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‘Old-fashioned’ values pay off for Macfarlanes as double-digit growth sees PEP pass big four

Pound for pound one of the most successful UK firms in financial terms over the last five years, Macfarlanes has once again posted an impressive set of figures with double-digit growth in both revenue and profits for the second year running. At £1.55m, Macfarlanes’ profit per equity partner (PEP) is now stronger than all of the big four Magic Circle firms.

Revenue grew an impressive 14% to £159.6m for the 2014/15 financial year, up from £139.7m having grown 22% from 2013/14. Profits climbed 26% to £81.7m with PEP jumping 30% from £1.2m to £1.55m following a 21% increase the previous year. In PEP terms, based on last year’s Legal Business 100 stats and the results already in from the Magic Circle for 2014/15, Macfarlanes would be bettered only by Slaughter and May from the top 100.

These figures mark the firm’s fifth consecutive year of top line growth, up an eye-catching 73% since the 2009/10 financial year. The firm’s PEP over this period is even more impressive, growing a 118% from £711,000 in the last five years.

Unlike some Global 100 firms and the Magic Circle’s big four, Macfarlanes has bounced back incredibly considering its revenues were down 10% and 7% in 2008/09 and 2009/10 respectively after a stark decline in corporate work post-Lehman hit the firm hard.

‘We are in a very different business,’ said senior partner Charles Martin (pictured). ‘We compete with the Magic Circle in some ways but we don’t see them in every market. We don’t have the complexities and layers of cost that they have because of their scale. Our success comes down to a simple business model – some would say that’s old-fashioned but not having grown to some extent makes our partnership more adaptable. We bounced back after the downturn because changes were easy to drive.

‘We have seen some important client gains and some interesting trends but as usual, it is our loyal longstanding clients that came back strongly last year.’

Martin also pointed out that 2014/15 was also a year in which the firm’s almost entirely sterling billings were a distinct advantage. A depressed euro has been a key factor affecting the billings of the big four, while a weaker Australian dollar has also played its role for Anglo-Australian firms.

Some highlight mandates in the past year for Macfarlanes include representing Verizon Communications on its acquisition of Vodafone’s 45% interest in Verizon Wireless for $130bn, for which the firm picked up Corporate Team of the Year at the Legal Business Awards this year; and acting for London Bridge Holdings on the sale of the More London valued at £1.7bn.