantitative easing (QE) which the UK, the EU and the US have all adopted due to the pandemic by in effect printing money in the form of government bonds with a view to stimulating economic recovery. Just to put this in focus, it is estimated that the UK has spent 375 billion pounds, which is equivalent to 20% of the UK’s GDP with QE. The combination of these two factors has meant there is more money chasing fewer goods, which inevitably leads to higher prices and now there is an ongoing war in Ukraine which is causing disruption to the global markets, not just wheat and grain but also things like neon and palladium as well as for oil and gas. All of which, again, leads to less supply to meet current demands, so prices have to go up. So, we can all see what the causes are and we can all feel the effect even if it is just putting petrol in a car. We have to give some thought to the fact that if there are any other factors that come into play to derail growth, we could then be in recession for longer than anticipated, which is reinforced by the shrinkage of the UK economy by 0.3%. This is, however, not reflected in unemployment as we still have full employment. But if we do get wage inflation without increasing productivity, it will be a foregone conclusion that the recession will ravage much more of the UK economy than anticipated.

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Cause and Effect

It has been some time that I have been talking about the big beast stalking the long grass of the UK economy. But we can all now see the beast of inflation has pounced not just in the UK but also in the global economy as it ravages all of the 38 countries in the OECD (Organisation for Co-operation and Development) to a greater of lesser extent. Now being in the midst of inflationary pressures, the question people are all asking is “when will it end?” but to understand that we will need to know what has led to the current situation. In one word “Covid” has had a big part to play as it has caused the “workshop of the world” (a phrase originally coined for the UK economy at the start of the Industrial Revolution) China to effectively shut-up shop to prevent Covid outbreaks. This is still being done now in large parts of China, so making the distribution of goods very erratic. Whilst in the western world furlough fuelled the demand for consumables which were now getting harder to obtain because of China’s zero policy on Covid. Then there had been quantitative easing (“QE”) which again the UK and to be fair the EU and the US have all adopted due to the pandemic by in effect printing money in the form of government bonds with a view to help stimulate economic recovery as well as pushing businesses and so stem job losses. Just to put this in focus, it is estimated that the UK has spent 375 billion pounds which is equivalent to 20% of the UK’s GDP with QE. The combination of these two factors has meant there is more money chasing less goods, which inevitably leads to higher prices and now there is an ongoing war in Ukraine which is causing disruption to the global markets, not just wheat and grain but also things like neon and palladium as well as for oil and gas. All of which again leads to less supply to meet current demands so prices have to go up. So, we can all see what the causes are and we can all feel the effect even if it is just putting petrol in a car. We have to give some thought to the fact that if there are any other factors that come into play to derail growth, which will then mean we will be in recession for longer than anticipated albeit this is not being reflected in unemployment as we still have full employment but that is a discussion for another day in terms of the war on talent but if we do get wage inflation without increasing productivity, it will be a full gone conclusion that the recession will ravage much more of the UK economy than anticipated.

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Hawkins Hatton Newsletter June 2022

Newsletter June 2022

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Summertime and the Feeling is Good

Just like in that Mungo Jerry song we are coming up to the summertime and if in the summertime, when the weather is hot… we are all looking to enjoy the sunshine and summer break in some way. Notwithstanding, I usually comment on business trends and economic pressures on the economy, I thought this time it may be appropriate in the prelude to summer to talk about a staycation, as this would make for a seasonal article. Many of us at the moment, are experiencing the effect of the cost of living crisis just as we have started to emerge from the Covid crisis which has paralyzed both the economy and the world at large in terms of trade and travel. Of late, I have seen a trend in staycation and as I said it is a combination of many factors including Covid and the cost of living. Though it may also be that people’s sentiment may have shifted towards having more shorter breaks within the UK rather than just grabbing that two weeks in the sun. I am not saying that holidays are dead I am simply saying that more people are trying to get away more often and the easiest way to do this is to get away locally even if it is just overnight. There is compelling evidence to show that there is a real change in travel trends since the lockdowns. It has even been suggested that within the UK online searches have increased by over 500 percent compared with last year. This is further backed up by the Staycation Market Report 2021, which indicated that over 50% of this people in the UK taking a holiday would do so in the UK whether this be as I said the shorter breaks or that two weeks in the sun. With all this talk about staycation it is no wonder that there is a very buoyant market for businesses that offer staycations. Two particular sectors that I have seen a growth in as a result of direct experience with clients is leisure on the water and caravan parks. Both industries have one thing in common, which is once you have got over the capital commitment which is the main barrier to entry, the advantage is that they do not need a lot of labour to maintain what they do and what is noticeable is that HSBC UK Bank Plc have been spear heading finance for caravan parks throughout the country. “Ian Coulson (Area Director, Business Banking Western Midlands of HSBC) said “as a bank we do not try and follow trends but we look for clients and sectors where we can provide the best support and there are so many benefits for staycation not just the reduced environmental footprint and the money that is put back into the local economy”

