HBJ Gateley Wareing

UK 200 RESULTS 2010

Turnover at HBJ Gateley Wareing grew by 3 per cent during the 2009-10 financial year to just south of £50m.

Fee income was dominated by corporate and property, which together accounted for 63 per cent of total revenue.

The national firm’s profit margin increased significantly, from 27 per cent to 35 per cent, while average profit grew by 49 per cent, from £203,000 to £302,000. The top of equity experienced an even more dramatic 76 per cent uplift, from £456,000 to £802,000, facilitated by the drop in total equity partners from 64 to 58.

As a result of the improvement in profitability the firm was in good shape to expand and earlier this year acquired approximately 200 members of staff from Halliwells, including 43 partners, across the non-insurance commercial practice areas. This saw it reach its long-term objective of launching in Manchester, although it took place after the 2009-10 year-end.

The firm is forecasting a 30 per cent increase in total turnover as a result.

But the fact that the deal was done within three weeks, and that the new staff are ringfenced in a separate LLP, has raised reasonable questions as to whether it will meet these objectives.

HBJ operates a modified lockstep system. Seventy-five per cent of profit points are allocated according to seniority, while the remaining 25 per cent are awarded on merit.

UK 200 RESULTS 2009

Although turnover at Birmingham-headquartered HBJ Gateley Wareing inched up by 6.1 per cent from £45.2m to £48m during the 2008-09 financial year it was well below the firm’s bullish target of 20 per cent.

Turnover grew by 7 per cent in England while north of the border fared slightly worse, with gross fees rising by just 5 per cent. In contrast, profit was up in Scotland and down in England.

HBJ’s net profit was down 5.1 per cent from £13.7m to £13m though its profit margin remained static at 30 per cent. But average profit per equity partner (PEP) took a severe blow. With 24.3 per cent chopped off it stood at £203,000 compared to £268,000 in the previous financial year. The equity spread was £120,000 to £456,000.

PEP suffered mainly because of an increase in the number of HBJ’s equity partners from 54 to 64 of whom five were from London-based niche shipping firm Holmes Hardingham, which merged with HBJ in June 2008. The growth in HBJ’s London operations saw the firm move from Bishopsgate into new premises in Fleet Place House in March.

Unlike most firms, HBJ has not announced any major redundancy programmes and indeed saw the number of its lawyers increase from 230 to 245. The total number of fee-earners, however, dropped from 377 to 354, which the firm puts down to natural wastage.

HBJ operates a modified lockstep using a points-based system. Seventy-five per cent of the points are allocated according to seniority while the remaining 25 per cent are awarded on merit.

Average debtor days at the year end was 111. Lockup target was 180. Final profits were distributed to partners 12 months after the end of the previous financial year.