Legal Business Blogs

Comparing apples with, err, pears: Dentons’ financials show slight increase in revenue as Withers and Travers reveal numbers

If the financial results of 2013 are useful for one thing, it will be to remind us of the sheer volume of transcontinental mergers, nearly-ran mergers, and the growth in popularity of the Swiss verein model.

The tail end of the financial reporting season has seen Dentons post its first, broadly flat set of results since the three-way merger of SNR Denton, Salans and Fraser Milner Casgrain, while Withers and Travers Smith (which stands out all the more for its fierce independence) have both seen a small increase in turnover.

Dentons posted a combined total turnover of £829.7m, placing it broadly in the top 20 of global law firms in terms of turnover. Its PEP figure is £452,000, while net earnings stand at £225.2m.

The turnover sum is reached by combining the revenues of each limb of the verein, which on the face of it seems straightforward but for the fact that they do not all have the same financial year. This will undoubtedly skew any really meaningful comparison with Dentons’ peers.

Compared with last year, Dentons’ revenue figure represents a 1% increase and PEP is down by 1%. A spokesperson for the firm confirmed that by practice area, corporate work made up for around 61% of total global revenues, or £507.5m, disputes brought in £164.4m (20%), finance work contributed £75.4m (9%), and property £82.3m (10%) of the total revenues.

Elsewhere, Withers, which in May called off merger talks with Speechly Bircham, saw its revenues rise by 4% to £117.8m from £113.3m the previous year. It’s PEP, however dropped by 4% from £386,000 to £370,000. The top of equity has also dropped from 548,000 to 519,000 but the bottom of equity rose by 4% to £272,000.

Given the firm’s private client focus, it’s no surprise that wealth planning made up for almost half of its turnover, 48%, with disputes and corporate bringing in 17% and 15% respectively.

Meanwhile, the ever independent Travers Smith posted total revenues of £86.2m, up 3% from £83.8m last year. However, PEP dropped by 2% to £790,000 from £804,000 in 2011/12.

The results comes in a week that saw Herbert Smith Freehills announce its financial performance for just seven months – the period since the union between Herbert Smith and Australian leader Freehills went live on 1 October – but refuse to disclose the proceeding five months of the legacy City firm’s financial year.

The issued seven-month figures appear to support claims that the firm has seen an effective 10% fall in its profitability, at least judged by the rough ‘n’ ready formula of a pro-rata reading of the results over a 12-month period.

The seven-month results show revenues of £471.2m, with net profits of £137.2m, to be shared across 316 equity partners. On a 12-month extrapolation – admittedly a very rough guide – this equates to a profit per equity partner (PEP) of £753,000, against a legacy figure for Herbert Smith of £840,000 for the 2011/12 year. The legacy Herbert Smith PEP figure is on the basis of 131 equity partners.

David Willis, managing partner of HSF, told Legal Business that a straight financial comparison is not realistic. ‘You’re not really comparing like-for-like with the old firm. We’ve bought together two firms,’ he said.