Travers Smith has seen a drop in average profit per equity partner (PEP) as the corporate-heavy firm becomes the latest to suffer the effects of the credit crunch.
In financial results announced today, Travers achieved a slight increase in turnover, which rose from £78.5m to £81m, but saw PEP fall by 7.6 per cent from £817,000 to £755,000.
Managing partner Chris Carroll said that the firm’s results are less positive than many because of its unusual financial year, which ends in July, meaning that they reflect three more months of credit crunch-related gloom, and three fewer months of the M&A boom.
He said that from April 2007 to April 2008 the firm had recorded double-digit revenue growth, but it had been hit by the economic downturn for much of this year.
Carroll said: “We are in the vanguard of the slowdown. We might be an illustration of what is going to be happening across the board in London.”
The results follow a record year in 2007, when Travers made the most of the M&A boom to boost turnover and PEP by 15 per cent.
Carroll said it was surprising that the corporate practice had increased revenues this year, despite economic conditions, adding that other practice areas had made steady progress.
He put the fall in PEP down to sluggish growth and rising costs. “We slightly increased on 2007’s turnover with 2008 overheads. Salaries went up across the board last year.”
Travers’ closest rival Macfarlanes has also been hit by the credit crunch. Last month the silver circle firm announced a rise in turnover of 6.7 per cent but PEP remained static at £1.1m (The Lawyer, 30 June 2008).