Shoosmiths posts massive profit hike despite falling turnover
Shoosmiths has posted an 83 per cent hike in net profit for the 2009-10 financial year with average profit per equity partner (PEP) rising 69.5 per cent over the same period.
The figure rose from £6m in 2008-09 to £11m, while PEP increased 69.5 per cent to £256,000. Turnover, however, has continued to fall. After reporting a 4 per cent drop to £99m last year, the figure fell a further 9 per cent to £90m in 2009-10.
Chief executive Claire Rowe said a series of cost-cutting measures were behind the boost in profits. A total of 107 staff redundancies have been made in the last year, and in October all staff earning more than £25,000 were asked to take a permanent 3.5 per cent pay cut (26 October 2009). In total 90 per cent of staff agreed to the cuts, which could be reviewed later this year. The firm also introduced a flexible working scheme and was one of the very few firms that withdrew training contracts from future trainees without offering any compensation (30 March 2009).
Rowe, who took up the role last May after previous incumbent Paul Stothard stood down (22 May 2009), said the PEP increase should be put in the context of last year’s results, when the figure fell by 54 per cent to £151,000.
Despite the dramatic increase this year it remains well short of 2007-08 figure of £372,000 (6 July 2009).
“This was definitely an improved performance, although in the previous year we were in a particularly poor position,” Rowe said. “We’ve changed our business focus toward profitability, not income, and had budgeted for a reduced income, so this is not unexpected.”
She added: “Last year was a challenge and there’s been increasingly fierce competition in the market, but this is a positive step toward our strategic goal of improving profitability.”
Despite its push to reduce costs Shoosmiths has continued to invest in its Manchester office as it looks to build up a full service offering. In April it brought in personal injury specialist Debra Woolfson (26 April 2010).
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Readers' comments (23)
Anonymous | 14-Jul-2010 11:27 am
Surprise surprise ... another firm reporting rise in PEP and profits despite a fall in turnover ... "Chief executive Claire Rowe said a series of cost-cutting measures were behind the boost in profits" ... what Clarie Rowe meant to say was kicking out staff in an unfair manner, and make like hell for lawyers and staff who did keep their jobs has meant that partners have been able to enjoy more take home pay!
The economic crisis has seen hundreds of lawyers forced out of work, and partners seem to forgets that these lawyers are skilled workers. Lawyers unable to find jobs have had to leave the profession, and so when the market bounces back and deal flow increases where exactly do firms and partners hope to find these skilled workers to come in to work on these transactions.
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IHateBPP | 14-Jul-2010 11:48 am
Looks like Shoosmiths permanently destroyed what reputation they had for a quick buck.
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Anonymous | 14-Jul-2010 12:06 pm
Watch out Slaughter & May.
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Anonymous | 14-Jul-2010 1:11 pm
What ever next!?
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Anonymous | 14-Jul-2010 2:18 pm
Those remaining associates at Shoosmiths may be working at a deeply unimpressive, third-rate firm but at least they can console themselves with the knowledge that the partners really care about their staff and are genuinely decent and honorable people.
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City Gent | 14-Jul-2010 2:30 pm
So the PEP goes UP 69% (albeit from a paltry level) and the pay for those few employees who are "lucky" enough to have kept their jobs goes DOWN by 3.5%.
I'm not sure the term "equity" partner is really appropriate any more, as the word has connotations of fairness, which seem grievously misplaced.
Perhaps "SITT" partner would be better - Snout In The Trough.
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Anonymous | 14-Jul-2010 2:46 pm
The treatment of staff by Shoosmiths has been truly despicable. This PEP increase has been achieved purely on the back of very large numbers of redundancies (both announced and stealth), appaling treatment of trainees and a pay cut for remaining staff.
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Tim | 14-Jul-2010 4:15 pm
Nicely done.
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Anonymous | 14-Jul-2010 4:22 pm
"Turnover has continued to fall."
I've always thought that well-run firms should be able to weather the credit crunch storm and I imagine that all the redundancies and reduced pay/hours at Shoosmiths are just a temporary fix for a much wider problem. The Equity Partners should enjoy their 69.5% "windfall" while it lasts and the minions should brace themselves for more bad news in the future.
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Anon | 14-Jul-2010 4:42 pm
No doubt all the staff they made redundant, and the trainees whose contracts they deferred without offering compensation, will be truly delighted at this news!
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