Clifford Chance back in £1m PEP club as revenues nudge up
Clifford Chance has posted a 2 per cent increase in global revenue for the 2010-11 financial year, with the figure rising from £1,197m in 2009-10 to £1,219m.
David Childs
The slight upturn comes as the firm’s average profit per equity partner (PEP) pushed over the million-pound mark, rising 8 per cent to £1.005m from £933,000. This is the first time the firm’s PEP has broken the million-pound mark since 2007-08.
Net profit rose 10 per cent from £347m to £381m, giving a profit margin of 31 per cent.
In total, 35 per cent of global turnover came from the UK, with the figure rising 1 per cent to £430m.
US revenues were flat on last year, remaining at £140m, representing 12 per cent of the firm.
Managing partner David Childs said the US and UK remained central to the firm’s strategy. He said the firm aims to strengthen in the States organically, but did not rule out future mergers.
Revenue in Asia was up 16 per cent, with the region now contributing 12 per cent of the firm’s global income. The figure does not include the firm’s Asian offices, which came into being following mergers with firms in Sydney and Perth in May.
The firm aims to double revenue in the region by 2014.
The Middle East practice also saw an upturn, with revenue rising 17 per cent, making up 3 per cent of global turnover.
Continental Europe now makes up 38 per cent of income, although the firm made 2 per cent less in pounds sterling in the region in the past financial year. This figure becomes a 2 per cent increase based on local currency.
Childs said the corporate, finance and litigation practices were strong contributors to the firm’s profits.
He also ruled out issuing a bond, as it did a decade ago, and confirmed the firm has a strong balance sheet.
“This is a strong set of results which demonstrate how our investments over many years are delivering for the firm and for our clients. We’re very pleased to be in growth mode again and to see our profitability further strengthened,” Childs said.
Readers' comments (9)
Anon | 5-Jul-2011 1:21 pm
Wonderful news, the partners really deserve this. And achieved by doing the right thing and treating people properly. No stealth redundancies for the likes of CC.
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Anonymous | 5-Jul-2011 1:59 pm
Whoever said that 'money isn't everything' should pay a visit to the UK, circa 2011.
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Anonymous | 5-Jul-2011 3:00 pm
It's going to be hilarious watching PEP across the board drop over the next few years - it's not sustainable. Also, it makes no business sense whatsover to withdraw all profit from the business every year. Law firms stuck in the 1950s.
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Mike Hunt | 5-Jul-2011 3:22 pm
Anonymous @ 5 July 3pm
Not sure that every well managed practice would allow EPs to withdraw all profit every year - surely PEP is just a crude/blunt performance measure? PEP isn't drawings?
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Anonymous | 5-Jul-2011 4:17 pm
@ Anonymous | 5-Jul-2011 3:00 pm - Although the biggest law firms are huge in comparision to the largest firms of 40 years' ago, they remain miniscule compared to the largest companies in most other sectors and are very crudely managed.
The whole 'PEP' measurement is a reflection of this - grossly simplistic and very easily manipulated in businesses where staff costs represent the great bulk of total costs. A firm can dramatically boost its short-term PEP through job cuts or partner de-equitisations. The ratio of partners to associates can also vary widely.
Firms have been pushing up PEP levels at the expense of associates career prospects and work/life balance. The impact of this will in time be highly negative, particularly as emerging markets firms start to rise up.
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David Lindsey | 5-Jul-2011 5:45 pm
Congratulations to my friends at CC. They have worked hard and deserve the good news. Anyone who has counted them out is foolish. CC is a truly great firm getting well back onto its feet.
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Marc Daniels | 6-Jul-2011 8:17 am
To the anonymice above: partners are taxed on partnership profits as they arise. Partnerships therefore can't reinvest profits in the way companies do; instead they have to borrow.
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Anonymous | 6-Jul-2011 10:54 am
If only the staff who worked there got 8% pay rises.....
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Anonymous | 7-Jul-2011 9:00 am
Whole system = flawed. Only reasons for the pep increase is because there are fewer associates left to do the work 3 people used to share but earning salary of 1 person, recruitment is non-existent and their fees have gone up again.
News like this only makes an already demoralised workforce worse and despise management more than before. More will follow the approach taken by the cliffords funds team. Hate to think what all those cliffords trainees who didn't make qualification think.
This news = not positive. Dont believe anyone who actually works at cliffords and isnt earning 500k+ thinks it is.
Yes - answer is to cut losses and leave because nothing will ever change. Easy to say, hard to do? Probably, when there are few alternatives. And this is why cliffords has its lawyers over a barrel.
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