Analysing and then explaining the performance of the LB100’s 26-50 bracket is far from straightforward. The monumental disruption of the last year would seem to mandate a slip in standards or market activity at least somewhere, but across the board, leaders seem almost embarrassed by their near-universally buoyant performances.
Three of the top ten fastest-growing firms by revenue are in the 26-50 category, with expansive listed firm Knights the fastest in the entire LB100, after growing by 39%. Granted, Knights has bolted on a number of new offices to inflate the increase, but the acquisitiveness is representative of a flourishing market. Average revenue for the bracket increased by a respectable 4% to £154.7m, while average revenue per lawyer (RPL) remained flat at £273,000.
But profitability is by far the most eye-catching statistic. For the overall 26-50 contingent, profit per equity partner (PEP) rocketed by 19%, an almost bewildering rebound from the 3% slump seen last year. Of the ten fastest-growing firms by PEP, four of them belong to this group: TLT (which leads the way with an astonishing 87% uptick in PEP to £597,000), RPC, Charles Russell Speechlys and Withers. Average profit per lawyer (PPL) growth for the second 25 was even pacier, increasing by 20% to hit £79,000.
A cursory glance at the table bears favourable reading too – nine of the second 25 increased revenues by a double-digit margin in the last year, with other margins of increase also being non-trivial. Five firms saw a dip in turnover, although these were largely non-dramatic barring BLM’s 7% slip which saw it slide into 50th spot, on the cusp of the second half of the table.
While the reading may be rosy given the context, it raises some pertinent questions as to how firms thrived in this most challenging of years. Disputes are known to be countercyclical to the economy, but firms with all manner of sector and practice specialisms seemed to do well.
‘The uniformity of success has really surprised me. None of our practices had an 80% uptick or anything, they’ve all been pretty similarly successful.’
James Miller, RPC
RPC managing partner James Miller echoes the surprise: ‘The uniformity of success has really surprised me. None of our practices had an 80% uptick or anything, they’ve all been pretty similarly successful. We saw a pretty uniform increase across the board. And this was true geographically too, across London, Bristol and Asia, there was a steady growth.’
Clearing the bar
When looking at success stories, RPC is a great place to start. The firm stands out, not only among the second 25, but across the entire LB100 thanks to its striking financial performance over the past year. Revenue at the firm jumped a considerable 24% to reach £136m, causing RPC to climb two places in the LB100 to reach 37th position. PEP shot up by a startling margin, a 49% increase to £632,000, even more impressive considering the number of equity partners at the firm remained flat at 75.
Miller says he is ‘sensitive to the fact it has been damn tough for some businesses this year’, and hails a flight to quality that he believes propelled the firm: ‘The sectors and areas in which we focus were perhaps not as badly hit as others. We succeeded by understanding what our clients’ businesses were about – when it all got a bit shaky they tend to turn to their trusted advisers for help.’
He also dismisses the possibility that firms with a strong international hedge were the ones that thrived, referring to his newly coined theory of ‘geo-agnosticism’. Thanks to the home working enforced by the pandemic, law firm leaders have realised ‘you can work effectively anywhere’. He adds: ‘Clients want you to have solutions on an international basis, but we do that by having strong relationships with trusted partners.’
Travers Smith bounced back to characteristically strong form after a slight slump in revenues last year, with overall turnover increasing by a robust 15% to hit £185.7m. Keeping track with the majority of the LB100, the firm’s PEP also soared, rising 21% to break the £1.2m barrier. Managing partner Edmund Reed claims that client demand was so strong, he was forced to balance workload with the wellbeing of Travers’ staff: ‘As the work came flooding in, and there was a lot of work, we didn’t lose sight of the need to protect the teams. We turned quite a lot of work away last year and we continue to do so, which is always a bit disappointing because you want the best financial results, but actually I’d rather take the hit on the numbers. We still had a very good year. I would much rather we have people who still want to work at Travers Smith and enjoy it.’
