Legal Business Blogs

Financial results 2013/14: RPC posts mixed results with revenue up 3% against 9% drop in PEP

RPC has this morning (21 July) posted mixed financial results for 2013/14, with revenue up 3% to £84.1m – representing growth of 40% since 2011 – but partner profits down by 6% to £26m. Profit per equity partner (PEP) came in at £338,000 for the period, a 9% drop on last year’s figure of £372,000.

In 2012/13 the City firm rose five places to 44 in the LB 100 with a revenue uptick of 21% to £82.1m, while PEP increased 5% to £372,000. Profit per lawyer, however, dipped 8% to £86,000.

Managing partner Jonathan Watmough (pictured) said: ‘We’re very pleased with last year’s revenue growth, particularly off the back of the stellar 20% increase we posted the year before. Especially given that our growth – broadly in line with what the likes of the Magic Circle have achieved – is entirely organic, and not the result of merger activity.

‘But it could have been better – last year saw a significant uptick in activity towards the financial year-end but too late to be accounted for in the 2013/14 financial year. But it has meant this year has got off to a flying start – revenue to date is already 14% up on the same period last year, with average recovered rates also continuing to climb.’

He added: ‘We’re not motivated or governed by some arbitrary PEP metric and so we don’t run the business that way. Compare this with other firms who have announced 3-5% increases in revenue and, in some cases, larger increases in profit and PEP; surely, in a case like that, when costs are increasing by up to 7% year on year you can only increase profit in a climate like this by slashing cost and not investing, and you can only increase PEP by cutting partners and not replacing them. That’s not our style, and nor will it ever be.’

In December 2013, RPC took steps to adopt an entirely merit-driven pay model and announced its intentions to abolish the traditional flat-rate salary for newly-qualified solicitors (NQs) in the UK and move to a system linked to merit and market rates from September 2014.

Highlights in the last year saw the firm secure a place on the 25-strong advisory panel for AIG, as well as winning the mandate to be sole advisor on a project involving pharma giant AstraZeneca on the acquisition, construction and planning related issues for a new global research and development (R&D) centre and corporate headquarters at the Cambridge Biomedical Campus, which AstraZeneca intends to inject £330m into.

However, the year also saw the firm lose its head of financial services and regulatory Steven Francis to Baker & McKenzie in March, while insurance partner Simon Kilgour joined the City office of fellow international firm CMS. Last week also saw DLA Piper hire a four-strong real estate team from RPC, including heavyweight Stephen Malley.