Legal Business

Training contracts: A&O cuts 2015 intake by 15% and reveals retention rates alongside HFW and Olswang

Allen & Overy’s (A&O) decision today (15 August) to reduce its trainee intake by 15% in 2015 will be closely watched by City rivals, many of which are also considering whether to cut their trainee numbers in light of diminishing newly-qualified (NQ) roles in the medium term.

The top five LB100 firm, which achieved a modest turnover growth of 1% this year to £1,189m, is cutting its trainee numbers from 100 to 90 in 2014, followed by a further drop to 85 in 2015. A statement from the firm said the decision was taken in order to ‘match [its] expectations of NQ jobs in the medium-term.’

Graduate recruitment partner Richard Hough, added: ‘We aim to recruit for the long-term as well as providing a high quality training contract.

‘Managing our intake numbers means that we aren’t just offering our trainees excellent training and experience, but also a strong prospect of a long-term career with the firm after qualification.’

The announcement comes as A&O is also the latest and last Magic Circle firm to release its trainee retention rate, posting a figure of 72%.

A total of 45 out of 51 applicants have been made offers and 39 accepted a permanent position with the firm. This signals a dip on last autumn’s results, when the firm retained a total of 46 out of 58 trainees, giving it a retention rate of 79%.

This round the firm has posted the lowest retention rates of any Magic Circle firm, as Linklaters, Slaughter and May, Clifford Chance and Freshfields Bruckhaus Deringer all released figures upwards of 80%.

However, David Campbell, partner and training principal, said: ‘The job market for NQs continues to be tough but we are pleased to have been able to offer jobs to so many of our trainees. A number of this year’s intake decided not to accept offers, so our retention rate is lower than we expected.’

Elsewhere, Holman Fenwick Willan has taken on 100% of its trainees, while at the other end of the spectrum only 54% of Olswang’s qualifying trainees have been given a position at the firm after seven of 11 were offered a permanent position and six accepted the offer.

Legal Business

Host of top 100 firms disclose increase in turnover as profit proves a more variable metric

Host of top 100 firms disclose increase in turnover as profit proves a more variable metric

A host of UK top 100 legal firms including Holman Fenwick Willan, Ward Hadaway, Gateley, Shoosmiths and Sacker & Partners have all reported revenue increases for 2012/13 amidst highly variable profit figures.

Top 30 UK firm Holman Fenwick Willan has seen its turnover increase by 13.8% at the 2012/13 year-end to £141m, while net profit jumped by 17% to £38m, up from £32.4m the previous year. However average profit per equity partner (PEP) at the 450-lawyer firm climbed by a modest 1% from £525,000 to £530,000, largely a result of the addition of 10 new equity partners over the past year, taking the total to 72.

Meanwhile national top 40 firm Shoosmiths has seen a slightly more modest 3% rise in turnover while PEP dropped 9.7% from £298,000 to £269,000 as the firm pointed to the rise in average equity partner numbers from 40 to 45 during the year. It was a year that saw the firm expand into Scotland through its merger with Archibald Campbell & Harley last autumn. The lion’s share of the firm’s revenue came from its disputes and corporate practices, which made up 30% and 22% respectively.

Elsewhere, top 50 full service national outfit Gateley enjoyed a significant boost in profits over the past year, with PEP up 22% from £214,000 to £262,000 while revenue rose 7% from £61.5m to £66m. The 462-lawyer firm opened a new office in Leeds in January 2012 and bulked up its City premises with a move to 1 Paternoster Square last October. The firm’s equity spread now ranges from £140,000 to £550,000, up from £104,000 to £400,000 at the 2011/12 year end.

Enjoying a double digit increase in turnover was top 90 firm Ward Hadaway, which today (11 July) posted a 10% rise in revenue from £30m last year to £33m while average PEP went up from £281,000 in 2011/12 to £322,000 at last financial year end on the back of ‘significant investment’.

The UK top 100 firm opened its main Manchester office in July 2012 and grew its private client services, which saw income jump by 64%. Corporate finance and commercial services saw their income grow by 36% and 14% respectively.

Jamie Martin, managing partner at Ward Hadaway, said: ‘The marketplace for legal services is becoming ever more competitive with new entrants coming in to the sector and existing firms ramping up their efforts to secure greater market share.

‘Combined with pressures on costs and the overall economic climate, it is a difficult market at the moment so we have done incredibly well to achieve double digit growth against such a backdrop.’

In a year that has seen boutiques flourish, pensions specialists Sacker & Partners saw its PEP dip by 11% from £860,000 to £765,000 following the addition of three new partners this year, which gives the top 100 firm 16.4 full-time equivalent equity partners. At the top of its equity the firm nonetheless enjoys profits more on a par with the Magic Circle; the highest earning equity partner at the firm took home £1.15m, up from £1.1m last year while at the bottom of the equity partners took home £362,000, 8% less than last year’s figure of £395,000. Turnover saw a slight increase up from £24m 2011/12 year end to £24.3m this April.