Silver circle tarnished as financials slide
Equity partners at firms in the silver circle will be taking home a significantly lower share of profits following the 2008-09 financial year, with profit per equity partner (PEP) falling by an average of 34 per cent.
Charles Martin
Travers Smith, which has not yet finalised its figures for the past financial year, is expected to be the worst hit, with PEP expected to be 38 per cent down at around £470,000.
Ashurst and Macfarlanes both fell out of the million-pound PEP club, with the former reporting a 35 per cent drop, from £1.04m
in 2007-08 to £673,000.
At Macfarlanes a 31 per cent drop saw PEP fall from £1.1m last year to £846,000.
After a fall of 33 per cent, Berwin Leighton Painser’s (BLP) PEP stood at £414,000, down from £620,000.
At Macfarlanes, which saw revenue fall by 11 per cent, from £110m to £99m, senior partner Charles Martin said the numbers were indicative of a drop-
off in activity in the firm’s core practice areas.
“They reflect a downturn in important practice areas, such as private equity and real estate, and an increase in equity partner numbers,” he added.
It is expected that Travers will put in the worst turnover performance of the group given its dependence on the private equity market. It is understood that the firm will post a turnover drop of 20 per cent, down to £64.5m.
Ashurst’s turnover fell by 7 per cent to £301m, while BLP’s fell by 3 per cent to £180m.
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Readers' comments (15)
playfootsieforme | 20-Jul-2009 12:42 pm
These firms are second-rate compared to the magic circle. They all jumped into private equity without any hedge and it's all gone wrong.
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City Gent | 20-Jul-2009 7:44 pm
Thank you for that invaluable insight., though I do worry whether the partners from the second rate silver circle firms will be able to sleep at night after your stinging criticism.
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Anonymous | 20-Jul-2009 9:09 pm
Ok, Macfarlanes has a considerably higher PEP figure than CC, so the above comment is not entirely correct. Secondly, had it not been for the depreciation of the sterling in relation to the euro many of the MC would not have posted such positive results. These record figures we are seeing are not necessarily a reflection of increased work/quality at the MC, just a fortunate bonus from having an international network.
Many of the silver circle firms did specialise in private equity but the fact that they are all still posting quite reasonable PEPs suggests that they are viable businesses.
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Anonymous | 21-Jul-2009 0:18 am
Second rate? What on earth is your point here.
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Clarence Boddicker | 21-Jul-2009 8:24 am
More brass circle than silver circle then?
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Political Realist | 21-Jul-2009 9:12 am
Playfootsieforme: what on Earth are you talking about - "without any hedge"? It is hardly as though the Magic Circle have faired any better on their PEP results.
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matlock | 21-Jul-2009 10:51 am
Many of these firms have announced lower drops in turnover than might be expected given the decline in economic activity.
A drop of only 20% seems low for Travers given that they had a private equity concentration.
It would be interesting to see the breakdown in turnover of the first and second half of the financial year. Assuming things tailed off I would expect further declines next year.
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Omni Consumer Products | 21-Jul-2009 10:58 am
He's probably talking about their offices, they'd be better off with a hedge rather than a wall or fence.
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Tartan Teddy | 22-Jul-2009 2:47 pm
From the vitriol of the comments on lack of quality - made by associates trainees and partners made redundant from the Magic Circle -- I am far from sure that the Silver Circle have second rate lawyers.
To me the SC bring their brains to work - not their egos and the transactions are all the better for it .
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Anonymous | 23-Jul-2009 0:25 am
Has Herbert Smith announced its PEP results?
If the definition of the "silver circle" is a set of firms with considerably higher PEP figures than their competitors, can BLP/Travers still be considered part of this group?
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