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Prescription for Good Health

Jhoots Pharmacy has long been known as the leading independent, community pharmacy chain within the Midlands. Jhoots have done this through offering an efficient and reliable service for all of their patients and customers.   Manjit Jhooty (CEO of Jhoots Pharmacy) has prided himself in ensuring that everyone is given the time and attention they deserve by ensuring Jhoots Pharmacy tailor their services to meet everyone’s individual needs.    In order to continue to help Jhoots Pharmacy in their expansion they have taken support from HSBC UK Bank Plc (“HSBC”) who have had a good relationship with the pharmacy chain and have continued to support them over the years. Thus, it was a natural step for HSBC to continue to provide support for Jhoots Pharmacy and as part of their reorganisation in order to allow the pharmacy to continue to offer its full range of Essential, Advanced and Enhanced NHS Services. Manjit said “it goes without saying HSBC have the skill set and experience to deal with pharmaceutical sector but what makes the bank different is the personal approach and the genuine interest they have in their customers which reflects how I look at my customers within my business.” Partho Bose (Senior Business Development Manager at HSBC) said “working with Manjit has always been a pleasure because he is focused in his goals which means things have to be done at a pace in order to allow him to move onto other things.” In order to deliver the deal, HSBC used Hawkins Hatton Corporate Lawyers who are a panel firm for the bank. Manjit specifically wanted HSBC to use Hawkins Hatton as he knew their skill and reputation for delivering a deal on time. Colin Rodrigues (Corporate Partner at Hawkins Hatton) said “having done a pervious deal for the bank for Manjit, I do know that there is no room slippage when starting a transaction. In this particular transaction, not only there was a lot to do but the time frame was very tight thus, we had to work as cohesive team to deliver the deal for the bank and Manjit.”

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Déjà vu

The government has announced its new “Energy and Security Strategy”. Obviously, the focus will be on renewals and nuclear. But will eight new nuclear power stations ever to be commissioned even if there are going to be located on the existing power stations? Will the new offshore wind farms come into the fore? That’s why I say déjà vu, it is as if we are back where we started on the energy debate. It was just the other day in the “COP26” in Scotland where the UK restated its aim of net zero. Thus, in reality there is nothing new in the strategy being put forward for the short term. Is this a missed opportunity given that everything is focused on the long term? As we will all know all it takes it’s a change in the government, for policy decisions to be consigned to the bin, especially when some of these policy decisions do not affect the term of that current government but instead successive governments. Any nuclear power station will take at least 15 years to come online even once the planning and finances have been agreed. Part of the energy security debate has to take in account how to fix supply and not just look at how to generate supply. In the short term there are very easy wins when looking at energy saving installations which will save money on energy consummation. The UK's housing stock is one of the most energy inefficient in Europe despite years of government grants to improve the situation. Surely there has to be a dual approach. Even if the government is not going to focus more on energy saving improvements, I suppose it is a good thing that the government is looking at a new offshore grid and hydrogen to replace natural gas. However, the government needs to be bolder as back in 1973 the oil crisis led to “Messmer plan” which made France focus on nuclear energy as a means of power generation. It is the lack of investment in the UK which will cause further bill shocks in the future. If the government invested in nuclear and alternative renewables even though bills are at the heights there are now which could not be anticipated a few years ago the UK consumer would be getting a better return. This sounds contrary but some of the earlier wind generation contracts which looked expensive at the time are now paying dividends as they are generated electricity at prices lower than the current energy price. So maybe a bold approach with energy saving measures framed in a radical approval process for new projects could be the solution but as always only time will tell as the government has to follow through no matter what the short-term cost are going to be as there will be long term gain then we can avoid déjà vu.

