DLA Piper

UK 200 RESULTS 2010

DLA Piper cut £37m out of its cost base over the past financial year through a combination of reducing headcount, deferring office moves and tightening business development expenditure. Around £2m was saved on air travel alone.

Nevertheless, such prudent financial management was insufficient to stave off an 18 per cent drop in average profit, from £645,000 to £527,000. In contrast, turnover fell by just 1 per cent. Net profit was down by 19 per cent on 2008’s £123m to £99.8m, a margin of 17 per cent.

One of the largest contributing factors to the fall in profitability was the firm’s Middle East ­network. ­Revenue for that region declined by 40 per cent from 2008’s £20.5m (during which time the firm had its best billings month ever) to £12.4m in 2009-10.

As a result the firm made a number of ­redundancies and alterations to its regional ­senior management. Middle East head David Church was replaced by Abdulaziz Al-Yaqout, Alex Saleh was moved out of the role of head of Bahrain and Kuwait, senior partners Peter Monk and Damian McNair were seconded to Australian alliance firm DLA Phillips Fox and Shehzaad Sacranie, who was billed to act as regional finance head, left the firm after a year.

Elsewhere the picture was more mixed. Asia grew by 21 per cent to £56.5m and Continental Europe raised income by 10 per cent to £229m. Strong performances were recorded in Belgium, Germany, Hungary, Italy and the Netherlands.

The UK, meanwhile, saw income fall by 8 per cent to £284m. The UK’s largest single area last year was litigation, accounting for a fifth of national turnover, followed by finance. The latter area was boosted by the hire of Bob Charlton from Freshfields Bruckhaus Deringer as global head of projects and finance.

DLA Piper’s fixed-share partners divide up a 25 per cent share of any profit above budget(equity partners get the rest) and may receive a ­performance-based bonus. Equity partners (on average one more than the previous year) are remunerated on bands worth £25,000 on a merit-based system. While the bottom of the equity fell by £100,000 to £225,000, joint chief executive Nigel Knowles’ remuneration as sole plateau ­partner remained static year-on-year at £1.5m.

Strengths
DLA Piper’s biggest selling point is its global breadth, and this is the reason new clients such as Christie’s, Kraft and UBS have turned to it.

Its Asia practice is booming and it is able to recognise new market opportunities, as indicated by launches in Brazil and Turkey, which are destined to become increasingly important for the firm.

Weaknesses
The firm was overambitious in the Middle East, having hired too rapidly and relying too much on one client, Nakheel, which was aversely affected by the property crash. London is also a little skinny and could do with a bolt-on to improve market standing, particularly in more sophisticated corporate work.

UK 200 RESULTS 2009

DLA Piper may have its critics but the world’s largest firm by headcount confounded expectations with double-digit growth in 2008.

Admittedly, the firm did benefit from having a calendar year-end, which meant it had four more months of pre-banking-crisis activity.

But an increase in turnover of 16.2 per cent was impressive nonetheless, and the figure of £585m put DLA Piper firmly in the top five of the UK 200.

The firm’s average profit per equity partner (PEP) was, however, affected by the downturn, remaining virtually unchanged at £645,000.

Both the turnover and PEP figures are for the Europe, Middle East and Africa side of the business – the US arm does not share profit with the rest of the firm so its revenue is not included in the figures for the UK 200.

DLA Piper’s detractors point to the fact that the firm is not often seen on the very largest transactions, but the firm’s strength is its scale and diversity.

Its key practices are of roughly equal size. Corporate and litigation provide 25 and 20 per cent of turnover respectively. Clients range from mid-sized regional players to global banks such as Lloyds TSB and Barclays.

However, the current year will undoubtedly be a challenge. The firm was forced to make 31 staff redundant at the end of 2008. More job losses followed in January this year: 24 lawyers and 100 support staff were shown the door in the UK, alongside 54 job losses in Asia and in the Middle East, where joint CEO Nigel Knowles invested heavily in 2008.

All the redundancies will take their toll on 2009's profit, although the redundancy package offered to departing staff (the minimum required by law in most cases) left a sour taste.

But Knowles’ ambition remains undimmed. After building a Middle East practice from scratch, he has now turned his sights to Asia.

DLA Piper has one of the tightest equities of any of the large firms, with just 31 per cent of partners getting a share.

Fixed-share partners divide up a 25 per cent share of any profit above budget (the equity partners get the rest) and can receive a bonus of up to £75,000 depending on performance.

Equity partners are divided into bands of £25,000, ranging from £325,000 to £1.5m, although they do not get near the top of equity figure. Knowles is the sole plateau partner among the 188 partners.