The Lawyer UK 200 Preview: Come on, united

Early results show strong influence of mergers on the pecking order of the UK’s top firms 

It’s summer, and a proper one at that, but while you have been making the most of the sunshine The Lawyer’s editorial team has been hard at the coal face compiling the data for this year’s The Lawyer UK 200 Annual Report.

To purchase access to the full report visit or contact Daniela Badcock on +44 (0) 207 970 4582

The research process for what is the most comprehensive analysis of UK legal market finances is by no means finished. A handful of firms are still to report their results – the first financials from one of the year’s mergers between Scottish outfits Burness and Paull & Williamsons came through just last week – while there are key indicators such as net profit, equity spreads and number of equity partners still to collect and check from several major practices.

And, of course, there is then the lengthy process of checking and re-checking the thousands of pieces of information before the finished article is ready to release in October.

So, to be absolutely clear, the table published here is not the definitive top half of The Lawyer’s annual UK 200 report. It is, if you like, a work in progress – a term that will be all too familiar to managing partners and finance directors across the land (indeed, this year’s UK 200 will include a particular focus on WIP, debtors and total lockup across the country’s biggest firms).

But a picture is starting to form of how the UK’s largest firms fared last year. And the key theme remains one of big change.


While new business models such as ABSs and firms with capital injections are starting to make their presence felt, the most obvious trend continues to be the impact that consolidation is having on the hierarchy.

That said, last year finally saw the UK’s first listed law firm. It’s been a long time since Sir David Clementi laid out his vision for new business models to allow greater competition in the market, but when Russell Jones & Walker morphed into Slater & Gordon , it got itself a share price into the bargain.

This creates a new issue for The Lawyer’s editorial team to grapple with – the potential for an adverse impact on a listed company’s stock price caused by the publication of incorrect financial results. Consequently, we have steered clear of making a stab at Slater & Gordon’s results, preferring instead to wait until next month for its first-year financials.

A more traditional style of consolidation over the past financial year has, however, seen a plethora of mergers that are helping to chop and change the top line-up. DWF alone swallowed up three firms in 2012/13, snapping up Scottish Biggart Baillie, Fishburns and the remnants of Cobbetts in a pre-pack.

Other major mergers last year included those between Shakespeares and Leicester-based Harvey Ingram; Pinsent Masons and McGrigors; TLT and Anderson Fyfe; and Burness and Paull & Williamsons.

The biggest deal of the year was, of course, the October 2012 link-up between Herbert Smith and Freehills. The firm provided figures for the seven months since that deal so its revenue in today’s table is an estimate based on combing legacy figures with those provided.

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This results season has seen some stunning one-off rises and several returns to form, along with a number of firms that have seen their average profit per equity partner (PEP) figure plummet. 

Indeed, as we reported last month, PEP has fallen at nearly half of the UK 200 firms to have provided figures for 2012/13 so far, with 41 of 86 recording a decline and 10 of those reporting a drop of more than 15 per cent.

The latter category includes Dundas & Wilson , where PEP last year fell by 22 per cent, Morgan Cole , where it dropped by 37 per cent, and Manches , where the partners are on average 43 per cent worse off than this time last year.

Still, it is yet another merged entity you need to turn to for the biggest drop in PEP. At Howard KennedyFsi PEP fell by 52 per cent to £128,000, the lowest in our provisional top 100, with chief executive Mark Dembovsky pointing the finger at the firm’s expanded equity partnership as one of the key reasons.

At the 2011/12 year-end Howard Kennedy was home to just 13 equity partners in a total partnership of 57, while FSI had nine equity partners in its 35-strong partnership. A year later the combined firm has 70.4 equity partners with a total partnership of 83.8, an increase of 220 per cent among the equity. As a result PEP has fallen from an average £269,000 at legacy Howard Kennedy to £128,092.

“We made a concerted push to move people from being salaried partners to equity partners – it became our objective to bring people together,” says Dembovsky, adding that the focus now would be on integrating the two firms, currently spread across three London bases.

The firm just pipped Manches (PEP down by 42.6 per cent to £135,000) for the dubious bragging rights. Bear in mind, however, that not all firms have reported their profits data yet – the market awaits Berwin Leighton Paisner .

Mill-high club

In contrast, six firms in the top 100 posted a PEP in excess of £1m including litigation boutique Stewarts Law , which registered a magic circle-style £1.1m. Indeed, it is the four magic circle firms plus Slaughter and May that make up the half-dozen.

For firms where PEP has bounced back you could do worse than to look at Nabarro , which posted a 30 per cent hike, from £332,000 to £430,000.

“We now have a strong financial platform on which to build, having also settled our property requirements,” says senior partner Graham Stedman. “With a focus on profitability and an investment in the partnership, in technology and in the work we generate internationally I expect to see the performance and confidence of the firm continue to grow.”

Mind you, PEP is still some way off Nabarro’s 2007/08 high of £600,000. And as PEP risers go, Nabarro pales in comparison with Harper Macleod (51 per cent) and Wedlake Bell (an astonishing 140 per cent). The latter’s financial improvement is partly down to its merger with fellow London firm Cumberland Ellis, which went live on 1 April last year (Wedlake Bell has a 31 March year-end).

Revenue risers and fallers

When it comes to top-line growth the merger-fuelled DWF tops the charts with an 84.5 per cent increase in revenue, closely followed by Shakespeares (up 53 per cent), a firm that with its bolt-ons of Needham & James, Berryman, Gorrara Haden and Wood Glaister is following a similar strategy and trajectory. 

Indeed, all five of the year’s biggest growers in terms of revenue have achieved this off the back of at least one merger.

Minster Law is the firm that saw turnover proportionately fall the most last year (13 per cent) after a referrer of work went bust. It was closely followed by Manches (12.9 per cent) and a brace of Scotland’s finest, Maclay Murray & Spens (12.7 per cent) and Dundas & Wilson (10.5 per cent).

These north of the border results, coupled with the high level of merger activity featuring Scottish firms, serve to underline the continuing tough market conditions there.

DLA Piper

One place where there is no change is at the top of the revenue table. For the second consecutive year DLA Piper can claim the largest British-headquartered firm in the world title, with the global giant adding another £100m to the £1.4bn it posted in 2011/12.

On top of that, global net profit rose by 8.5 per cent, from £351m to £381m at the end of the 2012 calendar year, giving DLA Piper a profit margin of 25 per cent.

“We want to be a leading global business law firm with a full range of practice groups and expertise,” says global co-CEO Sir Nigel Knowles.

It appears to be getting there.

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To purchase access to the full report visit or contact Daniela Badcock on +44 (0) 207 970 4582