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Hawkins Hatton Newsletter March 2022

Newsletter March 2022

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UK ENGINEERING FIRM TO INVEST IN STRATEGIC MACHINERY WITH FUNDING FROM HSBC UK

Westley Group, one of Europe’s largest privately-owned foundry and engineering groups, is set to further invest in new CNC machinery following an eight-figure funding package from HSBC UK.

The funding from HSBC UK will support the Group’s UK business plans to add further value to its foundry activities through machining more of the castings it produces for its worldwide customer base.

In addition, the financing allows Westley Group to grow further into existing and emerging markets for their highly complicated products; most of which are safety-critical in application. This will allow a number of new jobs to be created in skilled machining operations across its 4 manufacturing sites.

Westley Group is a trusted world expert in heat, wear and corrosion resistant alloys for a wide range of strategic equipment and safety critical applications; servicing a range of industries including defence, marine, aerospace, oil and gas, architecture and general engineering. One of their key markets is the UK’s and overseas’ surface and sub-surface strategic naval defence market.

James Salisbury, CEO at Westley Group, said: “This agreement with HSBC UK allows us to expand our services by investing in new machinery and upgrading our facilities to grow the Group’s offering to our customer base – it gets us even closer to our customer and their own finished product”.

“The products we produce are subject to some of the world’s most stringent of testing criteria. They are also incredibly complicated from a metallurgical and geometrical perspective. Our customers rely more and more on our expertise to deliver a finished product including all testing and certification”.

Keith Webb, Deputy Regional Director and Head of Manufacturing for the Midlands at HSBC UK, added: “Westley Group has a clear commitment to manufacturing excellence and we look forward to further supporting the development of this well-established business that is a leader in its field, whilst helping to create new jobs within the UK and supporting its plans for business growth.”

Colin Rodrigues, Corporate Partner at Hawkins Hatton said: “Every agreement brings its own unique traits and differentiation requirements. We worked closely with Mike Richards, FD to determine the factors that would be required to get the deal done. That meant we had to complete the agreement expediently, which was a challenge given the number of commercial properties”.

Westley Group was recognised as one of the UK’s top 200 private companies with fastest-growing international sales in the 2021 Sunday Times HSBC International Track 200.

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Good food, good wine and good company at HH event

‘Twas the night before Christmas’ In fact, it was a whole month before Christmas, and some, when Hawkins Hatton Corporate Lawyers decided to hold their ‘Sing for your Supper’ dinner. This event was never normally held in November, in fact, it was always held in early spring. Given the intervention of the pandemic, this dinner was not able to be held in the spring of 2020 or 2021. Instead, HH thought rather than waiting for spring 2022, they would hold a pre-Christmas event to try and share some of the magic of Christmas with their clients and professional contacts. The event at Weston Park has been held there for over 10 years by HH, and has become one of the iconic events which people put in their business calendars. HH corporate partner Colin Rodrigues said: “Our event is simple – it is good food, good wine and good company with friends, so what is there not to like? Given how difficult the pandemic has been for a lot of people, HH thought by sharing some Christmas joy early, it would be the perfect way to mark the countdown to the start of the festive season. Litigation partner Harminder Sandhu added: “HH has been built on strong values of client service which means a lot to Colin and I, and when we see our clients and professional contacts in one room, we know we are amongst friends.” View the original Express and Star news article here

