Lovells bounced back from its woeful 2004-05 financial results after reporting a record rise in profit for the last financial year. Profit per point rocketed by a whopping 43 per cent to £12,000, meaning partners at the top and bottom of equity pocketed £718,000 and £287,000 respectively. Average PEP, meanwhile, jumped from £427,000 to £572,000.

Lovells' lockstep until recently ran from 24 points to 60, with an increase of three points every year over 12 years. Although partners move up the ladder automatically, the partnership council was given powers in January this year to move underperforming partners down the ladder or freeze their points. In July Lovells overhauled its remuneration system, giving entry-level partners 30 points. It is also considering introducing more flexibility at the top of the ladder.

Lovells' turnover, however, increased by just 8 per cent, from £366m to £396m, while London revenue inched up by a modest 2 per cent. In contrast, the firm's US, Asia and Continental Europe offices witnessed revenue rises of 20 per cent, 20 per cent and 15 per cent respectively.

The results were a huge boost for Lovells, which saw a 21 per cent slide in profit during 2004-05. The jump in the firm's top of equity was also symbolic, as it exceeded the 2003-04 figure of £635,000.

The recovery followed an aggressive restructuring scheme that resulted in 25 partners getting the axe in December 2005. Lovells absorbed the final third of the restructuring costs in the last financial year. However, the firm insists its gigantic profit rise is a result of managing costs very tightly. Indeed, costs during 2005-06 inched up by just 1 per cent. However, Lovells concedes that costs are likely to rise during the current financial year because the firm, in line with most of its rivals, has given associates significant pay rises.

But Lovells is not out of the woods yet. In recent months a number of partners have exited the firm, including private equity stars Marco Compagnoni and Oliver Felsenstein.

The firm's 85 salaried partners receive a basic salary plus three notional points, which carry the same value as those allocated to equity partners.

Lovells has no bank debt and manages lockup very tightly. Equity partners are paid via monthly drawings and quarterly distributions, which typically follow five months after the year-end.