SNR Denton chief tells partners to hold their nerve after 35 per cent slump in UK PEP
Average profit per equity partner (PEP) at SNR Denton’s UK LLP fell by 35.6 per cent in the last financial year, dropping from £360,000 to £232,000.
Matthew Jones
The international firm, which was formed via the merger between US-based Sonnenschein Nath & Rosenthal and UK-based Denton Wilde Sapte in October 2010, has also revealed that turnover for the UK LLP dropped 8 per cent to £154.4m. In 2009-10 Dentons turned over £167.5m.
Net profit stood at £19.8m compared to £31.4m for Dentons during the previous financial year, marking a 37 per cent fall.
The UK LLP covers Europe, the Middle East and Africa (EMEA), with the US side of the merged business reporting on a calendar-year basis.
The large drop in profitability was expected, with SNR Denton UK CEO Matthew Jones admitting to The Lawyer last month that this year’s financials would make for grim reading (30 May 2011).
Commenting on the figures, Jones said: “In a year of transformation for our firm, including the addition of over 50 partners worldwide, the tough climate of 2010-11 did not meet the economic aspirations of our EMEA business.
“However, based on the steps being taken by the new EMEA board and continuing improvements in trading, we’re budgeting for a substantial turnaround this year. Accordingly, the year-end financial results don’t reflect our present direction and we’re planning for significantly stronger profitability across the firm.”
Jones, who was appointed CEO in March, recently launched a three-month review of practices and sectors with an emphasis on improving profitability.
He said: “We’re seeing exciting growth in work referrals and collaboration across our geographies, supported by the new global co-ordination of our eight sectors.
“Our current strategy review is focused on areas of growth for us, and for our clients, and will be the driving force behind our plans going forward.”
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Readers' comments (12)
Anonymous | 30-Jun-2011 10:16 am
This is looking more and more like a case of terminal decline. Almost all the partners with any spark have jumped ship and the band which remains seem to be sailing quietly into oblivion. The ‘merger is the only solution’ solution doesn’t appear to have worked, unsurprisingly.
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Jack the Lad | 30-Jun-2011 11:19 am
If average profits represent the middle of equity, practically everyone at SNR would make more money if they moved to a peer firm. Hardly a basis for optimism but probably a basis for further exits by partners who bring in business.
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Anonymous | 30-Jun-2011 11:27 am
The firm's problems are nothing to do with the merger, they are the result of 10+ years of complete managerial incompetence and strategic incoherence prior.
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The Rooster | 30-Jun-2011 12:49 pm
Yawn - do none of you have jobs to do?!
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Flimflam | 30-Jun-2011 2:36 pm
I wonder if Sonnenscheins are regretting this buy. They should have told Dentons to get their house in order before the merger.
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Sad but true | 30-Jun-2011 2:40 pm
Brought to you by the visionary leader who acquired TPW and saw the talent leave at the end of their handcuff period, opened and closed a Charlotte office within 18 months, opened a Palo Alto office and lost all the talent within two years while saddling the firm with a lease that is more expensive than NY space and sits virtually empty, brought in political hacks with law degrees who get paid lots of money for doing nothing, chased trendy new practice groups with over market compensation packages only to see the production therein not materialize and the talent leave or be forced out of the firm.....all programs that cost millions and millions of dollars EACH.....down the drain.
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Anonymous | 30-Jun-2011 2:56 pm
This sounds rather ominous... Periods of decline are rarely branded as such, but poor figures are usually explained as temporary "blips", as is the case here.
A 37% net fall in profit represents something of a financial clanger on SNR Denton's part - and should be seen as a warning for those other British firms rushing into dubious tie-ups with firms on the other side of the pond.
Although we are still operating in a somewhat choppy financial climate, this is nevertheless a truly awful, putrid state of affairs. What a rancid mess!
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Anonymous | 30-Jun-2011 10:02 pm
I wouldn't write them off just yet. A large part of the firm is banking panel work and I think we will see them come back as banking work picks up. There are some reak stars amongst the partnership and some very good clients and I bet many of them are hanging on to see what this year brings.
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Anonymous | 1-Jul-2011 2:41 am
Frankly when 3/4 of the fee earners are out the door at 6pm and the other 1/4 are sweating away until 2am it is little surprise that those hard working talented fee earners are leaving for better pay and better opportunity elsewhere. The so called sector strategy has failed spectacularly, as has the ridiculous death march into Africa. The PEP tells the story.
It is actually very sad because there are (or were) some exceptional lawyers there, but I sense now that the place will be forever lost in the wilderness.
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Anonymous | 1-Jul-2011 9:03 pm
PEP rises/falls in proportion to how the partners treat their staff. Hopefully SNR will follow Halliwells.
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