2011 Round-up – Financials: Slow ahead

Big revenue rises have been seen by a few of the top firms, but the more usual story is one of marginal recovery

Despite some rocky economic times in 2010-11, law firms in general had an alright time of it during the past financial year.

The best performer overall in turnover terms was Mishcon de Reya, which broke through the £60m ­barrier for the first time after a ­revenue rise of 28.6 per cent. This was accompanied by a rise in average profit per equity partner (PEP) of 27.8 per cent.

Berwin Leighton Paisner was also a strong performer, posting a turnover rise of 19.9 per cent to £229m and a PEP increase of 56.5 per cent to reach £712,000.

Usual suspects

There was little evidence of big rises in turnover or profitability, however, with the largest international firms posting marginal increases year-on-year.

As The Lawyer UK 200 Annual Report 2011 revealed, little changed at the top of the turnover leaderboard, with Clifford Chance retaining its position as the largest UK-­headquartered firm following a year of financial recovery and ­international expansion. Despite the fact that its turnover rose by just 1.8 per cent, from £1.2bn to £1.22bn, the firm stayed ahead of magic circle rivals Linklaters, Freshfields Bruckhaus Deringer and Allen & Overy. These firms ranked second, third and fourth respectively after respective revenue rises of 1 per cent, 0 per cent and 7 per cent.

The rest of the top 10 featured the same names as in the previous ­financial year, although the ranking below position six altered a bit.

DLA Piper’s non-US operations held on to the number five spot, while Hogan Lovells retained the number six ranking held by legacy firm Lovells in 2009-10.

Thanks to its January 2010 ­merger with Australia’s Deacons, Norton Rose was propelled from its 10th place ranking to position seven, pushing Herbert Smith, Slaughter and May and Eversheds into eighth, ninth and 10th places respectively.

Mass market

That is not to say that little ­happened over the course of 2010-11. The real story of the financial year was the rise of the volume firms, with the mergers between Clyde & Co and ­Barlow Lyde & Gilbert and Beachcroft and Davies Arnold Cooper showing how seriously traditional insurance players are taking the competition.

Volume outfits Parabis Law, Minster Law and Optima Legal are now all ­firmly ranked within the UK 100, taking the 29th, 40th and 96th spots respectively. While their models bear no comparison to those of ­traditional law firms, the fact that they employ small bands of qualified lawyers and large groups of support staff means profitability is high. Parabis’s PEP for 2010-11 was £1.14m, while Minster’s stood at £700,000.

The merged DAC Beachcroft took note: the combined firm posted a ­revenue rise of 10 per cent for the first half of 2011-12 compared with the individual firms’ joint first-half figures from 2010-11. This brought first-half revenue to £88.2m.

It was not the only recently merged firm to report a positive start to 2011-12. SNR Denton, which was ­created when Denton Wilde Sapte and Sonnenschein Nath & ­Rosenthal merged in September 2010, saw its half-year revenue rise by 11.5 per cent on the individual firms’ combined figure for 2010-11.

Gloom temperature

But while many firms posted ­reasonably strong first-half results, few were optimistic about the ­picture for the full year, with a dearth of ­activity in the run-up to Christmas expected to hit both top and bottom lines for 2011-12.

Norton rose crowned top firm of 2011

Two years after taking the market by storm by announcing ­its merger with Australian firm Deacons, ­Norton Rose walked away with the ultimate prize at The Lawyer Awards 2011: Law Firm of the Year.

Having fought off strong competition from Taylor Wessing and Stephenson Harwood, which were ranked second and third respectively, Norton Rose walked away with the prize for the second time, having also won in 2009.

The firm was recognised for having set the global standard, with mergers with Canada’s Ogilvy Renault and South Africa’s Denys Reitz.

Elsewhere, International Law Firm of the Year went to US litigation powerhouse Quinn Emanuel Urquhart & Sullivan, while Scotland’s Brodies picked up the Regional/National Law Firm of the Year gong and Peters & Peters was named Niche Firm of the Year.

At the partner level, Freshfields Bruckhaus Deringer London head Mark Rawlinson was singled out as Partner of the Year after landing roles on a string of high-profile deals and seeing the London corporate group, which he then headed, usurp Linklaters’ in the FTSE100 rankings for the first time in 20 years.