Norton Rose

UK 200 RESULTS 2010

In any normal year drops in both revenue and profit per equity partner (PEP) would be signs of a firm in trouble, but few could seriously suggest that Norton Rose had anything but another good year in 2009-10.

Global turnover was down by just over 2 per cent on 2008-09’s, falling from £314m to £307m. However, unlike many of its competitors, for ­Norton Rose that figure represents an improvement on the £297m it posted a year previously.

PEP was down by 6 per cent, with partners ­taking home an average of £486,000. Net profit was marginally up from £88.4m to £92.3m and the firm increased the total amount of equity in circulation by around 7 per cent and boosted its equity partner ranks.

Therein lies the key to Norton Rose’s year. In a period during which many firms have displayed a somewhat mercurial streak in their financial ­performances, Norton Rose has stuck to its plan and maintained steady progress.

The firm introduced a flexible working scheme at the beginning of the financial year in an effort to avoid redundancies. This initiative, which allowed staff to take four-day weeks and part-paid sabbaticals, ended in January as workflow picked up, with chief executive Peter Martyr ­reaffirming his promise that the firm would not profit from it.

Further afield, Asia remained a big focus. The tie-up with Deacons (now Norton Rose Australia) has given the firm added clout in the Asia-Pacific region and pushed its projected global turnover to around the £440m mark.

In practice area terms, litigation continued to perform well, growing to 14 per cent of firmwide revenue (and 17 per cent in London).

Meanwhile, finance edged ahead of corporate ­as the biggest-billing department on the back of its work for HSBC, Société Générale and Crédit ­Agricole.

However, the biggest mandate of the year came from the regulatory practice, which snared a role for Orange on its merger with T-Mobile.

Norton Rose partners start as junior equity ­partners before moving onto a modified lockstep system, starting on 100 points. They move up 12.5 points a year until they reach a gateway at 150.

Partners plateau at 200 points, at which level a handful of high performers can move up to a ­maximum of 300 points

Strengths
Finance was a big plus this year, with Norton Rose acting on some of the biggest IPOs around, including Jupiter Asset Management and Polish power group Tauron. Litigation outperformed expectations for the second year running, while the continuing push into Asia is another big positive for the future.

Weaknesses
There is concern that London is being left behind as the focus remains on growing the global network. Mainstream corporate work has also fallen away, in line with the M&A market, although headline figures were boosted by work coming through the corporate finance and competition practices.

UK 200 RESULTS 2009

It might have had a solid rather than spectacular year, but Norton Rose remains one of the most ambitious firms in the top 20.

Turnover was up by 6 per cent to £297m, helped by a decent performance in Germany and the Netherlands and a strong euro, although average profit dipped by 17 per cent to £625,000.

Norton Rose has, however, been one of the few firms to avoid redundancies. Instead it launched a widely hailed flexible-working scheme to cut costs, allowing staff to be put on four-day working or part-paid sabbaticals. The initiative was put into action in May 2009, the first day of the new financial year.

In spite of general gloom in the legal sector, Norton Rose was in expansive mood, opening in Tokyo and Abu Dhabi during the course of the year. And as chief executive Peter Martyr pointed out, offices in these two locations do not come cheap.

Asia remains a key priority. A tie-up with Australian firm Deacons, announced after the end of the 2008-09 year, will give the firm a base from which to expand in China and South East Asia.

Norton Rose was also given a licence to practise local law in Singapore, one of its fastest-growing offices last year, and continues to eye a transformative merger in the US.

Overall the firm increased in size thanks to the new offices and around 15 lateral partner hires. In contrast, the City office shrank slightly in terms of headcount, thanks to lawyers in recession-hit practice areas being relocated overseas, largely to Asia.

The star practice area was, unsurprisingly, litigation, which at 12 per of total revenue was the fastest-growing department.

More significantly, the finance group also saw an increase in turnover, thanks to close relationships with banking giants such as HSBC and SocGen. It now makes up 38 per cent of the firm, making it the joint largest group along with corporate.

By far the biggest and most prestigious deal of the year was HSBC’s £12.5bn rights issue in March, which called on five partners in London and Hong Kong.

Associates at the firm join a merit-based system and move up and down the three grades based on their performance. Once promoted they become either fixed-share or salaried partners for between two and four years on average before being invited to join the equity.

Norton Rose operates a modified lockstep, which is punctuated by ‘gateways’. Equity partners start on 100 units, moving up by 12.5 units a year until they reach the first gateway at 150, where they are reassessed before being allowed to move on.

Assuming they meet the criteria, partners can progress up to the plateau of 200 units. Two years ago the firm introduced a super-equity rung of up to 300 units, which is reserved for those making ‘exceptional’ contributions. A single unit was worth slightly more than £3,000 in 2008-09.