PEP drop at DLA Piper after Middle East woes

DLA Piper has posted a one per cent drop in fee income for the 2009 financial year, as PEP fell by 18 per cent.

Paul Edwards
Paul Edwards

The EMEA and Asia section of the business, which currently report on a calendar year basis, made £581m last year, down from £585m in 2008.

Over the same period PEP fell from £645,000 to £527,000. At 189 the firm had on average one additional equity partner in 2009 compared with 2008. The equity spread runs from £225,000 to £1.5m, compared with £325,000 to £1.5m in 2008.

Net profit was £100m, down 19 per cent on the 2008 figure of £123m and reflecting a margin of 17 per cent.

The dip in profitability was aversely affected by a 40 per cent decline in revenue in the Middle East from £20.5m in 2008, when the firm had its best billings month ever, to £12.4m in 2009. One of DLA Piper’s major clients in the region had been indebted property company Nakheel. The law firm’s chief financial officer Paul Edwards commented that if the Middle East were removed from the equation then the global PEP figure would only have fallen by the much less dramatic three per cent. DLA Piper halved the total number of fee-earners in the region to around 100 through several rounds of redundancies.

The combination of a reduction in total headcount globally and other cost-saving measures, such as reducing long-distance travel, allowed the firm to take £37.4m out of the cost base.

The most impressive revenue increases were in Asia, which grew by 21 per cent from £46.8m to £56.5m and continental Europe, which grew by 10 per cent from £208.8m to £229m, partly boosted by currency exchange fluctuations. New clients include Kraft and UBS.