Mishcon experiences another tough year for PEP

Mishcon de Reya has posted another sharp decline in average profit per equity partner (PEP), with the firm’s PEP now having dropped 39 per cent in two years.

Kevin Gold
Kevin Gold

Mishcon’s PEP was £450,000 in 2009-10, down from £575,000 the year before. In 2007-08 the firm’s PEP had been £740,000.

Managing partner Kevin Gold said the firm’s financial performance reflected the investments it had made in hiring a succession of senior lawyers over the year.

“We brought in five partners in the past financial year, the cost of which was all written off in the 2009-10 year and which comes straight off the bottom line,” said Gold. “It was a key strategic decision.”

Mishcon’s partner hires have included property partners Steve Hughes and Nick Minkoff from SJ Berwin, corporate partner Dean Poster from Orrick Herrington & Sutcliffe and former Matthew Arnold & Baldwin construction head Richard Gerstein.

Gold said Mishcon’s decision to continue investing in its real estate group, one of the firm’s hardest hit in terms of reduced revenue, was particularly notable.

“We increased our intellectual capital base in real estate to make it a more rounded department,” added Gold. “It was a counter-cyclical investment.”

During the year Mishcon also launched an office in New York, bringing in a team of litigators from Sheppard Mullin Richter & Hampton headed by fraud specialist Jim McGuire this January.

Gold said the firm’s New York office was on track to hit its first-year budget of approximately $8m.

The Holborn firm is targeting a return to its higher levels of profitability in a new three-year plan launched in April this year.

However, Gold admitted that the days of sky-rocketing PEP may be gone forever.

“The last time it was up there it was because it was a mad world,” said Gold. “I don’t believe those times will come back again.”

Turnover at Mishcon excluding New York (which operates as a separate limited liability partnership) was £47.5m last year, up slightly from £47.3m in 2008-09.