SJ Berwin has announced that its partners are taking home only half of last year's wedge. Profits per equity partner, which were £801,000 for 2008, dropped to £410,000 for 2009.
The dramatic fall was driven by a 14% drop in revenue to £184million. That is significantly worse than most of its competitors, no doubt a result of SJ Berwin's strong focus on private equity and relatively large UK business. And the law firm financial model, with a relatively high fixed cost base and narrow profit margin, means that even a small drop in revenue can have a huge impact on profit - as shown by the table below of some of the large law firms that took the biggest profit hits.
It's notable that many of the firms above are noted for their strong private equity and/or corporate practices. Chris Carroll, Travers Smith's Managing Partner, laid the blame squarely on the decline in corporate work but said that things were looking up. He said that the firm was currently "working on eight IPOs - which is eight more than we were working on a few months ago".
And there seems to be some light at the end of the tunnel for other firms too. Several over managing partners have told RollOnFriday that workflow has started to pick up over the past few months, and whilst August will be quiet they're hoping for a busy autumn. So turnover figures for 2010 may show some improvement - and in the meantime, even the hard hit partners at SJ Berwin can probably muddle by on nearly half a million quid...
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The dramatic fall was driven by a 14% drop in revenue to £184million. That is significantly worse than most of its competitors, no doubt a result of SJ Berwin's strong focus on private equity and relatively large UK business. And the law firm financial model, with a relatively high fixed cost base and narrow profit margin, means that even a small drop in revenue can have a huge impact on profit - as shown by the table below of some of the large law firms that took the biggest profit hits.
| Firm | Drop in turnover | Drop in profit |
|---|---|---|
| SJ Berwin | 14% | 49% |
| Travers Smith | 20% | 38% |
| Clifford Chance | 5% | 37% |
| Ashurst | 7% | 35% |
| BLP | 3% | 33% |
| Macfarlanes | 11% | 31% |
| Eversheds | 6% | 27% |
It's notable that many of the firms above are noted for their strong private equity and/or corporate practices. Chris Carroll, Travers Smith's Managing Partner, laid the blame squarely on the decline in corporate work but said that things were looking up. He said that the firm was currently "working on eight IPOs - which is eight more than we were working on a few months ago".
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An SJ Berwin partner settling for a Porsche Boxster rather than a Ferrari yesterday |
And there seems to be some light at the end of the tunnel for other firms too. Several over managing partners have told RollOnFriday that workflow has started to pick up over the past few months, and whilst August will be quiet they're hoping for a busy autumn. So turnover figures for 2010 may show some improvement - and in the meantime, even the hard hit partners at SJ Berwin can probably muddle by on nearly half a million quid...