As the 2009-10 financial reporting season gets underway prospects for the UK legal market are looking more positive than they did this time last year.
Firms with a corporate and real estate bias are expected to still suffer but those with strong insurance, litigation and employment practices are predicted to weather the recession a little better.
“The current market is showing signs of an improvement for many firms but there’s no doubt last year was tough, particularly in the first half,” says Matt Byrne, The Lawyer’s features editor, “many firms will be happy with flat turnover and slightly improved profits after a long period of cost cutting.”
So far a number of firms have reported dramatic increases in profit per equity partner (PEP), a term that has been adopted by the industry as a major measure of success. PEP is the amount of profit shared by full equity partners, after paying out on the usual running costs such as rent and salaries.
Denton Wilde Sapte, Eversehds and Olswang for instance have all posted double-digit growth in PEP despite a lacklustre performance in turnover.Eversheds, for instance, posted a dramatic 28 per cent jump in PEP even though total revenue fell by 3 per cent (read more). Similarly, Denton Wilde Sapte, which last week announced a merger with US firm Sonnenschein Nath & Rosenthal, saw it’s PEP rise by 22 per cent while it too saw its revenues dropping slightly on last year (see full story).
So how can this be the case? It’s simple – aggressive cost cutting and fewer equity partners.