LB100 Endnotes and Methodology

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 2011/12 – usually 1 May 2011 to 30 April 2012. We call these the 2012 results.

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, 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, Norton Rose, Squire Sanders, SNR Denton, 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 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. The headcounts we publish are always full-time equivalent averages over the firm’s most recent financial year.

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

Profits per equity partner (PEP) We calculate PEP by dividing net income by the mean number of full equity partners in 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) and profit per lawyer (PPL) RPL is calculated by dividing turnover by the total number of lawyers. 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.

Compound annual growth rate (CAGR)

This is a tool for measuring the performance of a business over time. It does not express economic reality but is a geometric average:

• it shows the rate at which a business would have grown annually over a defined period
• to reach its current position if it had grown
• at a uniform rate. In our tables, we have
• applied the CAGR to revenue over five years, with results from the LB100 2008 as the base year.

FOOTNOTES

1. DLA Piper and Manches operate a year-end to 31 December 2011.
2. Pinsent Masons and McGrigors merged in 2012, but have yet to complete a full financial year as a merged entity, so results are provided for the legacy Pinsent Masons businesses.