US firms’ leverage ratios only half those of UK rivals

Top national firms have twice as many lawyers per equity partner as rival City practices, while US firms have among the lowest leverage ratios in London, The Lawyer can reveal.
The leverage ratio – a calculation of how many lawyers a firm has to each equity partner – has long been regarded as one of the factors determining partner profitability.
The findings, which are derived from figures published in this year’s The Lawyer 100, underline the tight grip on the equity at firms such as DLA, Eversheds and Addleshaws.
DLA HR director Robert Halton denied that a high leverage ratio meant a tougher route to partnership. “We’ve got quite a different structure from other firms. There’s a meritocracy and defined criteria for promotion. There’s a clearer escalator than in many other firms,” he said.
Herbert Smith has the highest leverage ratio of any City firm, at 6.8 lawyers to each equity partner. Next in the top 10 is Clifford Chance with a ratio of 5.6:1.
The highest leverage operated by a major US firm in London belongs to Weil Gotshal & Manges, with gearing of 5:1, while Shearman & Sterling has a ratio of 4.5:1.

Law firms’ leverage ratios
Firm Leverage ratio
Eversheds 8.3:1
DLA 8.3:1
Addleshaw Goddard 8:1
Stephenson Harwood 7.4:1
Hammonds 7.1:1
Osborne Clarke 7.1:1
Herbert Smith 6.8:1
Bird & Bird 6.8:1
Davies Arnold Cooper 6.4:1
Beachcroft Wansbroughs 5.8:1
Clyde & Co 5.7:1
Clifford Chance 5.6:1
Richards Butler 5.4:1
Weil Gotshal & Manges 5:1
SJ Berwin 4.8:1
Pinsents 4.7:1
Shearman & Sterling 4.5:1
Norton Rose 4.4:1
Simmons & Simmons 4.2:1
Olswang 4.2:1
Ratios compiled from figures provided by the law firms. Table derived from the top 30 UK firms and top 25 US firms in London.
Source: The Lawyer