While the headline Legal Business 100 (LB100) results are once again inflated by significant merger activity at every level, there is evidence that many of the top 100 grossing firms in the UK are enjoying organic growth again.
Total revenue for the LB100 for 2013/14 is £20.82bn, an increase of 9%, while lawyer headcount swelled 6% to 65,111. With revenue growth slightly faster than 2012/13 but headcount growth slower, average revenue per lawyer (RPL), profit per lawyer (PPL) and profit per equity partner (PEP) were all up by 3% to £320,000, £98,000 and £640,000 respectively.
The top 25 firms in the LB100 posted the fastest revenue growth, with average turnover up 10% to £650m, a figure inflated by firms such as Ashurst and King & Wood Mallesons SJ Berwin, which both had large-scale mergers taking effect in 2013. While none of the firms in the top 25 stood out significantly, Clifford Chance (CC)’s performance illustrates the returning strength of transaction-focused firms, with its turnover up 7% to £1.36bn and PEP up 16% to £1.1m.
Matthew Layton, who took over from David Childs as CC’s global managing partner in May, said: ‘We continue to have tremendous strength in the financial institutions sector, but we’ve made good strides diversifying and strengthening our position across every sector.’
The second 50 saw above average RPL growth (up 5% from £194,000 to £204,000) while average PEP was up 14% to £334,000. This improvement in profitability is in part explained by many smaller City-based boutiques continuing to make significant profit gains while other mid-market players, particularly Lawrence Graham, Morgan Cole and Blake Lapthorn, managed to recover from significant falls in profitability in 2012/13 in the run-up to their recent mergers.
Once again, the second quartile of the LB100 produced some of the strongest individual firms, with Osborne Clarke (OC), Macfarlanes, Watson, Farley & Williams and Mishcon de Reya among the standout year-on-year performers.
OC’s revenues grew 26% to £142m, while PEP was up 47% to £513,000. Managing partner Simon Beswick told Legal Business: ‘We had a significant uptick in returns on transactional work. Focus is key to being profitable while expanding; it’s making sure the firm and everyone in it are aligned with our approach.’
For a complete breakdown of the top-performing UK-based firms, see our LB100 report in full tomorrow (2 September)