UK mid-market firms post record rises in PEP figures

BLP smashes targets with thirty-four per cent PEP hike to £570K; magic circle growth modest

The latest preliminary figures from the UK’s biggest practices show that the mid-market firms are continuing to record rises in revenues and profit per equity partner (PEP) – and that lockstep is all but dying out.

Both DLA Piper Rudnick Gray Cary and Berwin Leighton Paisner (BLP) have managed to hike their average PEP figures to more than £500,000 by keeping their equity tight.

BLP smashed its targets with another storming year. PEP, for the firm’s 65 equity partners (of a total partnership of 125), is up a staggering 34 per cent to £570,000 from last year’s £425,000. This was itself a market-rocking 40 per cent rise on the firm’s 2003 PEP of £303,000. Turnover grew a record 19 per cent, from £102m in 2004 to £121m.

Managing partner Neville Eisenberg attributed the two-year winning streak to a wholesale review of the business in 2003-04. “It’s a very competitive market, but the larger mid-size market has been more buoyant than the massive multinational market, and we’ve benefited from that,” he told The Lawyer.

DLA Piper’s PEP has risen from £475,000 to approximately £525,000, but only 30 per cent of its partners are full equity.

The very largest City firms are predicting modest rises, with Allen & Overy expected to post a 10 per cent hike in profit, which would take PEP to £670,000 from last year’s £609,000. Herbert Smith is anticipating last year’s PEP of £700,000 to increase by between 5 and 10 per cent.

There is now a growing number of firms inhabiting the £400,000-plus PEP band, according to research by The Lawyer. Addleshaw Goddard, Nabarro Nathanson and Olswang are all new entrants into the £400,000-plus band.

Nabarros’ average PEP has risen by 18.8 per cent, from £345,000 to around £410,000, on a turnover increase of 12.3 per cent, from £87.3m to £98m.

Olswang is predicting a profit jump of 30 per cent to some £405,000 on a revenue increase of 8.5 per cent, from £59.4m to £63.8m.

Meanwhile, CMS Cameron McKenna is expecting a steady year and is set to maintain a comfortable position in the £400,000-plus band. Internal sources said the firm was budgeting for a revenue increase of 6 per cent.

Richards Butler is reporting PEP of £450,000, an 8 per cent rise on the previous year’s figure of £415,000. Revenues are up 4.5 per cent to £91m.

Preliminary figures show that Clyde & Co‘s revenues have risen from £94m to £104m. The firm is predicting a similar rise in PEP, which would take it through the £500,000 barrier for the first time. If Clydes’ figures meet expectations, it will have achieved that with a relatively large equity partnership.

Norton Rose, though, has been unable to drive its profits through the £500,000 barrier to join City rivals Ashurst, BLP and DLA Piper. It has posted a 5 per cent increase in turnover, from £205m to £215m. Average PEP also rose at the same rate, from £405,000 to £425,000.

Outside the £400,000-plus band, other firms have been reporting healthy figures. Bird & Bird’s turnover is up 12 per cent, from £71.9m to £80.4m, with PEP inching up 4.89 per cent, from £327,000 to £343,000.

As revealed by The Lawyer last week (2 May), Simmons & Simmons is expecting a PEP rise of 35 per cent to some £371,000.