Categories:US & The Americas
Orrick, MoFo suffer PEP falls at year-end
Julia Berris
Orrick Herrington & Sutcliffe and Morrison & Foerster are the first US firms to announce results for the 2008 financial year.
Orrick suffered a dip of 20.8 in profit per equity partner (PEP), from $1.66m in 2007 down to $1.315m in 2008. Global revenue grew by around 8 per cent, from $772m to $835m.
Orrick announced 40 layoffs in November (13 November), but despite this is currently considering further expansion and is exploring opportunities to launch in the Middle East.
Revenue at Morrison & Foerster grew 2 per cent, from $894m in 2007 up to $911m last year. PEP dropped by 13 per cent, from $1.27m in 2007 down to $1.1m in 2008.
Readers' comments (6)
Anonymous | 13-Jan-2009 1:02 pm
PEP and PPP at "All Equity" Partnerships??
PEP is easily manipulated. There is probably a big difference between PEP and PPP at these two firms. A number of US firms proudly boast of being all equity partnerships, but then look to inflate the PEP figure by reducing the capital contributions from a large numbes of partners in the lower ranks. This exercise is driven by the AmLaw 100 definition of an "equity" partner -- which is different from the firms own definition.You need to look at PEP, together with PPP and the range and spread of equity to get a handle on how these firms are performing. Look for more PEP manipulation in the coming months by the demotion of more partners to the lower ranks "relieving" them from capital contributions.
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Anonymous | 13-Jan-2009 11:02 pm
BSPEP Popped -- 2009
Looks like 2009 could be quite savage!! The headline PEP figures are BS. Everyone knows the game. A "junior" partner in the Bay Area will be very lucky to take $400k home in 2009. Offer them $300- $350k and they would probably bite your hand off.
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Giusti | 13-Jan-2009 11:07 pm
2009 Office Closures
Two firms with two very different strategies. One has forged ahead with the international play. The other has basically admitted defeat and given up on expanding the empire. I expect they will close more offices in 2009 - cutting costs and headcount. Short term PEP preservation.
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Respect Ethics | 13-Jan-2009 11:13 pm
Management by Subscription
Yeah. It is amazing how some firms are managed. Herd the likeable deadwood into management, get them a subscription to the American Lawyer, Legal Business, Business Week and the Economist, and then let them spend 12 months trying how to work how to spin the PEP figure. It is only a matter of time before some of these firms implode under all the internal tension and politics associated with faking the PEP number.
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Anonymous | 14-Jan-2009 7:04 am
Bottom Feeders
2009 will be tough for everyone, but particularly tough for the bottom feeders. High volume/low margin models will be under enormous pressure as volume disappears. This will force them to take a look at their international offices which have been carried through the boom years. Partners in California who will be taking a pay cut for the first time for a long time, will start making noises about "investments" in Asia and elsewhere.
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Anonymous | 14-Jan-2009 5:57 pm
"Elsewhere" ?
Anonymous said that
"Partners in California who will be taking a pay cut for the first time for a long time, will start making noises about "investments" in Asia and elsewhere".
It's strange, O London and Paris offices made respectively a +8% and +23% in 2008.
Thank you Anonymous for your sharp analysis.
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