Lovells faces crash in profits as City firms trumpet revenue hike

Lovells faces crash in profits as City firms trumpet revenue hikeLovells partners are bracing themselves for disappointing half-year financial results as their City competitors are reporting an upturn in billings, with Slaughter and May leading the pack.

AccordingtoLovells sources, the firm is set to post 160m at the six-month stage, 6 per cent down on the previous year and 21 per cent below budget. Sources say that if this figure is not improved by the year-end, it will translate into a reduction in partner profits of over 20 per cent to 472,000.

The sources say that the firms financial performance will threaten its costly Asia operation. All overseas offices are subject to ongoing review, but it is understood that Tokyo and Singapore have never made a profit.

Six-month figures are not widely circulated by larger City firms, but research by Lawyer 2Bs sister title The Lawyer revealed that Lovells difficulties contrast with the transactional growth experienced by other major City practices.

Slaughters half-year figures were up nearly 45 per cent to 155m after a stellar M&A performance in the first half. One Slaughters partner said: Weve had a thumping first six months, but were lumpier than Clifford Chance. We wont necessarily sustain that for the rest of the year.

Linklaters has grossed 376m at the half-year stage, up 6 per cent on the previous year, and it is understood to be ahead of budget. Herbert Smith turned over 120m, up just over 7 per cent.

Simmons & Simmons has also reported a strong first half, up 6.5 per cent to 90m. OneSimmonspartner predicted a 20 per cent uplift in profit per partner if the revenue growth was sustained.

Clifford Chance sources say the firm turned over 460m, which is flat on the previous year and some 5 per centbelowbudget.One partner said: Our costs are well down on last year.

FreshfieldsBruckhaus Deringer is understood to have grossed 370m, with the first quarter down 5 per cent on the previous year, but the second quarter making up for any shortfall.