Rules and exceptions

The financial reporting season usually reveals a few surprises, but new levels of boggling were reached a fortnight ago when Berwin Leighton Paisner (BLP) announced its results.

Its revenue was up 20 per cent from £191m to £229m, while profit per equity partner (PEP) was up 56 per cent from £455,000 to £712,000. What’s more, there are rumours doing the rounds that the top of the equity this year will be £1.6m, up from £1.2m in 2009-10.

Amid the air-punching though, there’s a bizarre sensitivity at BLP about the number of equity ­partners it has. When the firm released its ­figures at the end of May it included the £712,000 PEP number but gave its net profit as £98m – a ­figure that included remuneration to all partners. BLP baulked at giving the true net profit figure, ­conventionally defined as the pot distributed to full equity partners, perhaps because even arts ­graduate journalists can do the maths; net profit divided by PEP gives you equity partner numbers.

Now, we’re not all conspiracy loons, and we’re not saying that BLP has secretly got rid of a third of its equity partners in order to heave its PEP up to ­hypnotic levels, but – and you know there’s always a but – its oversensitivity on this point points to a more complex story.

There has certainly been a rethinking of its ­partnership – hence our lead story today on its move to drop guarantees for laterals. The BLP line is that the firm is so profitable now that it doesn’t need to offer new recruits fixed-term guarantees.

To unpick that a bit, what BLP is saying is that its brand – based on a good six of years of eye-catching lateral hiring – is now sufficiently established not to require such incentives.

But the internal politics are equally important. The issue of guaranteed pay deals for big hires into the equity has led to long-running dissatisfaction among the fixed-share ranks that has passed into legal market lore. Declaring that the firm no longer needs such deals goes some way to addressing that local difficulty. Although, given that BLP is still after that elusive big corporate hire, I suspect that should a magic circle rainmaker come along – much as Robert MacGregor did – the management might just make an exception.;