Farrers sees profit rise by 14 per cent as turnover stabilises

Farrer & Co has reported a 14 per cent rise in net profit for the 2013/14 financial year thanks to an increase in its equity partnership, while turnover was stable at £50.7m.

The firm reported net profit £12.7m last year, a rise of some 14.4 per cent from the previous year’s £11.1m (9 July 2013). Farrers’ profit margin rose from 22 per cent to 25 per cent.

However the net addition of four equity partners, bringing the number in the equity to 30 from 26, meant that average profit per equity partner dipped from £427,000 to £423,000. The firm brought six partners into the equity, but two retired. 

This deliberate attempt to broaden the equity led to a widening of equity spread. The bottom of equity dropped by 14 per cent from £270,000 to £232,000, while the top of equity increased by 2.3 per cent to £580,000 from £565,000.

Revenue per lawyer (RPL) for Farrers in 2013/14 sat at £301,000, a rise of 2 per cent from £295,000 in 2012/13. RPL has also risen since 2009/10, when it was £292,000.

Chief financial officer Sue Shale said Farrers had been focusing on profitability and efficiency and was undertaking a programme to train its lawyers better in managing cost.

Shale added that some capital had been brought into the business as the firm sought to ensure that it fulfilled “condition C” of HM Revenue & Customs’ changes to national insurance for LLP members (17 December 2013). This required self-employed partners to have capital in the business equal to at least 25 per cent of their remuneration.

There was little change in headcount last year with a small drop in total fee-earner and lawyer numbers and no change in partner numbers.