LB100 2014: Methodology and Notes

LB100 LAW FIRMS

The firms that appear in the LB100 are the top 100 firms in the UK, ranked by gross fee income generated over the financial year 2013/14 – usually 1 May 2013 to 30 April 2014. We call these the 2014 results. Where firms have identical fee incomes, the firms are ranked according to the highest profit per equity partner (PEP).

SOURCES

An overwhelming majority of firms that appear in the LB100 co-operate fully with its compilation (see ‘Transparency’) by providing our reporters with the required information. A limited number of firms choose not to co-operate officially with our data collection process, and in these circumstances we rely on figures given to us by trusted but anonymous sources.

LAW FIRM STRUCTURES

We recognise that as firms have expanded globally they have developed a number of ways of structuring their businesses, for instance using Swiss Vereins, European Economic Interest Groups, and partial and full profit-sharing models. For consistency’s sake we now publish the global firm-wide financials for all of the firms in the LB100, regardless of how they internally structure themselves or share profits. So the turnover, profitability, PEP and headcount figures published for CMS, Herbert Smith Freehills, Norton Rose Fulbright, Squire Patton Boggs, Dentons, Hogan Lovells, King & Wood Mallesons SJ Berwin, Taylor Wessing and DLA Piper are all global firm-wide figures.

DEFINITIONS

Turnover/revenue/gross fees

Revenue figures do not include VAT, disbursements, interest or anything other than the worldwide fees generated by lawyers for their work during the last financial year.

Net income

We define net income as the total profits that are available to be shared among all the equity partners. We treat profit sharing with non-equity partners as an expense, and it is therefore not included in the net income figure.

Total lawyers

Total lawyer numbers include partners, trainees, assistants, associates, of counsel and all other fully qualified lawyers but do not include legal executives, paralegals or other support staff. For the first time this year, we have asked firms for actual full-time equivalent headcount at the end of the last financial year. Inevitably, this will in some cases this year have a negative effect on revenue per lawyer and profit per lawyer figures as the baseline data will be higher than a yearly average.

Equity partners

We define full equity partners as partners that are full participants in the firm’s profits.

Non-equity partners

Non-equity partners, be they fixed-share, salaried, or laterals on probationary periods, are those that are not full participants in the firm’s profits, though they may have voting rights.

HOW WE CRUNCH THE NUMBERS

Profit per equity partner (PEP)

We calculate PEP by dividing net income by the number of full equity partners at the end of the last financial year. PEP is an average figure used to benchmark the profitability of firms, which is not necessarily the same as saying that any partners take home this amount of money.

Revenue per lawyer (RPL)/profit per lawyer (PPL)

RPL is calculated by dividing turnover by the total number of lawyers at the end of the last financial year. PPL is calculated by dividing net income by the total number of lawyers.

Profit margin

Profit margin is net income as a percentage of turnover.

Change 2009-14

This figure is simple percentage change in revenue between the 2008/09 financial year (as reported in the 2009 LB100) and the 2013/14 financial year.

FOOTNOTES

1. DLA Piper and Sacker & Partners operate a year-end to 31 December 2013.
2. CMS acquired the business of Scottish firm Dundas & Wilson on 1 May 2014. As Dundas completed a full financial year prior to the acquisition, it is ranked separately in this table. CMS accounts in euros. For conversion into sterling, we have used a rate of €1 equals £0.8436, the average for the financial year provided by HMRC.
3. On 1 November 2013, UK firm SJ Berwin merged with Asia practice King & Wood Mallesons to form King & Wood Mallesons SJ Berwin. The figures here represent the combined financials of the merged entity.
4. On 1 November 2013, Ashurst achieved full financial integration with its Australian arm. The figures here are the full financials of the combined entity.
5. On 1 July 2014, Squire Sanders and Patton Boggs merged to form Squire Patton Boggs. The figures here are for Squire Sanders only.
6. On 1 May 2014, Wragge & Co merged with Lawrence Graham to form Wragge Lawrence Graham & Co. As both firms completed full financial years prior to the merger, each firm is listed separately in the table.
7. Slater & Gordon UK – the figures in this table represent the UK business of Australian-listed company Slater & Gordon. As the firm has an alternative business structure, it does not operate a conventional equity partnership and has no equity partners. For the purposes of this survey, the firm’s 138 UK LLP members are listed as equity partners and therefore the PEP figure quoted is actually profit per member.
8. In the summer of 2014, Charles Russell and Speechly Bircham announced a merger to form Charles Russell Speechlys on 1 November. For the 2013/14 year, each firm is listed separately in the table.
9. On 1 July 2014, Blake Lapthorn merged with Morgan Cole to form Blake Morgan. As both firms completed full financial years prior to the merger, each firm is listed separately in the table.