Legal Business Blogs

HFW profits drop 9% as investment costs weigh in ‘tough’ market

UK top 50 firm HFW has had a tougher year which saw revenues flatline as profits and profit per equity partner (PEP) tumbled 9% and 11% respectively.

Revenue stagnated, dipping slightly to £178.9m, while profits suffered a more severe decrease to £43.3m. PEP fell from £542,000 last year to £481,000 this year.

‘It’s been the cost of investment and the lead time,’ HFW senior partner Richard Crump (pictured) told Legal Business. ‘We’ve been growing a lot over the last three to four years in terms of offices in places like Abu Dhabi, and it can increase cost.’

Managing partner Jeremy Shebson added: ‘We’re in the middle of a growth journey, we hired a new employment team in Australia and they’ve started well, so there’s signs these investments will come good.’

Disputes resolution accounted for 71% of the firm’s overall revenue, with corporate and finance the second and third largest contributors at 14.5% and 12% respectively. This year’s results follow the firm last year recording an 8% rise in revenue and a 12% hike in profits.

The longer term has seen HFW revenues grow 28% over the last five years, while a reduction in UK dependence saw the firm produce 61% of its revenue outside the UK in 2018/19. The international revenue comes from 19 offices outside the UK, with affiliations in Saudi Arabia and Brazil among the most recent international additions.

And while a return on these investment remains the primary cause for the slowdown, Shebson added: ‘Throughout markets generally it’s been tough out there, but in terms of clients and international work, it’s been good for us.’