Six-month financials show promising market
23 November 2009 | By Gavriel Hollander
The first half of the 2009-10 financial year has provided a mixed bag of results for law firm revenues, but some stability seems to have returned to the market.
Firms that are focused more on corporate and real estate have continued to suffer, while those with strong financial, tax and employment practices have weathered the recession better.
Another trend has seen some of the smaller firms perform better on balance than their larger counterparts, the best of which were happy to tread water in a difficult market.
Among the success stories, in the first six months of 2009-10 Stephenson Harwood saw revenue rise by 8 per cent to £42.6m.
The firm’s chief executive Sharon White said: “These results reflect our well-hedged business, which includes a healthy balance between non-contentious and contentious work.”
DWF was another mid-market firm to post impressive half-year figures. The firm achieved a 15 per cent rise in fee income, improving from £28m in 2008-09 to £32m in the six months to the end of October 2009.
Growth areas included litigation (up 32 per cent), insurance (up 18 per cent) and private client (up 10 per cent). The firm also increased its headcount by 30 per cent in Leeds and 25 per cent in London.
LG’s revenue grew by 10 per cent during the period, although this followed an 11 per cent drop in turnover for the full 2008-09 year.
Bucking the general trend, the firm said its corporate arm was well ahead of budget, along with dispute resolution and finance.
Other climbers included Denton Wilde Sapte, which saw revenue grow by 3.5 per cent, while Watson Farley & Williams posted a 15 per cent increase in turnover.
Among the firms that saw turnover fall, Olswang recorded a 3 per cent drop, bringing in £43.3m.
Managing partner David Stewart said the firm’s corporate arm had performed well, thanks in part to the e540m (£480.99m) acquisition and restructuring of Pearl Group by Olswang client Liberty Acquisition.
Berwin Leighton Paisner saw revenue fall from £84m in the first six months of last year to £80m this time around, representing a 5 per cent drop.
Wragge & Co’s decline in revenue stood at a more manageable 3 per cent, with senior partner Quentin Poole reflecting market opinion that the first half of 2009-10 had “got gradually better”, while the second half of 2008-09 had “got gradually worse”.
He added: “If the trend continues, we’ll match last year on total turnover.”
Pinsent Masons saw its half-year revenue drop by 7 per cent after bringing in £98m against £105m a year earlier. According to a firm spokesperson, this was “broadly what we were expecting”.
As reported by The Lawyer (9 November), Simmons & Simmons saw its revenue drop by 16 per cent compared with the first half of 2008-09, posting a six-month turnover of £120.3m.
Managing partner Mark Dawkins said the results were “broadly speaking […] in line with our expectations”.
Magic circle firm Allen & Overy posted a 7 per cent year-on-year fall, with a global revenue of £548m compared with £511m last year.
While many of the top 10 firms are still finalising their numbers for the six months, Lovells and Norton Rose reported flat figures against last year’s. Lovells brought in £259m in the first half, a slight drop from last year’s £260m.
Lovells managing partner David Harris confirmed that the corporate practice had suffered, while high-performing sectors included dispute resolution, business restructuring, insolvency, employment and IP.
“This is a respectable result compared to the market,” Harris said. “Across the regions, Asia and the Middle East have seen some slowdown, although the position varies from market to market. The effects of the downturn are still evident in Continental Europe and London, with some improvement in certain areas. The US has performed broadly in line with last year.”
Eversheds saw its turnover drop by 6 per cent year-on-year. However, the £178m the firm brought in represents a 1 per cent rise on the final six months of 2008-09.
Chief executive Bryan Hughes said: “Overall the majority of our practice groups reported in line with management’s expectations, with HR and litigation performing on the upside and real estate and corporate continuing to face challenging market conditions.”
Hughes said that, despite falling turnover, profit was up year-on-year, adding that he believed the firm was in a good position.
“There can be no doubt that the legal sector has changed for good,” he said. “While the economic situation remains challenging, the firm’s in a strong position and we’re cautiously optimistic that performance and market conditions will continue to improve.”