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Tightening of ranks at Hogan Lovells sees PEP approach $1.4m as turnover rises 4%

Hogan Lovells has posted an 8% increase in profit per equity partner (PEP) to $1.38m after reducing equity partner headcount 6% to 523 in 2018.

The firm today (25 February) posted revenue of $2.12bn, up 4% on $2.04bn in 2017, a less pacey rate of growth than the 6% achieved in each of the previous two years. Revenue per lawyer (RPL) grew at a faster 6% pace to $804,000 as the firm cut its legal workforce 2% to 2,637 while total partner headcount, including non-equity partners, was down 4% to 803.

‘In today’s market having a strong handle on capacity is critical to achieve profitable growth,’ chief executive Steve Immelt (pictured) told Legal Business. ‘We have to be lean, we have to have adequate staffing but we have to be very careful not to be overstaffed, and we were very focused on that. Notwithstanding those changes, revenue went up and RLP is considerably up.’

The numbers are less flattering in sterling teams, with revenue rising by less than 1% to £1.6bn while PEP passed the £1m mark growing 4% to £1.035m.

London revenue meanwhile broke the £300m barrier rising 3% to £301.9m.

While the firm made 31 partner promotions and 18 lateral hires, losses in 2018 included London litigation duo Jon Holland and Andrea Monks to Latham & Watkins in January and private equity partner Robert Darwin to Dechert in August, as well as a five-strong California team to Baker McKenzie.

The firm also cut 54 of its around 500 business support roles in London, moving most of them to its low cost centres in Johannesburg, Louisville and Birmingham.

The majority of revenue came once again from America, which accounted for 51% of the firm’s billings. Europe was second at 42%, with Asia Pacific and the Middle East contributing the remaining 7%.

Key mandates for the corporate practice, which accounted for 31% of turnover, included Walmart’s $16bn acquisition of a 77% stake in Flipkart. The firm’s contentious and employment practice, which was busy with key client Uber on a number of cases, brought in 28% of billings.

Immelt said that the regulatory practice, accounting for 18% of turnover, had a ‘very strong year’. ‘That’s not surprising. We have a leading trade practice and there are trade issues happening all over the place.’

The remaining turnover came from finance (14%) and intellectual property, media and technology (9%).

Looking to the future, Immelt said that work levels had been healthy at the start of 2019 and concluded: ‘Brexit is typical of the type of volatility that we see today, but that’s the benefit of being in a very well hedged firm like Hogan Lovells. We have a strong US practice, a strong practice in London and a strong practice in Europe.’