Turnover (£m): 64.5
Average PEP: 266
Equity spread (£k): 157-305
Profit margin (%): 19
RPL (£k): 253
It was wholesale management overhaul time at Charles Russell last year, a process that saw the firm abolish the managing partner position in favour of a more corporate style of governance. In practice that means an elected board of six fee-earning partners headed by chairman Michael Scott. Scott reports to the partnership at its monthly meetings, which are chaired by senior partner Patrick Russell. The new structure is aimed at increasing the level of consultation among the partnership about major changes and reducing the perception that management at Charles Russell under former managing partner James Holder was a closed shop. Financially the key indicators were largely positive last year. Turnover rose by 2 per cent, from £63.2m to £64.5m, average profit per equity partner was up by 2.7 per cent to £266,000 and net profit rose by 9 per cent to £12m.
The management overhaul coincided with a revamp of its remuneration structure. Previously the firm operated three classes of partners, A, B and C, which equated to equity, fixed-share and salaried. Profit for full equity partners was shared via a traditional lockstep of seven rungs, on which partners entered at 60 points, rising to 120.
The firm has now converted its salaried partners to fixed-share equity, with each partner injecting around £10,000 of equity into the business. Charles Russell has also introduced a small bonus element into the lockstep, allocated by an elected remuneration committee headed by Holder’s predecessor as managing partner Grant Howell. The seven-rung lockstep remains with no gateways. Once a partner is on the lockstep the expectation is that they will rise to plateau.
While the firm has no specific target for cashflow, last year’s efficiency drive resulted in a significant reduction in its relatively long lockup of 158 days. At the end of the 2010-11 financial year it stood at an average of 146 days.