Ashurst says goodbye to the million-pound PEP club as profit drops by a third
Related images
Ashurst has reported a 35 per cent drop in profit per equity (PEP) for the 2008-09 financial year.
The silver circle firm reported a PEP of £673,000 during the last financial year, down from £1.04m for the previous year.
Earlier this year The Lawyer reported that Ashurst’s revenue had decreased by 7 per cent last year from £323m down to £301m last year (27 May).
Ashurst managing partner Simon Bromwich told The Lawyer: “This is in line with what we have been expecting for the last six months. Since Christmas we have been busier and made a lot of partner investment. This has certainly affected the PEP figure.”
In February this year the firm launched in the US, snaring an 11-partner team from McKee Nelson.
Bromwich said: “We think we have the basics right to improve profits over the next year. We are confident that the investments we’ve made will be beneficial to us over the coming year.”
Readers' comments (4)
Anonymous | 8-Jul-2009 5:34 pm
Perhaps because they did not lay off dozens of lawyers?
Unsuitable or offensive? Report this comment
Ashley Balls | 8-Jul-2009 11:37 pm
Simon should be congratulated for his candour in dealing with what must be a difficult situation. The next and far harder step is not the measurement of ROI on the new investment but to question the very sustainability of the current business model. When partner drawings and other 'establishment' costs are well below the fees personally generated it is a recipe for future problems. It ensures that control of the pricing mechanism passes from the firm to its clients - placing further problems on the economic model. One solution is to de-equitise a significant proportion of the partners and adopt a corporate operating model. A bitter pill but probably inevitable. The impact on lawyers who are currently 5-10 years PQE is not pleasant as the majority will never become partners.
Unsuitable or offensive? Report this comment
HootsMon | 9-Jul-2009 11:54 am
I agree entirely with Ashley Balls. As a soon-to-be-NQ (and a soon to be job hunting one at that, as my office came up with an impressively miserly 18% trainee retention rate this year), I look at the career path of the next 20-30 years and shudder at the obvious impossibility of the current legal business model surviving.
The phrase 'too many cooks' comes to mind. You'd be forgiven for sneaking an extra 'r' in there as well...
I think firms will have to start shaking themselves out of their current mindset, and realise that the current fee generating model relies almost entirely on associates working themselves ragged with the prospect of partnership (and PEP) dangled in front of them.
Partners are often drawing money out of the business and relying on their underlings to replace it from the sweat of their collective brows - you could almost make a comparison to a Ponzi scheme here. The only way you get money out of the firm is when someone else down the chain is putting it in.
It'll hurt (a lot), but a top-down shakeup of how firms are operated is (in my view) the only way to guarantee this and the next generations of lawyers' loyalty. We simply no longer believe that partnership is going to be a realistic opportunity in our careers.
Unsuitable or offensive? Report this comment
Anonymous | 10-Jul-2009 3:55 pm
As a matter a fact , besides the partner redundancies mentioned in the press - Ashurst has done a cost cutting exercise by laying off a number of associates as well as senior non-legal staff. This has been done without implementing a formal redundancy procedure (i.e. on the cheap). At least at A&O, Links, etc. people were offered a proper redundancy package.
Unsuitable or offensive? Report this comment