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Davenport Lyons has become the latest UK firm to agree to convert to limited liability partnership (LLP) status, with the firm likely to move towards a more commission-based remuneration system once the change takes place.
Equity partners had voted on the conversion in May, with CEO Richard Williams telling The Lawyer that, in line with the changes, the firm is likely to review its remuneration system.
The firm keeps its equity tight, with just eight of its 45 partners on equity status. However, fixed-share partners also take home a portion of the equity pot, with discretionary bonuses rewarded. A new remuneration structure would look at rewarding staff at all levels by introducing a firmwide commission system.
Davenport Lyons saw its turnover drop during 2012/13, from £24.5m to £21.9m, while average profit per equity partner (PEP) slipped by 12.5 per cent to £197,000. This followed a 9 per cent drop in PEP to £225,000 in the previous year, meaning PEP has dropped 20 per cent since 2010/11.
Williams was brought in 18 months ago to focus on various projects, one of which was to increase profitability at the firm, another of which was to oversee the firm’s conversion to LLP status. The firm is moving offices next week, a move which Williams says will reduce the firm’s cost base by around £800,000 a year.
The drop in profits and revenue has been down to low activity with the firm’s existing client base and a struggle for new business, according to Williams. That said, the firm picked up a new client in Blackberry during the year after the firm’s IP team successfully pitched for the work.
The firm’s LLP conversion isn’t expected to be complete until around March next year. Increasing transparency was one of the reasons cited by the firm for converting to LLP status.
There is no managing partner status at the firm, which is instead driven by a board including William, board chairman Michael Hatchwell and partners Kevin Bays and Marie van der Zyl.