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This year, The Lawyer’s annual ranking of the largest UK law firms by turnover is available as an interactive, digital benchmarking tool. For the first time this will allow you to manipulate each data set against the metrics of your choice.
CMS Cameron McKenna ramped up loans to its Russian joint venture by £3.5m last year after its share of losses in the Moscow office doubled in 2013.
The firm’s UK LLP accounts filed yesterday with Companies House reveal CMS was affected by £2.2m of losses from its Moscow joint venture, up from £1.1m the previous year. That prompted an increse in shareholder loans to the Moscow office up from £97,000 in 2012 to £3.6m in 2013.
The office is expected to repay the loans when it returns to profit. But it has also almost doubled the trading balance owed to the LLP, from £244,000 to £491,000 over the last financial year and has owed substantial amounts to CMS since it was established.
The Russian alliance was set up in 2008 as a merger of three of its network members (23 June 2008) and was mooted as a pilot for further integration. CMS International BV began trading on 1 January 2009, marking the first time the firm had integrated separate firms under the CMS brand.
But the venture has taken chunks from the firm’s reserves every year since then. In 2011 the LLP’s share of gross Moscow liabilities stood at £10.3m, including a CMS loan of £2m to Moscow and debts already owed to it of £1.6m. Gross CMS assets in the joint venture were then £4.5m.
In 2012 the Moscow office had managed to reduce its pot of unsettled losses by £2.7m but still owed £3.2m to CMS in unsettled losses.
The results have affected CMS revenues this year, with CMS group revenue including its share of the Moscow joint venture dipping by 6 per cent, down from £227.6m in 2012 to £212.67m.
But without the share of the joint venture, turnover still dropped to £205.7m, down from £219.8m. Group operating profit was also down 12.5 per cent, from £54.6m in 2012 to £47.8m in 2013, leaving £45.4m available for division among the firm’s 94 members.
Last year the pot stood at £53.4m. However when fixed equity partner remuneration was taken off, profit available for distribution among equity partners dropped to £37.9m from £39.4m last year. Fixed-equity partner remuneration was also down on the previous year, going from £11.4m in 2012 to £6.9m in 2013.
The firm recently reformed its partnership model to allow salaried partners to progress faster up the lockstep to full equity. Under the old system a new partner spent three years as a salaried partner before moving to a ‘fixed-share’ equity partner gateway tier. Now new partners will progress one year quicker.
Last year the highest-paid partner still took home £1.13m with an early retirement provision of £533,000. That compared to a similar figure of £1.15m last year with a provision of £546,000.
But the accounts also reveal a dramatic drop in cash flow at the firm - last year it experienced inflows before financing of £20,885 but this year outgoings stood at £4.3m.
That was mirrored by a cash decrease of £6.4m compared to an £18.1m increase last year, though group bank loans were down from £5.2m to £4.3m.
The accounts come as CMS gears up to join with Dundas & Wilson in a proposed merger to take place in May 2014.
CMS’ UK LLP includes its operations in other countries including Brazil, Dubai, Hungary, Poland, Romania and the Czech Republic. CMS posted revenues of £679.3m for the 12 months to 31 December, representing a 5.1 per cent rise on 2010/11 when the firm reported turnover of £646.5m (24 May 2013).