London Small

London’s smaller top 100 firms may be a mixed bag, but one at least can be praised for its consistency. Pensions specialist Sacker & Partners tops the tables for revenue per lawyer (RPL), profit per lawyer (PPL) and average profit per equity partner (PEP). It also comes out top on margin. All this from a firm that bucked this particular trend by coming bottom of the table for revenue. But then, this is the first year that the former Rising 50 firm made the top 100, so perhaps it can be excused.

Sackers’ success is rooted in its determination to focus on one core area and, let’s be honest, its luck that this area has become such a hot potato over the past couple of years. As the firm’s senior partner Ian Pittaway told The Lawyer after its “exceptionally good” year ended (The Lawyer, 23 July), the results were driven by pensions being high up the corporate agenda, the sky-high levels of corporate deals requiring pensions advice and recent legislative change.

But it is also Sackers’ model that has helped it become such a pin-up for boutiques. Although its PEP almost rivalled the global elites’ at £874,000, the equity is not that tightly held (12 of the 21 partners are equity) and its leverage is an unspectacular 1:3.5. Yet the firm outstripped its nearest rival on RPL Mishcon de Reya by 9.5 per cent and its nearest rival on PPL Finers Stephens Innocent by 58 per cent. With a peer group best margin of 54 per cent, it is the epitome of a successful former Rising 50 firm – vibrant, neat and successful.

As Fladgate Fielder finance director John Goreing puts it: “The key for smaller firms is to know your space.” Sackers proved last year that it knows its space as well as anyone, and better than most.

At the other end of the scale comes Bristows. The all-equity IP boutique is undoubtedly a class act, boasting some of the best lawyers in its core market. Yet its figures appear to be slipping, slowly, off a cliff.

In 2003 Bristows ranked 81st in the top 100 with an £18.5m turnover and a PEP of £238,000. Five years on and turnover is up by just 8 per cent to £20m. PEP, meanwhile, has grown by a whopping £5,000 over the period; that is £1,000 a year. (The figures have in fact been all but flat year-on-year since 2003, the high point coming in 2005-06, when turnover reached £20.1m and PEP beat last year’s mark by an epic £3,000, at £246,000.)

The firm’s joint managing partner Paul Walsh blamed the downturn in the IP litigation market, the core of its business, and costs incurred in the lead-up to its first office move for 25 years for its poor results. But Bristows also lost a group of five patent litigation partners in March this year when it left to found boutique Powell Gilbert, suggesting that Bristows has a very big hill to climb to get its figures moving in the right direction this year. Bristows has dropped rankings places every year since 2003 and just scrapes in at number 98 this year.

Elsewhere, the rude health of the London market last year is reflected in the number of firms that posted PEPs of more than £500,000. Along with Sackers’ phenomenal performance there was Mishcons (£698,000), Howard Kennedy (£630,000), Fladgates (£610,000), Forsters (£550,000) and Speechly Bircham (£526,000). These firms have been powered by a healthy mix of top-end real estate, solid mid-market corporate and, in Mishcons’ case, headlinegrabbing divorce work (the firm acted for Heather Mills in her split from former Beatle Paul McCartney and also handled the divorce of former Arsenal FC star Thierry Henry).

“This group of firms know what they do, are good at what they do and have a significant number of good clients in their core areas,” says Speechly Bircham managing partner Michael Lingens.

Mishcons’ PEP was up by an astonishing 70 per cent, while the Holborn firm also posted a record revenue of £39.1m, an increase of 35 per cent. However, the £698,000 is a pre-bonus figure, with the residual profit for equity partner distributions expected to result in an average PEP closer to £640,000.

Not every firm in this bracket had a good year, however. Family and property stalwart Manches failed to translate the obvious high levels of instructions on offer in the City into mega-profit, with PEP up by just 1 per cent to £210,000. And this in a firm where only 41 per cent of the partners are equity.

Manches is unusual in this London group in that it also has a regional presence with its Oxford office, a factor that dragged the overall RPL and PEP figures down slightly. Senior partner Louis Manches says London-only PEP was higher than the average at more than £250,000, but admits the firm’s performance had been “below par” last year.

He points to the restructuring of the construction team, where the firm had had “a bit of a clearout”, as an indicator that not all parts of Manches’ commercial group had been firing on all cylinders.

“Our PEP really should be at least in the region of £325,000-£350,000,” says Manches. “We have to do better in our core areas.”

Next year’s results will show whether Manches manages it.