The true picture of profitability among the UK's top firms is on display today (3 September). Forget PEP. Loathe it (A&O's Guy Beringer) or love it (anyone at Slaughters), it has become something of a problematic benchmark.
Actually, strike that 'anyone at Slaughters' comment. As we reported last month, and reiterate today, the firm's senior partner Tim Clark is a supporter of a more balanced measure of law firm profitability, one that takes into account the increasingly small proportion of full equity partners at many firms, as well as the monies allocated to the entire partnership.
Enter The Lawyer's groundbreaking earnings per partner (EPP) figure, published today in the inaugural The Lawyer UK 200 Annual Report. The table of the top 100 firms, complete with the proportion of equity to non-equity partners for each, confirms that just three of the seven that posted average PEPs of more than £1m last year also reached that benchmark when it comes to EPP.
Yes, it was a great year, but the cake was smaller (or was at least shared among fewer people), than you might have thought.
Freshfields, Linklaters and Slaughters all retained the £1m-plus benchmark last year when the earnings of their non-equity partners are factored in.
Of the trio, Linkaters arguably put in the most impressive performance. It was the only one with significant numbers of salaried partners. Last year Slaughters had just five, all overseas, while Freshfields was still in the land of the all-equity partnership. How times change.
We think The Lawyer's EPP figure is important because it removes some of the smoke and mirrors surrounding law firm profitability. But it also offers the next generation of partners an insight into the likelihood of making equity, and the differential in income. Along with the actual EPP figures, if you're an assistant at a top 100 firm you might want to take a look at the column that reveals the proportion of equity to non-equity partners.
And if you work as an associate at DWF, which has the tightest equity in the top 100, you might, just might, want to look elsewhere.