It is a well-established point in the legal industry that while much attention is paid to profits per equity partner (PEP), that metric is often substantially different to what most partners are paid.
While headline figures for revenue, profit and headcount in this year’s LB100 confirm another year of subdued trading, a look at how the top 100 UK-based firms by revenue have performed overall since the halcyon, pre-credit crisis days of 2006 makes interesting viewing. Not least as they are testament to the inherent strength of the industry, despite the hurdles it has seemingly faced in ten years. We also look at 2011 as a five-year mid-point, the stage when the global financial crisis had started to ebb. Continue reading “Going long: a ten-year view of the LB100”
In this table we blend together the three key profitability metrics, PEP, profit per lawyer and profit margin, to discover which of the top 100 firms are the most profitable. The firms have been ranked according to their aggregate score across all three measurements.
After years of strong growth, the City’s mid-tier saw more mixed results in 2016
With Brexit looming large over the UK legal market, many of the second 25 of the LB100 have lost momentum. Outpacing the growth of leading players ranked in the top 25, last year firms including Macfarlanes, RPC and Nabarro defied critics who suggest the City mid-tier are in structural decline. This year, however, many firms have posted subdued results.
Brexit-related woes aside, City firms in the second 50 enjoyed a bumper year
When a firm depends on a signature practice area or specialism in certain sectors, a boom year can quickly turn bust during periods of economic turbulence. However, a number of the London-based practices and boutiques that occupy the second 50 of the Legal Business 100 (LB100) were the standout performers over 2015/16, despite Brexit-related headwinds during the second half of the year.
Regional firms are reporting patchy performances overall but the arrival of new entrants to the LB100 shows firms outside the capital are holding their own
National and regional firms are historically outperformed by their London equivalents in the bottom 50, but this year these firms are holding their own. There are 30 non-City firms in the 51-100 bracket, compared to 20 London firms, with a combined revenue of £1.14bn, down on the £1.2bn shared between 32 firms last year. Average revenue for this peer group is unchanged at £38m – the same as for the London-based firms. Profit per equity partner (PEP) has increased 9% to £329,000, compared to the City firms, which managed 7% growth to £435,000.
The big four Magic Circle firms have posted their strongest performance in this year’s Legal Business 100 (LB100) since the recession, despite a subdued market overall. Although average revenue for the top 25 is down 3% to £622m, the combined revenue of Freshfields Bruckhaus Deringer, Linklaters, Clifford Chance and Allen & Overy (A&O) stands at £5.33bn, up 4% on last year, while average profit per equity partner (PEP) jumped 5% to £1.33m.
A&O managing partner Andrew Ballheimer said: ‘The year has seen mixed markets around the world. In that context these are another set of solid results which highlight our people’s ability to spot opportunities for growth.’