Eversheds has pushed its profit margin above 20 per cent this year for the first time, just managing to hit 20.4 per cent with an average PEP of £422,000.

The firm has one of the largest workforces of any of the UK's firms with 1,997 fee-earners. However, it has just 329 partners - eight fewer than in 2005 - and around half of those are equity partners.

Partners recently voted through a change to Eversheds' remuneration structure, which takes effect from May. During the last and current financial years, however, equity partners were still being paid under the old modified lockstep. Each equity partner has a guaranteed basic of £125,000, and the lockstep runs from one to six points. An element of the remuneration is peformance-based. The system has the effect of pushing a large number of partners to the top of the lockstep because of the short ladder.

Under the new system remuneration will be entirely merit-based and partners will be paid according to criteria such as fee-income generation, profit and strategic value, client service and behaviour. Fixed-share partners will still be paid partly through performance and partly through a fixed element of profit.

Over the next eight years Eversheds partners will receive a share of a £12.5m uplift in recognised income that is a result of the new FRS5 accounting rules. This will equate to around £6,000 per partner per year and so does not mean a large increase in each year's profit.

The firm was one of only a few to exceed its lockup target, achieving 102 days, split between 39 days work in progress (WIP) and 63 debtor days. It has no bank borrowings.

Eversheds is planning continued investment for London and will move into a new building in 2008. It is focusing mainly on its weaker corporate and finance departments, which together account for 22 per cent of total turnover. The bulk of income currently comes from property (26 per cent) and a variety of smaller practice areas outside the main four sectors of corporate, finance, litigation and property.