Forsters

UK 200 RESULTS 2010

Position:
Movement since 2009

Turnover (£M):
Profit per equity partner (£K):
Earnings per partner (£K):
Equity spread (£K):
Net profit (£M):
Profit margin (%):
Revenue per fee-earner (£K):
Revenue per lawyer (£K):
Revenue per partner (£K):
Revenue per equity partner (£K):
Total number of fee-earners:
Total number of qualified lawyers:
Total number of partners:
Total number of equity partners:
Total number of female partners:
Total number of female equity partners:
Total number of staff:
Leverage ratio (fee-earners per equity partner):

90
DOWN

22.3
297
235.8
190-370
5.9
26
205.3
257.5
633.5
1,115.0
109
87
35
20
15
9
194
3.33

Mayfair firm Forsters had a relatively muted year in 2009-10. Revenue dipped less than 1 per cent, from £22.5m to £22.3m, while average profit per equity partner rose by 12 per cent, from £265,000 to £297,000.

The firm continued to suffer from its heavy exposure to the property market, although its increased focus on private client helped dampen this. Over the year property accounted for 46 per cent of total revenue (£10m), down from 61 per cent (£14m) two years ago. Private client and family rose from 20 per cent (£5m) to 27 per cent (£6m) over the same period.

A redundancy programme carried out and booked in 2008-09, coupled with a project that saw the firm’s entire property group work nine-day fortnights from May last year to April 2010, allowed the firm to increase its profit margin slightly, from 23 per cent last year to 26 per cent.

The firm operates a remuneration system that is part lockstep, part fixed-share and part bonus. The lockstep portion runs from three to 15 points over 10 years and accounts for around 50 per cent of the total.

UK 200 RESULTS 2009

Position:
Movement since 2008

Turnover (£M):
Profit per equity partner (£K):
Earnings per partner (£K):
Equity spread (£K):
Net profit (£M):
Profit margin (%):
Revenue per fee-earner (£K):
Revenue per lawyer (£K):
Revenue per partner (£K):
Revenue per equity partner (£K):
Total number of fee-earners:
Total number of qualified lawyers:
Total number of partners:
Total number of equity partners:
Total number of female partners:
Total number of female equity partners:
Total number of staff:
Leverage ratio (fee-earners per equity partner):

89=
SAME

22.5
265
214.7
181 - 390
5.6
25
205
253
662
1,125
110
89
34
20
13
8
198
3.45

After a tough year in the real estate market, equity partners at property-focused West End firm Forsters took home on average 41 per cent less last year than in 2007-08.

Average profit per equity partner (PEP) fell from £449,000 to £265,000, while the equity spread contracted from a range of £270,000-£600,000 in 2007-08 to £181,000-£390,000 in 2009.

Forsters, which has a total of 198 members of staff, also had to absorb the cost of a small number of redundancies.

Despite the fall in profitability, Forsters’ profit margin remains healthy at 25 per cent (although that is a 7 per cent on the previous year). This is partly the result of a strategic decision taken in 2006 to expand areas less subject to the dips and troughs of the market such as private client and tax.

Over a period of two years the firm has made seven lateral partner hires, six of them from Withers (which threatened legal action over the raid), six in private client, trusts and offshore tax and four of whom joined the equity.

Forsters operates a modified lockstep arrangement and typically around 15 per cent of remuneration is allocated on a performance basis. The firm has two classes of partner – fixed-share and equity. It takes four years on average for a partner to move into the equity. This was the first year that equity partners were remunerated on a reduced 10-rung lockstep.

Turnover fell by 5 per cent from £23.6m in 2007-08 to £22.5m in 2008-09. Property remains overwhelmingly important strategically, accounting for almost half of total revenue. The firm counts the Crown Estate among its key clients and advises its properties throughout the capital.

Litigation and corporate respectively generated approximately 18 per cent and 6 per cent of total turnover.