Unusually, the group of firms below the big five – Ashurst, Herbert Smith, Lovells, Norton Rose and Simmons & Simmons – has already given indications of its financials. This is terribly convenient for us legal market anoraks, since even at this early stage in the reporting cycle we can start to make relatively informed observations.
Herbies’ performance appears to be the most impressive, although since its financial year ends in March, virtually its whole first half was in the boom. With average profit per equity partner (PEP) now more than £1m, its partners may fondly imagine it’s within shouting distance of the magic circle. This is not the case: revenue has increased by 72 per cent in the past five years, according to The Lawyer 200 Annual Report 2007, but even on a turnover of £418m Herbies is well under half the size of Allen & Overy. What’s more, only around half of Herbies partners are blessed with equity. Still, good effort.
Lovells is an interesting case. If anything, its figures this year – revenue to £479m and PEP to £662,000, and the astonishing fact that its financial performance actually got better as the year went on – confirm the suspicion that its corporate practice has been underweight. On a five-year analysis, Lovells has increased total turnover by 27.1 per cent, but compare this with Ashurst (64 per cent), Norton Rose (45 per cent) and Simmons (47 per cent).
The key to all of this is international growth. Lovells had already made its international investment in 2004 with a series of European mergers and a US insurance litigation offering.
Its mission has been – still is, really – to knit those businesses together. The others, particularly Ashurst, have seen their growth spurts in the last couple of years, and the figures reflect that.