Revealed: Pannone restructure results in profit rise while turnover stagnates

Manchester firm Pannone has reported a rise in average profit per equity partner (PEP) to £239,000, but a slight drop in turnover to £45.6m for the 2012/13 financial year.

Manchester

Pannone’s revenues fell from £46.2m in 2011/12, a drop of 1.3 per cent, while PEP went up by 6.7 per cent from £224,000 (11 July 2012).

Managing partner Emma Holt said the rise in profitability came after several years of restructuring, process improvements and focus on pricing. In 2012 the firm carried out two rounds of redundancies (12 November 2012) and its total headcount has fallen from 602 in 2011/12 to 587 last year.

The focus on processes has seen Pannone examine its efficiencies and procedures in a number of areas, including moving some areas of advice such as divorce online and providing them on a fixed-fee basis. The firm has also been investing in digital marketing and last year saw a 40 per cent increase in new cases from digital enquiries.

Holt told The Lawyer Pannone was putting a greater focus on the way the firm priced work as well as the shape of its teams. The firm has 140 non-lawyer fee-earners and also has a paralegal apprenticeship programme.

The programme of change began when Holt was elected managing partner in 2010, with the firm’s management and divisions the first areas to be shaken up (13 September 2010).

Although turnover shrank across the board, some departments did see a rise in revenue. Holt pointed to the firm’s serious injury team in particular, which reported a 6 per cent rise in turnover.

She would not comment on the departments where revenue had dropped, but said profit had risen across all five of the firm’s divisions.

Pannone’s equity spread last year ranged from £50,000 to £250,000. At the start of the previous financial year the firm implemented a new equity structure, creating a new role of junior equity partner and turning salaried partners into fixed-share partners. Profits due to all partners last year rose to £10.4m, from £9.3m in 2011/12, equating to average earnings per partner of £162,500.

The firm’s total debt also rose by just under £1m to £13.9m. Holt said the firm is trying to reduce this amount. 

During the 2012/13 year Pannone recruited Clyde & Co’s former chief operating officer David Jabbari as a board member and chief executive of its referral network Connect2Law (6 December 2012). More recently, it brought on board Jonathan Gulliford from Co-Operative Legal Services to grow its white label arm Pannone Affinity (12 July 2013).