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Travers Smith managing partner Chris Carroll has predicted more woe for M&A lawyers after the corporate-heavy firm saw its average profit per equity partner (PEP) fall by more than 7 per cent last year.
Travers ;increased turnover by 3.2 per cent to £81m, narrowly beating the firm’s record 2007 showing, but PEP dropped by 7.6 per cent, from £817,000 to £755,000.
Carroll said the partnership was happy with the results, but that it was far from optimistic about the year ahead.
“I’m not worried about this year. I’m more worried about next year. There isn’t much good news. There are fewer deals, they’re smaller and they take longer to complete,” he said.
Travers was unfortunate in that its June year-end encompassed ;a ;longer period of market downturn than most other firms’.
Its late financial year meant that the figures missed two months of 2007’s M&A boom and gained two months of credit crunch misery.
Carroll said Travers’ results would be a sign of things to come for other City firms. “We’re in the vanguard of the slowdown,” he added. “We might be an illustration of what’s going to be happening across the board in London.” Travers’ closest rival as a small but heavy-hitting corporate practice is Macfarlanes, which announced its financial results last month. The silver circle firm saw a modest rise in turnover of 6.7 per cent, but PEP remained static at £1.1m (The Lawyer, 30 June).
Travers is the eighth firm to announce a drop in PEP. Others include Beachcroft, Berwin Leighton Paisner, Hammonds, ;LG ;and Trowers & Hamlins. Carroll put the fall down to sluggish growth and rising salary costs. “We ;just ;slightly increased on 2007 turnover with 2008’s overheads. Salaries went up across the board last year,” he said.
Carroll would not be drawn on how much the firm planned to grow, if at all, in 2008-09, but was philosophical about the downturn.
He said Travers’ strategy was to “keep a lid on expenditure and weather the storm. We can’t suddenly reinvent ;ourselves ;as something we’re not.”