The big PEP row: why profit does matter

Fresh from its tripartite merger last year, and in the middle of the UK financial results season, Dentons has decided to launch a tirade at the way the media and analysts look at law firm financial reporting.

The firm’s decision to stop reporting average profit per partner figures prompted an impassioned defence of the metric by The American Lawyer. The magazine’s suggestion that the move coincided, in part, by a 20 per cent decline in average profit per equity partner (PEP) caused Dentons to hit back.

In a statement issued last night, Dentons accused The American Lawyer of a “lack of understanding of basic math, let alone simple logic” which it said was “stunning”. It added that it was “literally impossible for the Editor in Chief’s analysis to be correct” because Denton’s composite firms – SNR Dentons, Salans and Fraser Milner Casgrain – were incomparable.

But as The Lawyer editor Catrin Griffiths argues today, with law firm economics changing as the sector changes, independent analysis of financial information is crucial. PEP is not the only figure that matters, but it does matter.

Also on TheLawyer.com:

  • Squire Sanders’ merger with Washington DC’s Patton Boggs was viewed by many as a rescue for the latter. European managing partner Peter Crossley reveals why the tie-up was necessary for his firm too
  • Slater & Gordon has confirmed a UK management re-jig and taken on 105,000 sq ft of office space in Manchester
  • Allen & Overy’s Australian senior partner Grant Fuzi is to leave the firm at the end of this year, four years after he launched the magic circle firm’s offices Down Under
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