With the credit squeeze continuing to fill column inches youd think law firms would be running scared. But it seems that fears of a global economic slowdown have had little impact on US firms.
Weil Gotshal & Manges‘ London office, for instance, has thrown down the gauntlet to its rivals by reporting a doubling of its profit in what looks set to be a record year for US firms.
Weil doubled average profit per equity partner (PEP) from 700,000 in 2006 to a whopping 1.35m in 2007. Despite market volatility during the past six months of the year, turnover in London was up by 6.5 per cent, from 53.5m to 57m.
Incidentally, PEP is the profit each equity partner receives once the total profit has been divided among them. It is viewed as the key measure of the success of a law firm. An equity partner meanwhile is a partner at a law firm who owns a share of the business and whose pay comes from the profit.
London managing partner Mike Francies said: “It was an incredible year. The whole office was a lot busier, and frankly, having Marco [Compagnoni] and his team on board for the whole year really helped.”
Weil has bounced back from a disappointing 2006 and has achieved its growth despite the loss of five partners during the course of the year – Graham De Fries, Michael Jones, Chris Mullen, Will Rosen and Wayne Rapozo.
Weil followed White & Case, which has enjoyed two excellent years, boasting a 37 per cent turnover hike, from $172.2m (87.43m) in 2006 to $235.7m (119.66m) in 2007. White & Case’s PEP increased by 19 per cent, from $1.28m (650,000) in 2006 to $1.53m (780,000). Last year the firm boosted PEP by 67 per cent.
White & Case co-head of banking and capital markets Maurice Allen said: “In London we’ve experienced 35 per cent year-on-year growth for the past five years. No other firm has been able to achieve that. What that shows is that we’re taking market share from top firms.”
US restructuring firm Bingham McCutchen reported a 4 per cent hike in turnover, up from $31.2m (15.84m) in 2006 to $32.5m (16.5m) in 2007. The firm also reported a healthy PEP, with a 20.7 per cent increase, from $1.45m (740,000) to $1.75m (890,000) in the same period.
Francies and his counterpart at Bingham James Roome were confident that their firms, which both have strong restructuring practices, are well positioned to benefit from the post-credit crunch fallout.
So why bother with US firm finances? The reason for this is simple. The US economy is an important barometer to determine the future health of the global economy so UK firms often turn to their American counterparts to predict whether their practices are heading for a boom or bust.