Pinsent Masons has ring-fenced ‘significant funds’ from partner profits in a bid to prioritise investing in the business, in turn cutting profit per equity partner (PEP) by 5%.
Revenue at the firm for the 2018/19 financial year rose 7% to £482m, slightly ahead of last year’s 6% increase and good for growth of more than 40% over the last five years. Gross profit rose 2.5%, but PEP fell to £620,000 from £653,000 as the firm put aside funds for investment in areas including IT and cybersecurity.
Pinsents managing partner John Cleland told Legal Business the firm had for the past four or five years diverted profit into investing in the business when necessary, but this year it was being ‘more overt’ about it. He expected the move would not be a one-off, although would not specify how much had been held back: based on last year’s equity partner numbers, however, the fund is likely to be in excess of £6m.
‘We’re deliberately signalling that while a significant proportion is going back to the principle stakeholders, the rest of it is being reinvested directly in the business,’ he commented. ‘Once we make investment, then we will redistribute back out to partners, so it’s a prioritising of investment, as opposed to moving away from a full distribution model.’
Cleland pointed to what he called an ‘aggressive’ eight office openings over the past four years as one area of investment, most recently opening its third German outpost in Frankfurt.
Furthermore, in March it appointed Kirsty Dougan to develop the firm’s Vario business – its flexible resourcing offering – in Asia-Pacific, having now launched in Australia, Singapore and Hong Kong. Cleland said that business had seen significant double-digit growth this year and its headcount has reached 600 globally. The firm also has about 50 legal technologists, analysts and engineers in an R&D function it is developing.
The firm’s overall partnership grew by 4% to 446 partners last year. It was also one of the leading firms on the Mindful Business Charter, an initiative it spearheaded alongside Addleshaw Goddard at Barclays to try to mitigate unnecessary stress for in-house and external lawyers.
‘We’ve continued to focus on organic growth in the business, but have also been investing in the services we think broaden our offering. We have a number of things that are important to us as a business and we need to invest in those,’ Cleland commented. ‘We continue to be interested in Europe. Germany’s been a very good market for us.’