LG

UK 200 RESULTS 2010

LG posted one of the highest profit rises of any top 100 firm last year, with its average profit per equity partner figure climbing by 63 per cent, from £281,000 to £460,000. The highest-paid partner took home £690,000 in 2009-10, 35 per cent more than in the previous year.

This was achieved in part through reducing the payroll, with total headcount 13 per cent smaller than it was a year previously, while most of the costs associated with making 47 redundancies were booked in the 2008-09 financial year. The total number of equity partners also fell, from 45 to 41.

LG operates a modified lockstep with a broadly bell-curve shape. The bottom three of its nine classifications resemble a traditional lockstep. Remuneration for those equity partners in the top six classifications is determined by the equity partner committee and is entirely performance-based.

LG restructured its three-tier partnership in 2009-10, phasing out the salaried partner role. Sixteen salaried partners converted to fixed-share status on 1 October 2009. The partners all contribute capital to the firm and LG will not pay any national insurance on their behalf.

LG is often cited as a fashionable merger target and this set of results, after several years of relative stagnation on the profit front, will make it an increasingly attractive option. Other assets at the firm, which has small but growing international offices in Dubai and Moscow and a one-partner operation in Monaco, include a first-rate private capital practice focusing on ultra-high-net-worth individuals. However, this was hit by the departure of four partners, who left to form a wealth advisory boutique in the spring, leaving just four partners in LG’s London private client team.

LG also has a good brand in the commercial property sector, where clients include Sainsbury’s, and in AIM, but activity in that market has been reduced massively compared with previous years.

UK 200 RESULTS 2009

After revenues reached a high point of £67.5m in 2007-08, a tough year in the firm’s core corporate and real estate practices – which together account for about 48 per cent of turnover – saw revenue drop by 11 per cent last year to £60.3m.

As a result LG has continued to be marooned in the £60m turnover region for the past five years. The firm’s mid-market property brand remains core to its identity, with clients including Legal & General and Sainsbury’s. But it has distinguished itself from rivals in that group by continuing to develop its private capital business, which has been enhanced by its growing international capability.

Expansion in Dubai, which services much of this client base, has also allowed it to pick up work in other practice areas and jurisdictions, such as advising Saudi-based SAAD Group on litigation and also strengthening ties with Indian high net-worth individuals.

After winning a Lukoil panel role, LG also opened in Moscow through a merger with local firm Aurora, although as this was close to the end of the financial year, this will not have had much impact on 2008-09 revenue.

The profit margin fell from 31 per cent in 2007-08 to 26 per cent last year and the equity spread from £215,000-£650,000 to £170,000-£510,000 over the same period. Average profit per equity partner fell by 35 per cent to £281,000.

The firm sought to cut costs by making 47 redundancies, with secretaries and fee-earners among those losing their jobs.

LG has three classes of partner: equity, fixed-share equity and salaried partners. The equity, which covered 54 per cent of partners last year, is a modified lockstep with a broadly bell-curve shape. The bottom three of its nine classifications resembles a traditional lockstep. Remuneration for those equity partners in the top-six classifications is determined by the equity partner committee and is entirely performance-based.

Last year LG embarked on a spot of internal re-organisation, splitting the business and finance group into four standalone departments, installing new heads in the dispute resolution, tax and private capital and property groups and merging the partnership board – which oversaw strategy and the management board – with the equity partners committee.