The London office of Covington & Burling has blamed the weak dollar for its poor performance in London and has addressed the problem by becoming one of the few US firms to bill in sterling.
The US firm’s financial results for 2005 in London were among the poorest among the top 30 international firms in the capital. Gross revenue in the capital dropped from £17.1m in 2004 to £15.9m last year.
However, the dollar figures pre-conversion were, according to London managing partner John Rupp, “up around 8 or 9 per cent”, while firmwide it was, he said, “the best year ever”.
The move is an attempt to moderate the firm’s exposure to exchange rate fluctuations. It was introduced formally at the start of its financial year last October. However, it has gathered pace in the past three months as Covington’s London partners identified a number of clients for which billing in sterling was appropriate.
“Some clients have resisted the change, others have accepted it,” said Rupp. “Over time it will become the predominant method in which we’ll bill in London.”
Rupp said incurring expenses and overheads in sterling in London, while generating revenues in dollars, was the key issue that drove the change.