Former ;Hammonds partners have pointed to the firm’s stringent lock-in policy as a reason for the firm’s plummeting average profit per equity partner (PEP) figure.
PEP dropped by 9 per cent in the past year, down from £404,000 to £367,000. Global turnover saw a 3.4 per cent rise to £132m (TheLawyer.com, 1 July).
One former partner told The Lawyer that, regardless of how they are looked at, the results were “very poor”.
“Given the transaction-based nature of the business and the death of corporate rainmaker Richard Burns, it’s probably fortunate that [managing partner] Peter Crossley has made it virtually impossible to leave,” said the ex-partner. “For Hammonds then to fail to keep pace with its competition shows that these policies haven’t worked.”
Hammonds’ lock-in policy allows partners to quit at only two specific times of the year, thus maintaining an even number of partners. But it also means that underperforming partners are locked in along with the big billers.
One ;poster ;on ;The Lawyer.com wrote: “Lock-ins have unhappy consequences: the good and the bad are locked in together; the people who have suffered the pain consider themselves entitled to a bigger slice in the future; and new equity becomes restricted.”
However, Crossley said the results were in line with the firm’s strategy.
He said the firm accepted it had progress to make, adding: “We’ve committed to a programme of investment in our infrastructure in the last 12 months, including installing a single financial management system.”