UK 200: Litigation boosts PEP

Litigation-heavy firms continue to be the high rollers in the ever-popular profit per equity partner stakes. Profit per equity partner (PEP) is not the most worthy benchmark, but it is the most enduring. Our table shows the PEP rankings for the top 100 firms by revenue in The Lawyer UK 200 Annual Report 2013

Profit per equity partner (PEP) is not the most worthy benchmark, but it is the most enduring. Our table shows the PEP rankings for the top 100 firms by revenue in The Lawyer UK 200 Annual Report 2013 The major change from last year is that we have not included volume outfits Parabis and Minster Law. This is not a value judgement, but because both operate radically different models from law firms. Both have a corporate structure and no partnership, and account in different ways. To make a meaningful set of comparisons we have removed them from the PEP table this year. 

To have a closer look into the PEP data from all UK 200 firms, purchase access to the full report visiting www.thelawyer.com/uk200 or contacting Daniela Badcock on +44 (0) 207 970 4582

Supreme court

As more and more firms examine the ABS option, the PEP metric may finally begin to decline. For the moment, however, the £1m PEP barrier remains totemic. This year seven firms made it over that hurdle. As last year, they included the big five circle plus corporate boutique Dickson Minto. That supergroup has been joined this year by litigation boutique Stewarts Law, which managed £1.1m, a rise of 23.6 per cent from last year’s figure of £890,000.

Litigation continues to drive high profitability. Aside from perennial high-performers Macfarlanes and Travers Smith, both of which lifted PEP performance this year, by far the best results came from litigation-heavy firms. And of these, the personal injury firms were remarkably resilient despite the threat of changes in that market. Many may not have featured on City lawyers’ radars. Their businesses turned in stellar results, helped by having a relatively small number of equity partners. Greenwoods managed £750,000, putting it at 15th in the country, while Fentons beat Holman Fenwick Willan and Simmons & Simmons on the PEP table, scoring an average PEP of £531,000. However, high PEP is no guarantee a firm will stay independent. Greenwoods has lately split in two directions, with half the firm being taken over by the Plexus Law arm of Parabis and the 11-partner Aviva team joining DWF. Manchester- and London-based PI firm Fentons, meanwhile, is to be taken over by Slater & Gordon. This time next year they will cease to exist in the PEP table. Irwin Mitchell, Keoghs and Clyde & Co, bunched together in places 20 to 22 in the £580,000-£620,000 band, have continued their steady trajectory upward. All posted higher PEP this year: Irwin Mitchell up from £659,000 to £619,000, Keoghs from £500,000 to £600,000 and Clydes from £550,000 to £580,000.

Few firms managed serious rises. Nabarro’s PEP increased by a whopping 29.5 per cent, from £332,000 to £430,000, but even this was overshadowed by the best performers in PEP terms. Wedlake Bell’s merger with £6m-turnover Cumberland Ellis gifted it an annus mirabilis, with average PEP shooting up by 140 per cent, from £135,000 to £324,000. In the mid-market, things were more static: Simmons, Olswang, Taylor Wessing. Wragge & Co, Addleshaw Goddard and Holman Fenwick & Willan barely shifted.

Two firms stand out for their poor PEP performances in 2012/13. HowardKennedyFsi did not reap merger benefits last year; PEP fell by 52 per cent, from £269,000 to £128,000. And Berwin Leighton Paisner partners saw the biggest drops in real terms. Their PEP fell by £259,000 from £660,000 to £401,000, a decrease of 39 per cent.

To purchase access to the full report visit www.thelawyer.com/uk200 or contact Daniela Badcock on +44 (0) 207 970 4582