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This year, The Lawyer’s annual ranking of the largest UK law firms by turnover is available as an interactive, digital benchmarking tool. For the first time this will allow you to manipulate each data set against the metrics of your choice.
Today’s issue of The Lawyer is a first: we survey 153 LLP accounts taken from the list of firms in The Lawyer’s UK 200 to investigate debt levels within the UK’s leading legal practices.
While we have a caveat that there are many varieties of partnership funding, what is clear is that a traditionally conservative profession is now embracing debt as a tool.
The insurance-heavy practices dominate the table on total volume of debt. They include DAC Beachcroft, Clyde & Co, Kennedys, Irwin Mitchell (which, since the LLPs were filed, has secured another £90m of funding facilities) and Hill Dickinson. In a similar vein, many other insurance firms are clearly having recourse to debt to fund long-tail WIP on litigation. Fentons, which was absorbed by Slater & Gordon last year, had a debt of £10.4m on a turnover of £26.3m. Colemans CTTS has a debt of £10.3m on revenues of £15.3m.
Yet you can’t make easy assumptions. Some personal injury-focused firms have little or no debt – Thompsons has zero, for example. And there’s little discernible pattern among those firms that increased their borrowings most over the last year; Lewis Silkin, Browne Jacobson, Ledingham Chalmers, Matthew Arnold & Baldwin and BLP have little in common, either in terms of market position or practice mix. Herbert Smith Freehills, which tops our table with £124.98m on a seven-month turnover of £469.4m, has undergone huge expansion, from New York and Germany launches to a global merger. Debt figures should be read in the context of the individual firm, as dramatic fluctuations may be down to one-off events and not systemic or easily segmented.