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Tyger Tyger Burning Bright

No, not that William Blake famous poem or Chinese New Year but is it that beast stalking the long grass of the UK economy known as inflation. There is one thing I always beat the drum about which is productivity and now I have added inflation to this ensemble. It is impossible to ignore that inflation is currently running at over 5% as I can see the real effects working at the coal face with business clients. I do not have a crystal ball, economists and policy makers are saying the current inflation rate is only ‘transitory inflation’ and it will be gone before we really suffer from its long-term effects. It is only because I was a child of the Thatcher generation that I am able to say I have seen it before. In those times inflation averaged over 12% and some prices doubled if not trebled. There are many reasons that contribute to the current rate of inflation, including a contracting market in energy suppliers or the cost of ‘big-ticket’ items increasing because of supply chain issues. All the things I have mentioned for the current rate of inflation are very similar to those of the 70s where we had a weak pound, a fuel crisis and the government injecting money into the economy through high wage settlements for public sector employees. In the same way during the last 24 months the government has borrowed record sums to deal with COVID and prevent a free fall in the economy. The real difference now though is interest rates have not increased to counter-act inflation but will the macroeconomic policies see a comeback in the UK under the conservative government? Unlike the Thatcher era, when the ‘Iron Lady’ went into battle with unions to put a stop to higher wage growth, we cannot follow the same route, because unions are not as strong as they were, so instead we need to reward productivity. It is only with improvement to productivity that we will be able to move forward. That is why we should take the opportunity in this new flexible office and home working environment to maximise productivity by working smarter and keeping that big beast at bay. It is an old adage, more for less and get rewarded. Unless we now adopt this strategy, we will find other countries will leave the UK behind.

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Integrated Pest Control

Integrated Pest Control. Its all in the name as Gareth and Catherine Turner have been running their business called “Integrated Pest Control” (“IPC”) for many years and have developed both an efficient and integrated business in all matters, pest control. Given how efficient and well run IPC have been and continue to be they were targeted by Rollins Pest Control who are the number one brand in the USA for pest control. Gareth and Catherine Turner embarked on their venture with the assistance of Hawkins Hatton Corporate Lawyers in order that they achieved their goal with minimum fuss but most of all in the knowledge that they were legally protected in all respects from what seemed very daunting legal documents. Gareth Turner said “I have known Rollins for a very long time and I know how they do business, and as such Rollins and IPC are a good fit together as we can continue to grow on the quality of clients we have knowing that Rollins are big enough to give us the continued support to enable our services to be offered to new clients on a wider geographical footprint.” Colin Rodrigues (Hawkins Hatton) said “I am always delighted to help clients especially when they are new to HH as lots of people who know HH are going to be familiar with our service but when you have a new client who is not familiar with how we do things then they get to understand the process it brings a smile to my face and the rest of the team, as we know we have done a good job for them.”

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Tea is certainly the best drink of the day

The Bettavend philosophy has always been focused on exceeded customers' expectations through high levels of customer service.
Geoff Rouse has continued to strive to use this philosophy to create a business which for nearly 35 years has been supplying fully inclusive refreshment systems and ancillary services. Bettavend is now regarded as one of the more established and highly successful, independent, regional vending companies within the UK. This has meant it was just a natural progression for Vicki Appleby and Ben West to undertake a management buyout of Bettavend from Geoff Rouse (“MBO”).
In order to undertake the MBO, Geoff instructed Colin Rodrigues of Hawkins Hatton Corporate Lawyers to assist him and his wife, Jeanette, in helping to deliver the MBO for them. Hawkins Hatton Corporate Lawyers worked alongside David Gamblin, who has been Geoff’s accountant for a number of years and helped him make instrumental decisions to build his business.
Geoff said that “the extensive knowledge and experience of Ben and Vicki within Bettavend over a number of years meant that they were the ideal candidates for the MBO, given their mantra of providing a high-quality service on behalf of Bettavend and always putting the needs of Bettavend’s customers first and foremost”.
Colin Rodrigues said: “I have only known Geoff for a short time, but I soon realised that not only is he a good entrepreneur, but he genuinely cared about his business and all those who worked within it. He really wanted to ensure the continued success of Bettavend through the stewardship of Ben and Vicki”.
Ben and Vicki said: “we have always known that Bettavend are fast, efficient and customer-focused as these are the traits we picked up from Geoff and we intend to continue to ensure that Bettavend carries on as one of the leading suppliers of vending products which exceed people’s expectations of taste and flavour. That is why tea is sometimes the best drink of the day, especially when it is dispensed by Bettavend”.
David Gamblin said: “like with any business, if you can get the basics done well then it gives time for everybody to focus on the added value, and I am sure that Ben and Vicki will continue Geoff’s journey into the future”.

