LB100 LAW FIRMS
The firms that appear in the Legal Business 100 (LB100) are the top 100 law firms in the UK, ranked by gross fee income generated over the financial year 2015/16 – usually 1 May 2015 to 30 April 2016. We call these the 2016 results. Where firms have identical fee incomes, the firms are ranked according to 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’, 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, PEP and headcount figures published for CMS, Herbert Smith Freehills, Norton Rose Fulbright, 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 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. Lawyer and partner numbers are rounded up to the nearest whole number.
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 2011-16
This figure is the simple percentage change in revenue between the 2010/11 financial year (as reported in the 2011 LB100) and the 2015/16 financial year.
FOOTNOTES
1 DLA Piper and Sacker & Partners operate a year-end to 31 December 2015.
2 Taylor Wessing – as the firm operates separate profit pools in each jurisdiction, the PEP figure provided is illustrative rather than actual and is based on the UK partnership, which converted to an all-equity partnership on 1 May 2015. The global PEP figure used here is £402,000. If calculated on a like-for-like basis, PEP would be £501,000.
3 Irwin Mitchell acquired LB100 firm Thomas Eggar in December 2015. The firm does not operate a traditional law firm partnership and partners are remunerated according to salaries and bonuses, not profit shares. The PEP figure is illustrative for the purposes of the LB100 and is not supplied by the firm.
4 In February 2016, Wragge Lawrence Graham & Co merged with Gowlings to form Gowling WLG. The financial data reflects the last financial year for legacy Wragge Lawrence Graham only.
5 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. The firm does not operate a traditional law firm partnership and profit is not distributed among equity partners. As such, the figure for PEP published in the table is for average compensation per partner and is not provided by the firm.