Dentons escalates PEP row: 'no two firms are the same, so cannot be compared'

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  • Not a big fan of the polycentric gobbledygook. It might seem novel and exotic to Americans, but is too slick by half. However, these guys might be on to something in this particular instance. Watching the Dentons combination take root, I would give them credit for trying to be innovative. They also seem fairly genuine in a particularly American way.

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  • Dentons is completely right to say that PEP is a meaningless figure to measure performance. It can easily be manipulated, whether through changing the equity structure etc. Overall profit is, however, a meaningful statistic - firms are still businesses and therefore should be able to operate in a way that delivers profit. This is where Dentons is wrong to suggest that the legal profession, by nature of being a "profession" shouldn't be judged by the same criteria as other businesses - they should.

    The focus on PEP also sustains a frankly bizarre business practice of removing the profit each year and dispersing it amongst partners - many firms adopt the right approach and use a % of profit, but many remove nearly all from the business. Bizarre.

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  • Dentons may have a point re. separate LLP profit pools not relating to each other and therefore not proving a single PEP figure that can be used as a benchmark, but they should have chosen a year when their performance was stellar to drop the PEP bomb on the media, not at best an average year for them. Now it just looks like they are dodging reality, (even if they are technically correct).

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  • How strange that they used to ask their NQs in interview what this "meaningless" figure was for the past three years!

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  • PEP is causing rather a lot of debate for a 'meaningless' metric…

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  • It is odd that PEP is meant to be an average, although in most firms, the majority of partners don't take home anywhere near the reported PEP figure. On that basis, it is pretty meaningless.

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  • Well done Dentons for taking this line. Subsequent comment confirms that the only people interested in PEP are the legal press.

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  • Anonymous of 1.46pm. Well said! I'm so fed up with reading about profitability as though it were all we were interested in.

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  • PEP as a benchmark was popularised by AmLaw several decades ago and it remains what it was at the outset: a metaphor for dick-swinging "look at me, I'm the best" types.

    There is plenty of room for good law firms for people who want to make very comfortable livings indeed in exchange for willing to live with the fast pace, hard work and, let's face it, sometimes unreasonable demands of clients, without us all having to compete to be the "most profitable" firm.

    I am proud to be at a firm that is not in the "Top 10" of PEP but near enough to it to be a place where you still have to work damned hard but you earn a very good living while not being so driven by the need to be "the top" that you are driven insane as well.

    If we wanted to be investment banker Goldman Sachs wannabees then we would have become investment bankers in the first place.

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  • Dewey LeBoeuf should have taught everyone the value of numbers in the legal profession. There is too much self-reporting or "whispers to AmLaw" from firms for the PEP numbers to be meaningful. We can all agree that Skadden and A&O are massive operations and that it is good to be one of the Princes who dine at the High Table in those places. Beyond that, figuring out who has done what to whom, and for how much, is a dark art at best until and unless full scale public-company auditing is applied to law firms globally.

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