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Talking Point - London financial market changes

In the same way Royal Dutch Shell is evolving into focusing on new energy technologies from battery, wind and solar, so is the London financial market. The oil giant is abandoning it’s Shetland oil project as a result of the economic case not being strong enough even though Shell had a 30 per cent stake in the project. Shell has also given up its dual listing for the UK and Netherlands to now just have a UK listing. Within the London market, the concentration of companies has always been focussed on the stalwarts of oil, gas, mining and banking. It now wants to become Europe’s main financial hub for FinTech. The stock market rules in London changed in December as a result of the previous fanfare heralded by the Chancellor Rishi Sunak, when he expressed his desire to perform financial services through Big Bang 2.0 as well as improve the UK’s position as a place to do business through detailed reports from Lord Hill and the Kalifa Review of UK FinTech published earlier this year. It is clear the direction of travel for London is now a course that will be divergent to the EU with a wider focus on global trade and attracting global capital into the UK. With that in mind, the December changes to the listing regime in the UK are designed to meet the UK’s desire to be the leading exchange for FinTech and technology companies. It is hoped these changes will help cement the UK’s position as a leader of growth and innovation for the expansion of technology companies in the London Market. In very general terms, there has been a balanced approach by ensuring listed companies in the High Growth Segment being one of the three segments of the Main Market in the London Stock Exchange, now have an entry value of £30 million rather than £700,000 to help create trust within those listed companies. This is then balanced out by allowing those companies to have a dual share structure, which allows founder shareholders to retain voting control which may be disproportionate to their stake in the company albeit it is only for the first five years from listing. Moreover, the minimum free flow, being shares in public hands has fallen from 25 per cent to 10 per cent.” Clich here to view the original Express and Star article

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The New Vintage

‘The New Vintage’ Midland dealmakers believe that a combination of a fast-recovering economy, almost fabulous amounts of money ready to be lent and invested, pent-up demand, owner-managers looking to sell, corporates looking to buy, and huge interest from overseas buyers are making the prospects for mergers & acquisitions (M&A) in 2022 look excellent. “The last year’s been a manic one for M&A, full of giddy pricing, aggressive deals, and happy sellers,” says Roger Buckley, corporate finance partner at BDO. “Those fundamental drivers for strong M&A activity in 2022 are still here. The wall of money looking for a good homes means high levels of activity, and high sale values. It’ll be tough to be a buyer, but a great time to be a seller.” “The pipeline for 2022 looks strong, and I expect another bumper year for transactions,” adds David M Jones, corporate finance advisory partner at Deloitte. “Theprimary motives for dealmaking remain unchanged for 2022. We saw a huge rally from late 2020 into 2021, and I expect this to continue into the New Year. All things considered, it’s a year to look forward to.” “Dealmaking momentum for 2022 has been building since the summer: we’ve never spoken to so many privately-owned companies,” says Paul Bevan, managing director at Breeze Corporate Finance. “For us next year will transcend all the years I’ve been advising on transactions.” There are solid grounds for this optimism. If we project the number of M&A deals involving Midlands-based businesses on current trends, 2021 should end with more than 800 transactions, up by about a fifth on 2020’s total and in line with volumes last seen in 2018. And they look like quality transactions: the value of these 2021 deals, where the price tag is known, is £8.6bn, compared with £4.9bn in 2020. The first three months of the coming year could follow 2021 in being the busiest quarter, driven by owner-managers looking to exit or de-risk before possible changes to Capital Gains Tax in March. In the year to December, there were 453 full or partial exits in the region. “The pandemic has changed some owners’ outlook on life,” adds Paul Franks, managing partner at Beech Tree Private Equity. “We’ll see an increase in businesses to market as owners either look for full or partial private equity exits, partly to facilitate growth, but also take some value off the table, to live life now, not at some future point when they sell the business. The pandemic has shifted the ‘I’ll do a deal next year’ mentality to doing something now.” Click here to view the full article.

