LLP latest: Trowers accounts confirm profits slide as Holman and Stephenson Harwood power on

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What finer way to kick off the New Year than a stream of law firm limited liability partnership (LLP) accounts? The latest in a run of recent filings confirm the extent of the fall in profitability at Trowers & Hamlins, while Holman Fenwick Willan and Stephenson Harwood confirm revenue increases.

Trowers’ LLP accounts for 2012/13 show that the firm’s net income fell from £26.2m to £16.1m while operating profit was down from £28.4m to £18.8m. The firm said the sharp fall in profits was largely due to the cost of moving its new London headquarters. Its turnover also decreased by 3.6% to £78.2m in 2013 from £81.2m the previous year.

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Comment: The New New Normal – a changing market beckons for 2014

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The last three years have drawn to a close heralding another 12 months much like those that went before: depressing. The eurozone flirting with break-up, fiscal woes holding back Western economies and a subdued legal market. Check, check and check.

But drawing to the end of 2013, commercial lawyers are facing an outlook that is, in highly relative terms, not half bad. The word from senior City partners has been generally upbeat since the summer. The first half financial results have, if anything, exceeded those raised expectations. We are looking at the best set of like-for-like financial results seen for five years from major UK law firms. Continue reading “Comment: The New New Normal – a changing market beckons for 2014”

Half-year financial results point to relative revival at leading UK firms

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Cyclical departments increasing contribution to bottom line

As an analytical tool half-year figures may be superficial but as a litmus test of performance they show, on the basis of the figures released by LB100 firms so far, that 2013/14 will be a much improved and more benign year.

Firms including Allen & Overy (A&O), Clyde & Co and Simmons & Simmons have disclosed increases in revenue, with signs that cyclical departments such as finance and real estate are beginning to increase their contribution to the bottom line again.

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H1 2013/14: Osborne Clarke sees half year revenues jump by 12%

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Osborne Clarke is the latest top 50 firm to announce positive results for the first half (H1) of the 2013/14 financial year as it posts a 12% rise in group revenues to €71.6m, which includes the firm’s international offices, while the UK boasts an 8% increase to £39.1m.

The 500-lawyer firm, ranked as number 32 in the LB100, attributes the success of the group revenue in part to its 14th and 15th office openings in Brussels and Paris, which opened in June and July respectively. Continue reading “H1 2013/14: Osborne Clarke sees half year revenues jump by 12%”

Positive financials continue as Simmons & Simmons posts an 8% increase in H1 revenues

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Top-20 Legal Business 100 firm Simmons & Simmons has reported an 8% increase in revenues for the half year (H1) 2013/14, rising from £121m at this point last year to £130.7m.

The firm has reported improved performance across all practice groups. This represents a reversal in fortunes for the firm, who last year reported a 3% dip in revenues at the half-year stage, attributed at the time to problems in the Eurozone.

The revenues posted are also much stronger than the firm’s full 2012-13 results, which were broadly flat with a 1% dip to £250.3m, with profit per equity partner also staying more or less flat at £525,000. Continue reading “Positive financials continue as Simmons & Simmons posts an 8% increase in H1 revenues”

Financial results 2013: BLP reveals PEP slump of 39%

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Following an unusual waiting game that has ensured Berwin Leighton Paisner’s profit figure has remained a topic of growing interest since the financial reporting season ended, the top 50 firm has confirmed that its profits are down by nearly 40%.

The 786-lawyer firm has revealed a 39% drop in profit per equity partner (PEP) from £660,000 to £401,000 and a 38% drop in net profits to £39.4m. This is the most significant drop in PEP of the LB100 top 50 firms over the past year, following 332-lawyer Trowers & Hamlins, which saw its PEP fall by 37% to £304,000. It is the second largest drop in PEP of both halves of the LB100 after Manches in 93rd place, which recently confirmed it is in merger talks with Penningtons and which saw its PEP fall by 43% to £134,000. Continue reading “Financial results 2013: BLP reveals PEP slump of 39%”

Mergers push the top 100 firms back into double digit growth

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A wave of consolidation in the UK legal industry has sparked double digit growth among the top 100 law firms for the first time in five years.

The latest Deloitte quarterly legal sector survey today (13 September) revealed a 10.5% increase in fee income generated in Q1 (ending 31 July) compared to the same period last year.

The growth was boosted by mergers within the sector, which accounted for approximately half of the fee income increase, with the balance due to an increase in general market activity. Continue reading “Mergers push the top 100 firms back into double digit growth”

Comment: The age of turbulence has only just begun for the UK’s top 100 firms

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Respectable, yes, but 2012/13 was a tough year, even by the post-Lehman standards law firm leaders have become accustomed to. While a frantic run of consolidation and international expansion pushed revenue up 8% to £19.1bn, like-for-like growth was far more subdued.

On all objective measures of productivity and profitability, there were further slides, even before accounting for inflation. Back-of-the envelope calculations indicate that the UK’s top 100 law firms are about 25-30% off their boom-time highs in real terms underlying profitability.

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Comment: If the mid-tier’s days are numbered why do they keep doing so well?

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We’ve had five years of unforgiving conditions for law firms, everyone agrees. And in many respects that squeeze has had predictable results on the upper echelons and lower half of the LB100. But this year it’s the mid-tier which has had the most interesting 12 months. This group should by rights and conventional wisdom be on its knees, yet judged on 2012/13 results they aren’t. Looking at organic growth, plenty of firms in the 26-50 range out-shone larger rivals and many of the stand-out performances this year – among them Mishcon de Reya, Holman Fenwick Willan, Macfarlanes and RPC – hail from this segment. Continue reading “Comment: If the mid-tier’s days are numbered why do they keep doing so well?”

If the mid-tier’s days are numbered why do they keep doing so well?

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We’ve had five years of unforgiving conditions for law firms, everyone agrees. And in many respects that squeeze has had predictable results on the upper echelons and lower half of the LB100. But this year it’s the mid-tier which has had the most interesting 12 months. This group should by rights and conventional wisdom be on its knees, yet judged on 2012/13 results they aren’t. Looking at organic growth, plenty of firms in the 26-50 range out-shone larger rivals and many of the stand-out performances this year – among them Mishcon de Reya, Holman Fenwick Willan, Macfarlanes and RPC – hail from this segment. Neither is this a one-year deal – there are plenty of firms in this weight class that have maintained a robust five-year growth track, powered by strong niches in areas like private client, TMT and insurance and a general affinity for contentious work.

It is a reminder that there is nothing inherently wrong with a domestic or mid-market focus. It is just one model with its own strengths and weaknesses. Executed with a genuine feel for those strengths it delivers not just well but sometimes spectacularly.

Continue reading “If the mid-tier’s days are numbered why do they keep doing so well?”