Mergers drive growth

Consolidation pushes up revenues among the UK’s top firms, with DWF the leading beneficiary

Mergers have been the driving force behind revenue growth for 2012/13.

DWF is the biggest grower so far, with revenues up by 84 per cent to £188m from £102m, thanks in part to its £3.5m rescue takeover of failing Cobbetts in January.

The combination of London firms Wedlake Bell and Cumberland Ellis last year (1 February 2012) has pushed revenues up by 49.5 per cent, from £18m to £26.9m. Pinsent Masons, meanwhile, saw growth of 39.8 per cent after merging with McGrigors on 1 May 2012.

The firms with the largest organic growth have a chunk of revenues generated by disputes-related work.

With average profit per equity partner (PEP) of £1.1m, litigation firm Stewarts Law would rank among the magic circle were figures based on PEP alone. The firm’s revenues increased by 29.5 per cent, from £34.9m to £45.2m, and managing partner John Cahill is eyeing £50m next financial year.

Anyone doubting the impact
alternative business structures (ABS) would have on the profession should look to Parabis in the insurance sector. Its revenues rose by 28.7 per cent to £139m on a like-for-like basis. The legal divisions of the business, claimant firm Cogent and defendant firm Plexus, generated 80 per cent of those revenues – £110.5m.

Parabis’ peer group for defendant work includes DWF, which has clearly bulked up over the past 12 months, DAC Beachcroft and Berryman Lace Mawer (BLM). DAC is yet to publish its figures, but BLM posted a 4.3 per cent revenue rise, from £81.2m to £84.7m

Senior partner Mike Brown said the firm continued to “observe a downward pressure on fees, with a greater volume of cases for less money and strong demand for advice on a fixed-fee basis”. 

The firm’s profit margin has been squeezed to 16 per cent, compared with 18.5 per cent in 2011/12.