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Hawkins Hatton Newsletter December 2021

December 2021 Newsletter

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Refreshingly Different

Our team of experienced lawyers came together to form Hawkins Hatton in 2006 with the single ambition of creating a different type of practice. One that not only delivers the desired results for our clients, but puts the smooth running of their business and life at the forefront of everything we do. Our ethos is built on total personal support, regardless of whether we are reacting to a client crisis within a moment's notice or pro-actively advising on a complicated legal or commercial issue. By bringing clear thinking to legal complexities, and responding to often challenging deadlines we help take the pressure off our clients. Through a highly dedicated, hand-picked professional team, our clients have access to vast experience within the firm. Achieving the results you require, means understanding your business, and your personal aspirations. In short, working alongside you as your legal partner.

Services

Corporate

We take a different perspective to your transaction

Property

We help you climb the commercial property ladder

Litigation

We take the weight off your shoulders

Legal 500 Hall of Fame

Colin Rodrigues has been listed in the Legal 500 Hall of Fame as a highlighted individual having received constant praise from Clients.  Click to see Colins’ Legal 500 Uk profile

Legal 500

We are recommended by the Legal 500 for Corporate, Commercial Property and Litigation work in the West Midlands on the the Legal 500’s elite “Leading Firm” list, which is The 2022 Legal 500 United Kingdom’s guide to outstanding lawyers nationwide. For full details of our recommendation please visit the UK Legal 500 website.

UK Chambers

Chamber and Partners have recommended Hawkins Hatton in 2022 as a leading firm and said that the firm is a “Highly Professional firm which is extremely responsible”.

Corporate Real Estate

Real Estate – Chambers 2022

We were selected as the exclusive contributor to Chambers 2022 Global Practice Guide for Real estate (UK)

Refreshingly Different

Our team of experienced lawyers came together to form Hawkins Hatton in 2006 with the single ambition of creating a different type of practice. One that not only delivers the desired results for our clients, but puts the smooth running of their business and life at the forefront of everything we do.

Our ethos is built on total personal support, regardless of whether we are reacting to a client crisis within a moment's notice or pro-actively advising on a complicated legal or commercial issue.

By bringing clear thinking to legal complexities, and responding to often challenging deadlines we help take the pressure off our clients.

Through a highly dedicated, hand-picked professional team, our clients have access to vast experience within the firm. Achieving the results you require, means understanding your business, and your personal aspirations. In short, working alongside you as your legal partner.

Find Us


Main Office
Hawkins Hatton Corporate Lawyers Ltd.
Castle Court 2,
Castlegate Way,
Dudley
DY1 4RD

Tel: 01384 216 840
Fax: 01384 216 841
Dx: 12746 Dudley
Email: info@hawkinshatton.co.uk

Directions from the M5 Motorway

We are located 2 miles from Jct 2 on the M5. Exit roundabout signposted to Dudley. Continue along dual carriage way over several set of lights. At next island take first exit (signposted Dudley). Continue for 1/2 mile until the next island.

Take fourth exit (next to the Footman James building) and proceed on to the Castle Gate development. Continue to the next island and take the third exit (back on yourself). Take the first left hand turn into the Castle Gate 2 courtyard. Please use the intercom at the gate to request access (Hawkins Hatton is situated in Unit 3). Visitor parking is at the front of the building.

Company Reg: 07151902
SRA: 566795

London Office
Hawkins Hatton Corporate Lawyers Ltd.
Suite 402,
16 High Holborn,
London
WC1V 6BX

Tel: 020 8191 7893
Email: info@hawkinshatton.co.uk