Average profit per equity partner (PEP) at Clarke Willmott has fallen by 14 per cent to £140,000 from £163,000 between 2011/12 and 2012/13, the lowest figure recorded since 2002/03 when PEP stood at £138,000.
The fall in PEP comes as the firm reported a 1 per cent dip in its 2012/13 revenue to £33.1m from 2011/12’s £33.5m, the lowest figure since 2004/05, according to The Lawyer UK 200.
In August 2011, the firm sold its eight-strong investment management arm to wealth management group Brooks Macdonald for up to £6m (5 August 2011). The transition of the team, which generated £1.2m worth of revenue in 2010/11 and £600,000 before its departure in 2011/12, was completed on 1 November 2011.
Clarke Willmott litigation head Paul Chapman said when the disposal was taken into account, the firm had experienced a small increase in like-for-like revenue, from £32.9m in 2011/12.
For the first time, Clarke Willmott revealed its London revenue. With nine fee-earners, including five partners, the London office generated a turnover of £1.3m in 2012/13, which accounted for 4 per cent of the firmwide total. The London team is set to move into larger premises on 1 Chancery Lane on 1 August.
In light of the decreasing PEP, the firm’s equity spread has narrowed compared to two years ago. In 2012/13, partners at the bottom of equity took home £110,000, 18 per cent more than 2010/11’s £93,200, while the top equity partner earned £152,000, down 6 per cent from £162m in 2010/11.
In 2011/12 the firm made a decision to split the profit evenly between its 30 equity partners, giving each equal partner £163,000.
Chapman attributes the 14 per cent drop in PEP last year to three main contributing factors – the firm’s £2m investment in a new IT system (1 November 2012), five partner lateral hires and a once-off additional profit injection following the Brooks Macdonald deal.
“Last year was a stable year. It has been about consolidation and investment to place the LLP in a position for both revenue and profit growth in 13/14,” said Chapman.
Neverthless, the firm has a long and steep climb to return to its 2007/08 peak, when its revenue was £53.2m and PEP stood at £317,000, 61 per cent and 126 per cent higher than its latest figures respectively.