Turnover up by 20 per cent, net profit up by 50.8 per cent and average profit per equity partner (PEP) up by 56 per cent all point to a very good year for Berwin Leighton Paisner (BLP).
Turnover (£m): 229
Average PEP: 712
Equity spread (£k): 321-1,400
Profit margin (%): 27
RPL (£k): 375
The firm’s strategy of bringing in top-end partners whatever the cost, motivated by a view that the UK legal market has almost become a zero-sum game where gains can only be made at the expense of others, has paid off.
According to the firm growth was across the board, particularly in corporate and real estate, litigation, finance and tax. The international offices still contribute relatively little to the bottom line, but a merger in Moscow has helped when marketing to clients. Revenue in Singapore grew by 28 per cent during the 2010-11 financial year.
Scepticism that managing the equity bolstered BLP’s PEP is overstated. Throughout the year the firm had, on average, just five fewer equity partners than it did in 2009-10. The firm is still on the lookout for new partners, particularly in corporate finance and banking, and does not rule out offering special deals to entice candidates, although managing partner Neville Eisenberg expects guaranteed packages to become obsolete as profit grows.
The firm’s profit margin grew by 5 per cent to 27 per cent, but it remains low compared with those of top performers. Management claims to be tackling this through increasing its share of premium work and growing revenue faster than costs.
Market watchers suggest that the firm’s claim to be taking on more complex, lucrative mandates is correct. Indeed, the bulk of the firm’s growth has come from moving up the pecking order with existing clients, but that means few gains have been made in terms of new clients.
BLP operates a modified lockstep whereby partners enter the equity on 50 points and typically take 10 years to reach the 100-point plateau, although this process can be accelerated for star performers.
In the second half of 2010-11 the firm will overhaul its bonus pool structure.
Previously 20 per cent of partners’ pay was based on performance, but now this figure has grown to 25 per cent. The criteria on which partners are assessed have also been tweaked. The elected remuneration committee now puts more weight on subjective criteria, such as business development.