Bevan Brittan’s credibility hinging on improved profit
28 July 2008
25 July 2008
21 July 2008
17 August 2009
21 November 2005
Bevan Brittan’s credibility hinging on improved profit" class="inline_image inline_image_left" src="/pictures/web/images/12989_80_whitfield.gif" />Bevan Brittan has set itself a challenge – and boy, what a challenge it is.
While going through a management shake-up (21 July), the Bristol-headquartered firm is targeting an ambitious 37 per cent boost to profitability within a year.
Bevan Brittan watchers will know that profitability has been falling at the firm since its demerger from Ashfords in 2004. This bucked the common view that Ashfords, based in Exeter, would fall behind Bevan Brittan after the split.
“It seems now that Ashfords did the right thing and have come out on top,” says one Bristol-based source. “Garry Mackay [head of Ashfords’ Bristol office] is a well-sought-after lawyer and he’s growing the Bristol office significantly. Bevan should be on the watch-out.”
By improving profitability by 37 per cent, Bevan Brittan will hope to achieve a net profit for 2008-09 of £8.4m – 12.5 per cent lower than the £9.6m the firm reported at the 2006-07 year-end.
This comes as the firm’s partners consider whether it is tenable for Stuart Whitfield to continue in his position as chief executive, or if he would be of better use in an external-facing role in the commercial practice.
In any commercial business the buck stops with the chief executive. Even Marks & Spencer’s, Sir Stuart Rose, was faced with shareholder demands for his resignation after revealing falling profits.
Yet Bevan Brittan commercial development director Sally Calverley told The Lawyer the firm operates under a cabinet board that takes collective responsibility for any perceived failures.
“The buck stops with the board, of which Stuart is a member,” she emphasises. “He’s not even the chairman of the board.”
And now the board is about to undergo a shake-up. Four partners were chosen to review the firm’s structure and put forward their proposals for moving it forward.
If Whitfield is evicted from his post, it is proposed that non-lawyer Andrew Manning take over as chief executive.
In addition to Whitfield, 13 management partners and 18 sector heads face losing their responsibilities. The proposals recommend having just four sector heads as the firm targets business in its core areas of health, local government, private sector and corporate.
“There’s clearly something amiss at Bevan Brittan and it has nothing to
do with the lawyers,” says one Bristol managing partner who has poached “well-respected” lawyers from the firm.
Bevan Brittan’s instability can be charted back through its four-year history (see box). Net profit has fallen by 35.1 per cent, from £9.4m for 2004-05 immediately after the demerger to £6.1m for 2007-08.
As one former partner puts it: “Why has it taken them so long to sort this mess out?”
Calverley admits that external perceptions of the firm could lead
one to conclude that the proposed management overhaul is a direct result of fluctuating profit levels.
However, she insists that “these are changes which are part of a much larger management restructure; but if [money] was the reason, then we’d have done it before”.
By setting out its forward plans in full view of the profession, Bevan Brittan hopes to silence the critics and bring about a resurgence in its profitability.
Yet the facts continue to speak for themselves.
Net profit is falling and the management board is about to be reviewed. The firm has in place a lock-in agreement, which means that only three partners can exit in the coming year, and partners have been told to increase profitability by 37 per cent. And all this during an economic slowdown.
For most firms it is a challenging period, but for Bevan Brittan 2008-09 will be its defining year.