It’s been a tough year for national firm Hill Dickinson. With both profit per lawyer and profit per equity partner taking a tumble of 15% – each at £33,000 and £264,000 respectively – and recent partner and staff redundancies matching others struggling in a turbulent market, the 200-year old firm has confirmed that it has issued a £2.8m cash call to partners to boost the balance sheet due to what managing partner Peter Jackson says was down to a year of heavy investment.
Hefty spending in the last 18 months includes the national firm’s launch of a new office led by resident partner David Reardon in Monte Carlo in March to boost its shipping and yacht practice. It also added a 30-strong defendant insurance team from DLA Piper’s Sheffield and Manchester offices earlier in the year, and invested in new premises at London’s Broadgate Tower for its City team in 2012.
Now, fixed-share and full equity partners will contribute a further £1,000 per equity point while a one-off contribution of £1,000 currently made by salaried partners will continue. Operating a modified lockstep ranging between 28-70 points, movement up the ladder is merit-based while performance is reviewed annually. Partners can move a maximum of six points up the equity ladder in a given year.
Jackson attributes the heavy investment made this year as part of a strategy that has caused the firm to struggle with profit levels this year. ‘I like to call it further investment. Strangely nobody else does. Internally, nobody likes paying more money out but the partners recognise that we’ve invested in a number of areas over the last 18 months and we’ve got to be able to continue that. That’s recognition on their part that doing business requires funding and they’ve done that.’
Jackson confirmed that the decision to increase capital was made by the partnership through a vote and not insisted on by lenders. ‘This is not me, senior partners and the Board thinking “we have to put money in”,’ he said. ‘The members have to have all the facts – strategy, investment, financials, presence in the marketplace, what we’re doing next and take a view – and they have.’
‘We’ve not seen people up in arms,’ he added. ‘There’s recognition also that our contributions were below average for firms of our size, status and in the marketplace.’
The 64-equity partner firm generated revenues of £112.8m this year – a marginal 2% increase while the 22% leap in profit per lawyer in 2011/12 stands starkly against the 15% decrease last year.
Last month the firm, following an announcement in April that it would be reviewing jobs ‘in response to the prevailing market conditions’ announced a total of 83 job losses, including 14 partners and 69 employees – 44 of which are leaving on a voluntary basis.
The news was confirmed shortly after the firm had announced it has sold its Chester office to Midlands firm Knights Solicitors for an undisclosed sum.