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)
Ashley Balls | 14-Jul-2010 9:38 pm
It seems cutting to the bone is highly selective which may not be the best message to send clients. It will be intersting to see if a similar outcome in terms of cost reduction can be repeated next year.
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Anonymous | 14-Jul-2010 11:39 pm
This just stinks! I love the smiling partner photo though! This is so blatantly selfish and greedy that you have to admire the audacity. If there was any justice.........
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Anonymous | 15-Jul-2010 12:46 pm
Firms can't keep on reducing costs just to increase PEP. Do they have a strategy for growth?! If Shoosmiths don't tackle staff morale quickly they'll be losing a few more people and not just the ones who are surplus but the ones who have kept the firm going thus far. What must the 90% of employess who took a cut be thinking when not only the PEP rises massively but also about the10% who didn't take a cut. Maybe the equity partners would like to give the 90% some of their money back!
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The man from the City | 15-Jul-2010 2:19 pm
well its nice to see that the Equity Partners are doing really well, one day they may think about the rest of the staff. Is Shoosmiths getting back to glory days or is this just a flash in the pan?
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Anonymous | 15-Jul-2010 4:21 pm
A bit short sighted for the greedy Shoosmiths partners. Getting rid of their best and most loyal staff in return for more cash in their pay packets at least for this year. I think I would sack the person who has written their business plan first. Perhaps they should ask who is really earning them the money and building up the long term reputation of the business? Different and better ? er right...
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Anonymous | 15-Jul-2010 4:42 pm
As an ex-employee of Shoosmiths this doesn't surprise me one bit. They are the tightest, most unappreciative and most unprofessional firm I've ever worked for.
After they have cut back on trainees and junior staff, it is not surprising that turnover is down. Most of those partners are probably dying of shock at having to do their own work.
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Anonymous | 16-Jul-2010 9:13 am
I believe assistants and associates will stay there just for the privilege of working for a "national" firm in one of its key strategic offices in the commercial hotspots of Northampton, Milton keynes, Reading Basingstoke and a business park near Portsmouth. Rumour has it they are thinking of re-opening their former offices in Daventry and Towcester to really shake up the big boys.
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Anonymous | 16-Jul-2010 9:50 am
Seems to me that Shoosmiths realised they were carrying a lot of dead weight and made a commercially sound decision to shed them . I can name several other firms who would do well to follow the same path
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Anonymous | 16-Jul-2010 11:51 am
Shoosmiths are one of a few firms I have worked at, and they do have this impression of themselves that they are "special" and "superior". Not sure why though, always struck me as being below average - in all senses!
Full credit to the 10% who did not take the pay reduction, shame all others did not follow suit.
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Anonymous | 16-Jul-2010 4:48 pm
A tenth rate firm with tenth rate partners trousering their temporary windfall on the back of lay-offs whilst investing zero in the future. Long may they Halliwell.
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