ANNUAL RESULTS: Eversheds and Norton Rose see profits per equity partner top £500,000


Large law firms enjoyed another bumper year in 2006/07, with the top names posting double-digit growth in both fee income and profits per equity partner (PEP), early reports have indicated.



For the second consecutive year, Eversheds delivered PEP growth of 20% to see a record high of £502,000 per partner. The firm's revenue of £356 million for the year included profits of £75 million - up 14% from the previous year.



Norton Rose also saw its average PEP top the half-million for the first time, reaching £512,000, while turnover grew 11% to £230 million.



Several other firms also reported big increases in fee income and PEP. Pinsent Masons saw annual fee income climb by £20 million to £192 million, a 12% rise, with PEP up 15% to £460,000. Beachcroft's £112 million revenue was a 14% hike, with £320,000 PEP an 18% rise.



In the City, Speechly Bircham increased turnover by 17% to hit £40 million, with PEP up 13% to £525,000. Lewis Silkin reported a 10% increase in revenue to £25 million, with PEP increased by 16% to £263,000. Charles Russell's turnover rose 9% to £63 million.



Drivers for growth were strong performances in areas such as AIM, corporate, property, projects and construction, and intellectual property and IT.



However, law firm management consultant David Temporal of Temporal Consulting warned that these figures 'flattered to deceive'. He said the present 'frenetic transactional climate' allowed everyone to enjoy the boom, but that it was the 'relative competitiveness' of a firm that would allow it to continue to grow when less buoyant times returned.



Mr Temporal said: 'When the slowdown comes, there will be a flight to quality [on the part of clients] and less well-positioned firms will find themselves marginalised. Now is the time to think strategically and consider relative competitiveness vis-à-vis the core market, rather than congratulating oneself on short-term performance.'



The figures for larger commercial firms were in stark contrast to the findings of a survey released by the Law Society's law management section in March (see [2007] Gazette, 29 March, 3). This had looked at the performance of a range of smaller firms, of which around 85% had between one and ten partners, and found that fee-earners had recorded an average annual income rise of just 3% over the last 12 months - signalling an end to the rapid growth of the previous two years.



Jonathan Rayner