Herbert Smith sees PEP return to 2006-07 levels as turnover nudges up
Herbert Smith has posted a 3 per cent increase in turnover and a 7 per cent drop in average profit per equity partner (PEP) for the 2011-12 financial year.
Revenue for the year rose to £480m, up from £465.1m last year, with equity partners enduring a fall in PEP from £900,000 in 2010-11 to £840,000.
The City firm’s net also profit decreased by 7 per cent, from £117.9m to £109.7m - its lowest level in five years, although turnover has reached a five-year peak.
PEP is also at a five-year trough, with the figure now 19 per cent down on the PEP of £1.036m in 2007-08, standing at its lowest level since its £820,000 figure in 2006-07.
The firm’s revenue grew by 3 per cent in 2010-11, with PEP up 4 per cent on the previous year.
The news comes amid a reshaping at the silver circle outfit, with the firm cutting 43.5 jobs in London (12 June 2012) as it enters advanced negotiations over a merger with Australia’s Freehills (21 June 2012).
It has also announced five support-staff redundancies in Dubai (22 May 2012).
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Readers' comments (24)
Anonymous | 26-Jun-2012 12:27 pm
That's pretty lame given over half of their partnership is now non-equity. Guess that means their real profit per partner is £420,000, which is faaaaaarrrrrrrr behind their peer firms. Or what used to be their peer firms!
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A closer look at the numbers | 26-Jun-2012 1:01 pm
Revenues up 3%.
Profits down 6%.
Internet surfing by London corporate partners up 50%.
Partner satisfaction with Jonathon Scott and David Willis down 75%.
Number of litigation partners who will be demanding more corporate heads on the chopping block up 100%!
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D Willis | 26-Jun-2012 1:26 pm
Now now. Let's not get all snarky. This decline in profitability is all a part of the master plan. We're going to address the issue by bringing more partners into the ranks of management, writing numerous papers, hiring an outside consultant, opening more offices in far flung regions and socialising the issue so as to not damage our collegial culture. We're calling it Project Wishful Thinking.
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Scotty | 26-Jun-2012 1:33 pm
Bloody good idea Willis! Let's make sure to raise it at the next GPM.
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Herbies Partner | 26-Jun-2012 1:51 pm
Right now I wish I was a partner at Linklaters. Sigh.
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Scotty | 26-Jun-2012 2:22 pm
Oh sure. Report on our profits being down 6%. You missed the real story, which is that our collegiliality is up 6%!
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Herbies Partner | 26-Jun-2012 2:39 pm
I should have voted for Tim Parkes for senior partner. What was I thinking?!?
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Who writes this stuff? | 26-Jun-2012 2:53 pm
Partnership at Herbert Smith £840,000. Reading these comments, priceless!
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Anonymous | 26-Jun-2012 3:00 pm
I hope Freehills got a due diligence out in the merger agreement!
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FPC | 26-Jun-2012 3:09 pm
I suppose this means the minimum track from non-equity to equity will now be extended again from four years to five years.
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