Blake Lapthorn PEP sinks to associate level
Equity partners average £65,000 - less than their fixed-share comrades
Walter Cha
Tumbling profits at Blake Lapthorn have led to some of the firm’s equity partners taking home less than the junior lawyers they supervise.
In what has been a dismal financial reporting season across the legal profession, the south coast firm has seen average profit per equity partner (PEP) fall by 68 per cent from £204,000 in 2007-08 to £65,000 this year.
It is understood that a small number of Blake Lapthorn associates take home more than £65,000, while fixed-share partners can earn between £80,000 and £150,000.
In an interview with The Lawyer, managing partner Walter Cha said the firm’s underlying PEP was £130,000. However, Cha admitted that this figure did not include a number of exceptional items, such as the firm’s move into new headquarters and payoffs to staff in two rounds of redundancies.
“Equity partners take the rough with the smooth,” added Cha. “In better times they get a better return.”
As well as moving into new headquarters in Southampton, Blake Lapthorn is still paying around £400,000 in rent on its old offices, which are now vacant. It still has around 18 months remaining on the lease and has so far been unable to sublet the property.
The firm has been through two redundancy programmes, leading to the loss of 53 jobs, including fee-earners. It has also emerged that partners at Blake Lapthorn have poured additional capital into the firm over the past two years.
Equity partners were asked to put in £30,000 and fixed-share partners an additional £60,000 in May 2008. In May this year equity partners provided another £100,000 and fixed-share partners £60,000.
Cha said: “We did restructure our capital. That was a consequence of partners leaving - that capital had to be replaced.”
The majority of firms in the UK 200 have been hit by profit falls in the 2008-09 financial year. Blake Lapthorn’s turnover also fell by 2.8 per cent, from £50.7m to £47.9m.
Readers' comments (9)
Lionel Hutz | 27-Jul-2009 3:36 pm
Why don't all the equity partners just leave?
There's no why I'd stick around with some snot-nosed associate earning more than me.
Profit share is supposed to be a reward not a punitive measure.
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Homer | 27-Jul-2009 4:41 pm
There's no why (sic) you will ever get there with such an attitude and poor attention to detail (guess you are the stereotype snot-nosed associate)
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Cat Herder | 27-Jul-2009 5:28 pm
As an equity partner you take the rough with the smooth - if you can't take the heat keep out of the kitchen whether times are good or bad.
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mary | 27-Jul-2009 5:37 pm
I suspect there will be a lot of firms in the same position this year. Things have been really tough for practically every firm in the market and salaries were set during the boom times. It's not great news for the equity partners but they are after all the owners of the business so this is a risk they have to take. At least the firm is still in profit and they are not sharing a loss, which has happened to many businesses in different sectors. Salaried partners and associates are employees so have to be paid no matter what. The owners get to share what's left after all costs and rightly so. A couple of years ago their share would have been massively greater than that being paid to the associates and in a few years it will be again. This is just a business risk.
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Anonymous | 27-Jul-2009 9:40 pm
As a former employee of this once south coast heavyweight this news is disappointing. I Ieft last year on good terms but the signs of a sinking ship had been there for some time. The firm has continued to merge since 2001 with almost a firm every year and so the number of equity partners grew exponentially. Most of the partners are of the old school and do not fully appreciate the concept of business development. Partners cannot expect work to just appear on their desks as they once did when the firm was a high street practice. Unfortunately the decision makers at the firm on the board comprise of a managing partner, a head of litigation, a head of real estate and a head of private client who date back to the high street days. They lack the experience and courage to take the firm forward and to compete with the likes of shoosmiths, wragges and other out of london heavyweights. A fit and capable managing partner/board would never have put the firm in a position where it is paying rent for vacant premises. Furthermore the firm continues to practice in areas which are not profitable and a lot of WIP has to be written off - such as in contentious insolvency - due to a loyalty to the old school partners. The last few years has seen the departures of the firm's best london trained partners to local rivals - all of whom could have taken the firm forward but preferred to make serious money rather than make low profits subsidising the partners of yesterday. The only way to preserve some of the cake is to shed partners who have all become more part of the furniture than business generators. I am afraid it is time to be ruthless.
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Anonymous | 28-Jul-2009 4:40 pm
Fair play to the partners. They're more interested in keeping the business going than just preseving profits and destroying young people's lives.
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herbert | 31-Jul-2009 1:04 am
This is just one of those things which happens in a particularly difficult year. From what I know of BL, this is a good firm which will bounce back. End of story.
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Anonymous | 29-Aug-2009 10:06 am
I used to work in IBRT, far too much WIP built up persuing bankrupts that the Trustee was not able or willing to fund the pursuit of. Result, lots of write offs
in the making ! Pity the forward thinking strategy is just not there, hence empty building costing £400k pa. What a nonsense that is.
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Anonymous | 29-Aug-2009 10:09 am
I was formerally working in IBRT, there was far too
much time put into pursuing bankrupts in fruitless or marginal cases that was not properly funded, It often
resulted in us having to continue because the Trustee had no funds and the WIP was so high.......what a waste of resources !
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