RPC has reported revenues of £108.6m for its legal business for 2018/19 after selling half of its management consulting arm.
The firm, which offloaded 50% of RPC Consulting to software company Marriott Sinclair in April 2018, announced today (25 July) that both like-for-like revenue and net profit for its legal arm alone rose 4% in 2018/19.
The four-year-old consulting arm, meanwhile, increased turnover by 33% from around £7m to £9.3m in the year to April 2019 and turned a profit for the first time after losing £2m in the previous financial year.
Profit per equity partner (PEP) at the law firm was up a striking 27% to £442,000 in 2018/19, as its all-equity partnership shrank by nine to 74.
Direct comparisons with its 2017/18 results are difficult, as the consulting arm was still fully owned by the firm last year. They showed higher revenue of £112.7m but much lower profits and PEP at £28.9m and £348,000 respectively.
Speaking to Legal Business, chief financial officer Steven Rowan said he was ‘pretty pleased’ with the performance of RPC’s legal business. ‘We had a strong performance from our core areas: strong litigation, decent corporate activity and a solid performance from our insurance practice.’
The firm’s equity spread increased considerably in 2018/19 as the top of the equity shot up 40% from £1.2m to £1.7m, while the bottom of equity was marginally up 4% from £185,000 to £192,000. ‘We want to reward top performers at the firm, whether partners or associates, and the top of the equity reflects [this],’ added Rowan.
Launched in 2015, RPC Consulting was loss-making in its first three years of activity after receiving substantial investment from the partnership. Rowan said losses by RPC Consulting were ‘in line with what we were expecting because it was a near start-up business’.
As of 30 April 2018 the firm moved into a 50/50 joint-venture arrangement with Marriott Sinclair, a Cambridge software company that was previously acquired by RPC Consulting in July 2015.
‘RPC Consulting has moved into a new phase of growth, so we wanted to ensure that the relationship with the law firm was appropriate for the next stage of its development, and allow it to operate with more of a sense of independence,’ said Rowan. He added that the business was still in the process of finalising its profit figure for 2018/19 but it made a ‘very encouraging profit’.
He denied that the reduction in equity partner numbers was part of a strategic review: ‘People come and go.’ The firm added five laterals to its ranks this year and promoted six to its partnership but losses included its head of construction and projects Dan Presto, who moved to Fieldfisher alongside fellow partner David Thorne in addition to a team of five associates.
The firm recently announced an official alliance with Chicago-based law firm Hinshaw & Culbertson, which will see the two firms work together on pitching and client marketing in the insurance sector as well as collaborating on professional indemnity mandates.