Relocation costs LG dearly as PEP dives

LG, the firm formerly known as Lawrence Graham, has become one of the few firms in the City to post flat revenue growth and a reduced profit for 2006-07.

Turnover at LG remained static at £66m, while average profit per equity partner dropped by 7.5 per cent, from £465,000 to £430,000.

LG managing partner Penny Francis blamed the 83-partner firm's move to new offices at More London Riverside and the cost of leaving its previous offices for the dip in profit.

"It’s down to the cost of the buildings," said Francis. "We have a significant rent-free period, but because we’re an LLP we have to account for the rent."

Francis added that the rent-related cost equated to around £35,000 per partner and said that the past 12 months, during which LG maintained three buildings before its move to its new South Bank headquarters, was "always going to be an expensive year".

Francis said the firm had improved its cashflow position thanks to a concerted push on improving lockup, which stood at 107 days at the year-end, and that LG had ended the year with £2m in the bank.

Last August LG lost the guts of its IT and outsourcing team when three partners, including department head Mark Lewis, left the firm. It also effectively closed down its shipping practice when partner Mike Lax and two associates left to set up boutique Lax & Co.

Francis pointed to the exits as the reason for the firm's flat revenue, but said the firm now had the right platform for its future development.

"This has been a big year for us, but the office move and the investment in the business was absolutely the right thing to do for our clients and for us," she added.