Addleshaws cuts fee-earners as profits rise 30 per cent
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Addleshaw Goddard is cutting around 24 fee-earners across its offices in a bid to combat low attrition as the firm posts a 30 per cent rise in profit.
Addleshaws said it had begun a redundancy consultation to, “rebalance the mix and skills and experience across each UK office” as attrition among senior fee earners drops.
The firm expects around 24 fee-earners to be made redundant. This amounts to approximately 3.5 per cent of the total number of non-partner fee-earners.
According to Addleshaws over the past five years fee-earner numbers have dropped from 490 to 437 but the firm’s two most senior fee-earner categories (managing associate and legal director) have together increased from 100 to 173.
A firm spokesperson added that there are no similar plans to cut partner or support staff numbers.
The news comes as Addleshaws has posted a 5 per cent rise in turnover for the 2011-12 financial year. Revenue at the firm was £170m, up from £161.9m in 2010-11.
Profit for 2011-12 was up 30 per cent, from £34.4m to £44.9m, while average profit per equity partner (PEP) rose 37 per cent over the same period, from £328,000 to £450,000.
The rises come after a disappointing 2010-11, however, when the firm cut around 40 support staff jobs (24 May 2011).
In that year profit fell 17 per cent, average PEP dropped 23 per cent and revenue fell by just over 3 per cent.
In a statement, Addleshaw Goddard’s managing partner Paul Devitt said: “In common with other businesses, natural attrition in our firm, especially amongst senior fee-earners, has fallen in recent years. We have therefore taken the difficult decision, having so far avoided a fee earner redundancy programme, to rebalance the shape and size of our front-line fee-earner resource by reducing the number of non-partner fee-earners.”
Addleshaws’ 2011-12 revenue by division:
Commercial services: £23.4m
Corporate: £29.2m
Litigation: £37.4m
Finance and projects: £37.3m
Real estate: £35.4m
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Readers' comments (27)
mrgrumpy | 21-Jun-2012 11:58 am
Our people are our most important asset but, hey, you can have too much of a good thing.
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Eric the Viking | 21-Jun-2012 12:23 pm
Nice....!
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Anonymous | 21-Jun-2012 12:31 pm
All in the name of increased PEPafter a drop in 2010-11. It would obviously be disastrous if those at the top didn't see a year-on-year increase in their earnings after that oh-so-terrible drop a year or so back, given that it we are experiencing a prolonged recession... and obviously so long as they get that increase, it's totally justifiable to axe associates on the basis of decreased attrition rates...
Who would want to be a lawyer these days (other than those sat in their ivory towers)?!
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Anonymous | 21-Jun-2012 12:32 pm
How do these people sleep at night? 30% rise in profit and also redundancies? I bet you it isn't just senior associates who will get the brunt of this...this stinks of a cull to help line the pockets of the socially inept brown-nosers who make up the partnership. To the partnership of AG, I spurn you as I would spurn a rabid dog.
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Anonymous | 21-Jun-2012 12:57 pm
Another horrible consequence of the current market but aside from all this AG bashing I can see their logic on this move.
Other firms have been doing this on the sly for months now, at least they have been open about it. PEP has became the key benchmark and unfortunately it needs maintaining for the long term strength of the firm. If there were a stream of partners leaving due to higher earning potential elsewhere then there would be far more jobs at risk in the long run.
Still, feel for the individuals involved having experienced similar myself.
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Anonymous | 21-Jun-2012 1:00 pm
This is disgraceful. I hope the AG partners reap what they sow and suffer a massive drop in PEP when the remaining associates head for the doors. Disloyalty breeds disloyalty...
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Anonymous | 21-Jun-2012 1:03 pm
Greed is good.
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Roman A | 21-Jun-2012 1:07 pm
But you just watch those litigation figures drop if Berezovsky v Abramovich doesn't go the right way, and which is being done on a CFA...
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Shrek | 21-Jun-2012 1:09 pm
It's entirely the fault of the fee earners.
If more of them had resigned recently they wouldn't have had to be fired.
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Cityboy | 21-Jun-2012 2:20 pm
Agree with one of the anonymous posters, at least this isn't on the sly. All professional services firms hire on a regular basis and whittle those people down to the partnership. Up or out.
For years this was concealed as the pyramid got fatter at each level to keep up with growing work levels (built on flimsy debt foundations, lest we forget). But now that growth is gone, the number of trainees at the bottom of the pyramid is shrinking and every level above that will see some fat trimmed to keep things in proportion.
Lets not forget, though, that most in the profession still live a remarkably gilded life compared to the average (£26k) british punter.
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