Watson Farley & Williams

UK 200 RESULTS 2010

Watson Farley & Williams (WFW) is something of an anomaly in its market. Despite being dominated by corporate and finance (together they make up 80 per cent of the business), the City firm has posted turnover growth of around 10 per cent or more for the past three consecutive years.

This year the top line rose by 9 per cent to hit £80.2m following a 25 per cent increase in 2008-09 and a 9 per cent jump in 2007-08.

The ambitious decision to open in Madrid through a five-lawyer raid on Hogan Lovells legacy firm Lovells contributed to this improvement. But so has the firm’s brand in the shipping market, one of the few sectors to have blossomed over the past year, where activity included working for Crude Carriers Corp on its $311m (£199.2m) New York IPO. WFW also has a strong practice in the growing renewables sector, counting AES Solar Energy among its clients.

At £448,000 WFW’s average profit per equity partner is analogous to that of Addleshaw Goddard’s, Berwin Leighton Paisner’s and SJ Berwin’s. But it has a relatively high proportion of equity partners (64 per cent), which it did not reduce in the past financial year.

The firm’s profit margin was 32 per cent, while the top of the 13-rung lockstep rose from £850,000 to £1m over the past financial year. All staff were awarded a discretionary one-off bonus equivalent to one week’s pay as a mark of the firm’s success.

The firm’s revenue base is increasingly international, with overseas income accounting for 51 per cent of the total in 2009-10 compared with 49 per cent the previous year. This was reflected in its promotions: for the second year running, in 2009-10 WFW did not make a single promotion in London.

UK 200 RESULTS 2009

Turnover at Watson Farley & Williams (WFW) grew by an astonishing 25 per cent during the past financial year to hit £73.5m. This level of growth was not only surprising for a firm with core private equity, project finance and ship finance practices, but marked a change from the slow but steady increase in revenue the firm had experienced during the boom, which averaged about 6 per cent per year.

The reason for this apparent volte face? WFW enjoyed billings in euros from its six European offices, including two new private equity-focused offices in Milan and Munich and around 17 per cent growth in total headcount.

The increasing importance of the international offices was reflected in the promotions to the partnership in May 2008. Out of a total of nine new partners, four were made up abroad, with one promotion each in Bangkok, Paris, Rome and Singapore.

However, despite the leap in turnover, profitability continues to be disappointing. The profit margin fell slightly from 37 to 33 per cent and average profit per equity partner increased by just 1 per cent from £424,000 to £430,000, which may be a hindrance to any plans to attract high-flyers in places such as New York.

There was no change over the last financial year in the remuneration structure, which remains a modified lockstep with a total of 13 rungs. Around 70 per cent of partners are part of the equity.

Finance is WFW’s biggest area of focus, accounting for almost half of all global revenues. Corporate brings in a third of the money. The firm’s leading reputation in high-end ship finance and the intersection of corporate and energy expertise work has helped it pick up significant deals, including advice to Citibank on a $850m (£515m) ship financing and advice to key client Dong Energy on its acquisition of a £600m power station in Wales.

Despite the downturn in ship finance, WFW contends that its Greek offices, which are heavily focused on the shipping sector, have been busy restructuring shipping contracts. Renewables work has also boosted the coffers in that jurisdiction.