The City’s mid-tiers defied the critics to achieve market-leading pace through 2015, cementing the gains of recent years. How big an upset can the tortoises deliver?
There are a few simple ideas that define the pecking order in the UK legal industry. The big boys are international, materially larger than the tiers below and two to three times as profitable as their mid-pack cousins.
Specialist practices and focused City firms in the second 50 thrived in what remained an uncertain market.
The second 50 is a hard place for any law firm without a strong claim on their chosen patch. Overall this section of the market saw a flat year despite the support of a relatively upbeat domestic economy and surging property market.
This year’s Legal Business 100 (LB100) has seen the dynamics of the UK legal market turn on its head as national-driven law firms outperformed those at the top of the table, including the Magic Circle.
Overall, total revenue for the LB100 in the financial year 2014/15 is down 1% to £20.64bn, while lawyer headcount has also decreased – down 2% to 64,024. But, these figures mask the positive performance from firms ranked 26-50, with average turnover up 6% to £112m. While revenue per lawyer (RPL) was down 3% to £248,000, profits were up – with profits per equity partner (PEP) seeing a double-digit increase of 10% to £453,000.
Regional firms are experiencing mixed fortunes. Can they take advantage of a less London-focused client base?
Regional and national firms dominate the second half of the Legal Business 100 (LB100), but typically they do not enjoy the same success as the London-based firms that also occupy the lower end of the table. This year, 32 firms ranked 51-100 are regional or national law firms based outside London, totalling £1.2bn in revenue from 6,308 fee-earners.
LB100 LAW FIRMS
The firms that appear in the Legal Business 100 (LB100) are the top 100 firms in the UK, ranked by gross fee income generated over the financial year 2014/15 – usually 1 May 2014 to 30 April 2015. We call these the 2015 results. Where firms have identical fee incomes, the firms are ranked alphabetically.
An overwhelming majority of firms that appear in the LB100 co-operate fully with its compilation (see ‘Transparency’, right) by providing our reporters with the required information. A limited number of firms choose not to co-operate officially with our data collection process and in these circumstances we rely on figures given to us by trusted but anonymous sources. Continue reading “LB100 2015: Methodology and notes”
From a successful UK focus to consolidation, LB100 management figures give their reflections on the market
So far so good
‘A number of businesses like us have adopted a strong sector proposition in the UK and that has been welcomed by the market. It reflects a general improvement in the UK economy and those businesses with a strong imprint in the UK market will benefit from that. We have grounds for confidence but the main challenges I see are around the uncertainty that remains at a macro level in a number of economies where we trade. It remains to be seen how clients respond and adapt to the EU referendum in the UK. There is continuing uncertainty in the eurozone, brought about by the position of Greece – I still see that limping along.’
John Cleland, managing partner, Pinsent Masons
Amid a challenging year for London’s top firms, Allen & Overy (A&O) managed to hit its stride with revenue growth of 4% to £1.28bn, while profits per equity partner (PEP) came in at £1.21m, a rise of 8%.
The result was significantly ahead of A&O’s London peers, which have also seen their sterling results impacted by weakness in the euro and the inroads of US law firms in City deal work (in constant currency, A&O estimates its revenue growth at 8%). Continue reading “Case study: Allen & Overy”
Life for a financial services-heavy law firm competing with larger rivals was always going to be challenging after the banking crisis, but Simmons & Simmons suffered more than most as it wrestled with abortive merger talks, plunging turnover and strategic discord.
This makes its revival in the last two years all the more welcome. Following a torrid 2012/13, with memories still fresh from its divisive merger bid with Mayer Brown, the firm was left with revenues £40m below its boom-time peak in 2008 but its previous high has finally been passed with an 8% rise in revenues this year and profits per equity partner (PEP) up 17% to £649,000, making its performance one of the strongest in the UK top 25 this year and by far the best by a ‘chasing pack’ firm. Continue reading “Case Study: Simmons & Simmons”
It was another strong performance from Legal Business’ 2015 Law Firm of the Year, Osborne Clarke (OC), which saw revenues grow from £142m to £151m, with profits per equity partner up from £513,000 to £550,000.
‘We had a fantastic year the year before and just to keep that momentum going was key for us,’ says UK managing partner Ray Berg (pictured). ‘There was no complacency. We continue to do well in our core areas and retain a strong sector focus.’ Continue reading “Case study: Osborne Clarke”