LB100 2015: Methodology and notes

LB100 LAW FIRMS

The firms that appear in the Legal Business 100 (LB100) are the top 100 firms in the UK, ranked by gross fee income generated over the financial year 2014/15 – usually 1 May 2014 to 30 April 2015. We call these the 2015 results. Where firms have identical fee incomes, the firms are ranked alphabetically.

SOURCES

An overwhelming majority of firms that appear in the LB100 co-operate fully with its compilation (see ‘Transparency’, right) 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, profit per equity partner (PEP) and headcount figures published for CMS, Herbert Smith Freehills, Norton Rose Fulbright, Squire Patton Boggs, Dentons, Hogan Lovells, 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 equity partners. We treat profit sharing with non-equity partners or fixed-share 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. We ask firms for actual full-time equivalent headcount at the end of the last financial year.

Equity partners

We define full-equity partners as partners that are full participants in the firm’s profits. Fixed-share equity partners are considered non-equity partners for the purposes of this survey.

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 whole 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 2010-15

This figure is the simple percentage change in revenue between the 2009/10 financial year (as reported in the 2010 LB100) and the 2014/15 financial year.

FOOTNOTES

1 DLA Piper and Sacker & Partners operate a year-end to 31 December 2014.

2 Dentons – turnover figures provided for the firm are global, based on the US and European LLPs combined. Profit calculations are based on data for the US LLP only.

3 Squire Sanders and Patton Boggs merged in June 2014. As such, there is no year-on-year comparison for key financial metrics.

4 Taylor Wessing – as the firm operates separate profit pools in each jurisdiction, the global PEP figure provided is illustrative rather than actual.

5 On 1 May 2014, Wragge & Co merged with Lawrence Graham to form Wragge Lawrence Graham & Co. As such, there is no year-on-year comparison for key financial metrics.

6 On 1 November 2014, Charles Russell and Speechly Bircham merged to form Charles Russell Speechlys. The data published here represents annualised results for the 2014/15 financial year and, as such, there is no year-on-year comparison for key financial metrics

7 Gateley became the UK’s first listed law firm in June 2015. Revenue figures published here are for Gateley plc and its affiliated Scottish arm, HBJ Gateley, which was excluded from the IPO. Profit figures are market estimates ahead of the firm’s first official financial statement to the London Stock Exchange in September 2015.

8 On 1 July 2014, Blake Lapthorn merged with Morgan Cole to form Blake Morgan. As such, there is no year-on-year comparison for key financial metrics.

9 On 15 June 2015, Shakespeares and SGH Martineau merged to form Shakespeares Martineau. As both firms completed full financial years prior to the merger, they are listed separately in this table.