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Berwin Leighton Paisner (BLP) spent in the region of £10m on its international expansion during the 2008-09 financial year, The Lawyer can reveal, but top earners have been unaffected by the resultant drop in profitability.
BLP launched in Moscow and Abu Dhabi in January, breaking with a previous international strategy of non-exclusive networks of referral firms.
The firm spent around £200,000 on due diligence on its tie-up with around 70 lawyers from Russian practice Pepeliaev Goltsblat & Partners. BLP subsequently signed terms on 2,000sq m of space in a Moscow office complex, where it is believed to pay an annual rent of between $1.3m (£785,000) and $1.8m.
Partly as a result of these investments the firm has experienced a drop in profitability, with profit per equity partner falling by 33 per cent, from £620,000 to £414,000. The bottom of the equity has also fallen substantially, from £350,000 in 2007-08 to £185,000 this year - a fall of 47 per cent.
However, BLP, which has a policy of bringing in high-profile lateral hires on guaranteed equity packages, will continue to pay plateau partners £1m, the same sum as last year.
A BLP spokesperson said the partnership supported the remuneration structure, adding: “In a difficult market the value and contribution of those high earners is very apparent.”
But another BLP source said: “If they’re performing well and we’re making money on them [nobody will complain, but] if they’re not making money then people might be pissed off.
“We’ve continued to make aggressive hires and spend money - in a few years we’ll find out if that’s a good decision or not.”