Each year The Lawyer UK 100 Annual Report reports on the UK’s largest firms by revenue. And among the wealth of figures, the average profit per equity partner (PEP) figure remains a key indicator.
Now the year-on-year incremental rise towards a totemic PEP of £1m appears to have been made redundant by a three-partner firm in Doncaster.
As we report today (9 April), Beresfords Solicitors senior partner Jim Beresford took home an astounding £16.8m in 2005. The firm’s other two partners, one of whom is Beresford’s daughter, made around £2m each. Is this wrong?Certainly other lawyers active in the same market think so. There are plenty of firms handling miners’ compensation cases that are not making anything like the money the Beresfords are making; plenty of firms that have not been accused by Lord Lofthouse of effectively creaming off a cut of individual miners’ compensation for spurious ‘administrative costs’.
Thompsons has made £106.4m from the Government’s scheme, the most in revenue terms of any firm. It has never publicly revealed its PEP – cynics might say for obvious reasons – but sources suggest that the 50-partner firm’s business model limits its average profitability to around £130,000.
Not so Beresfords. Or, indeed, Avalon Solicitors, another large firm with a miniscule number of partners (two) focused entirely on group litigation.
As we reported last year (21 August), Avalon’s senior partner Andrew Nulty picked up around £13m from a net profit of £15.5m last year. Like Beresfords, Avalon is currently being investigated by the Law Society.
Lofthouse will soon publish his “damning report” into the conduct of these litigation boutiques. He hopes it will lead to an “urgent review” of the coalminers’ compensation scheme. If wrongdoing is proved then it is to be hoped that the money will be returned to the miners. But in reality this will take years and may be too late for many.
For lawyers the wider implication of the miners’ compensation dispute is that the market for firms such as Beresfords may only be in its infancy.
As The Lawyer reported on 19 March, the EU is currently considering new rules that could see class action-style suits being fought across Europe.
Indeed, the advent of the Legal Services Act is only likely to incentivise other firms to tap into the process-driven, high-margin business that has served outfits such as Beresfords so well. Far from being the end, this could just be the beginning.