PEP drop at DLA Piper after Middle East woes
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DLA Piper has posted a one per cent drop in fee income for the 2009 financial year, as PEP fell by 18 per cent.
Paul Edwards
The EMEA and Asia section of the business, which currently report on a calendar year basis, made £581m last year, down from £585m in 2008.
Over the same period PEP fell from £645,000 to £527,000. At 189 the firm had on average one additional equity partner in 2009 compared with 2008. The equity spread runs from £225,000 to £1.5m, compared with £325,000 to £1.5m in 2008.
Net profit was £100m, down 19 per cent on the 2008 figure of £123m and reflecting a margin of 17 per cent.
The dip in profitability was aversely affected by a 40 per cent decline in revenue in the Middle East from £20.5m in 2008, when the firm had its best billings month ever, to £12.4m in 2009. One of DLA Piper’s major clients in the region had been indebted property company Nakheel. The law firm’s chief financial officer Paul Edwards commented that if the Middle East were removed from the equation then the global PEP figure would only have fallen by the much less dramatic three per cent. DLA Piper halved the total number of fee-earners in the region to around 100 through several rounds of redundancies.
The combination of a reduction in total headcount globally and other cost-saving measures, such as reducing long-distance travel, allowed the firm to take £37.4m out of the cost base.
The most impressive revenue increases were in Asia, which grew by 21 per cent from £46.8m to £56.5m and continental Europe, which grew by 10 per cent from £208.8m to £229m, partly boosted by currency exchange fluctuations. New clients include Kraft and UBS.
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Readers' comments (28)
Anonymous | 13-Jul-2010 1:48 pm
Way more than 50% redundancies as they failed to mention there was an initial cull back in Jan '08, one of many non-disclosures. I should know as I was one of them and HR there even tried not to pay relocation back to blighty. Shabby. In-house now and DLA off the panel.
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Anonymous | 13-Jul-2010 2:09 pm
DLA continues to invest huge amounts in growth, particularly geographic expansion and partner recruitment, and IT systems, which is artifically holding the PEP back compared to many rivals.
This is a firm going places. Those at more established firms can sneer all they like but in ten years' time DLA will be magic circle.
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Anonymous | 13-Jul-2010 3:43 pm
DLA - magic circle - don't make me laugh. Aggressive, frequently successful in achieving market penetration - yes. Likely to be regularly instructed and a trusted adviser on "bet the house" type plays to blue chip clients, unlikely without a radical reinvention of themselves (again) - Dibb Lupton Broomhead - we remember where you come from..... oh and well done for that. And I would say - who says striving to be so called "magic circle" is a good thing anyway.
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Anonymous | 13-Jul-2010 4:23 pm
Anonymous @ 2:09pm - hilarious, investment in IT systems?!? I'm ex-DLA (left a few months ago), and certainly didn't see any of that. It must be one of the only large firms (if any) that doesn't even have digital dictation. Tapes and batteries all round.
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Anonymous | 13-Jul-2010 6:02 pm
I like the way Sir Nige's pay packet stays the same at £1.5m even when the bottom of equity has dropped by £100k. That's a neat trick; I bet those hundreds of bods DLA laid off will be ecstatic to learn that, even in a dropping market, Sir Nige doesn't have to worry about his mortgage.
No wonder NuLab loved him and gave him a knighthood... feathering one's own nest regardless of business sense and practicality, to say nothing of not looking after one's staff, seems to have been a prerequisite for praise under the last administration!
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Anonymous | 13-Jul-2010 8:03 pm
Investment in financial system is turning into great chaos! Can they really measure their turnover or is it a guess?
DLA was growing mainly financed by partner PEP and growing debt which will create a burden for the furture.
Nigel is holding back some of the bad news and keeping partners satisfied by growth and success news.
Will this end in a tragedy? DLA is not able to keept top talent as they are not able to keept what they are promising - that is their key problem.
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Anonymous | 14-Jul-2010 4:24 am
£12.9 million revenue per fee earner is a healthy £129,000 per fee earner. That's nearly enough to pay their salaries.
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Anonymous | 14-Jul-2010 4:30 am
I amazed DLA made any cash in the ME - sinking ship with no decent staff or clients.
BTW - the 2008 revenue figures are almost certainly false as DLA's clients didn't pay on acount of the credit crunch and the general poor quality of service provided.
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Anonymous | 14-Jul-2010 7:31 am
Here we go again aboard the DLAP train (wreck)...
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Anonymous | 14-Jul-2010 10:05 am
DLA is unstoppable. To its competitors it's like lava flowing down a volcano, they can see it coming but can do little about it.
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