According to Reed, the positive results were the product of sustained investment in three key areas: asset management, M&A and disputes. He says: ‘We’ve always done disputes and investigations, but not to the scale we do it now. In terms of revenue it’s probably twice the size it was four or five years ago.’
Senior partner Kathleen Russ passes on the credit: ‘It’s everyone pulling together as a team, supporting each other, but also continuing to push forward with huge ambition.’
Another high achiever was Withers, which has maintained success after its pace-setting performance last year, growing revenue 11% to reach £243.7m. The private wealth specialist has benefited from its traditional client base of high-net-worth individuals who were largely insulated from the crisis, as chief executive Margaret Robertson notes: ‘During the pandemic they have done quite well; they are very active investors and they had a lot of time to focus on their own affairs.’
The firm has also opted to pursue a concerted strategy of international expansion, with Robertson laying out ambitious targets to have a third of Withers’ revenues coming from each region: Europe, US and Asia. Currently, just over 40% of the firm’s revenue is generated in Europe, 22% comes from Asia and the rest from the US. However she is bullish about the possibility of opening more offices: ‘We have got 18 offices already but could do with one or two more. Globalisation has worked well for us but now we can achieve more without bricks and mortar.’
‘As the work came flooding in, we didn’t lose sight of the need to protect the teams. We turned quite a lot of work away last year and we continue to do so.’
Edmund Reed, Travers Smith
TLT and Macfarlanes were among the other notable performers this year. Macfarlanes is as safe a bet as you can make when predicting growth, and this year it added 10% to its top line to close in on £261m. PEP was also up by a respectable 9%, hitting almost £2.1m. The firm reports surging activity in all areas, with senior partner Sebastian Prichard Jones commenting: ‘We were fortunate that activity levels remained strong across our three areas of business – transactional, disputes and advisory work. Thank you as always to the firm’s clients and to our dedicated people for achieving what turned out to be a good result.’
TLT smashed through the £100m barrier with a bullish 11% increase in turnover to £110m, and has shown that profitability has now come with the revenue increase, with the extraordinary 87% uptick in PEP to £597,000. This was a genuine result too, as the number of equity partners at the firm remained flat at 37. Chiming with the sentiments of the high achievers, managing partner John Wood reports a consistent stream of client demand across all areas: ‘Growth has been consistent across all our services, sectors and locations – although each of our sectors have faced very different challenges triggered by the pandemic and the ongoing disruption that it has accelerated.’
Missing the mark
Despite the surprising success across the board, there were still some firms who found the last year more understandably difficult. Sector-focused Watson Farley & Williams (WFW) saw its revenue slump by 3% over the year, slipping to £177m. PEP also took a hit, falling 4% to £556,000. However, contextually there were reasons for co-managing partners Chris Lowe and Lothar Wegener to be cheerful.
‘Globalisation has worked well for us but now we can achieve more without bricks and mortar.’
Margaret Robertson, Withers
Wegener summarises: ‘All in all we call this year a good enough one with manageable results, despite turnover not growing. The more interesting part as managers is that the turnaround back to growing the business happened in September last year, with growth of 5% as compared to the same period the previous year. Our budget for this year predicts roughly 10% growth, for which we’re currently on track.’
There were a host of mitigating circumstances too. The firm continued in investment mode despite the pandemic, opting not to freeze salaries or make pay cuts, and opened a new office in Sydney in March focused on the hotels and hospitality sector, as well as a new Düsseldorf hub in December centred on energy.
But WFW is a useful case study in assessing the markets that truly suffered during the pandemic, as Lowe reports that more niche sectors took a hit: ‘The challenge for a sector-oriented firm like ours is that our client base can face distress in certain areas. The cruise industry suffered, as did aviation. Hotels and leisure were also particularly affected by the Covid shock. Nonetheless we have continued to invest by building capacity and critical mass in these industries, but we expect that fully realising the benefit of these will take time to work through.’
‘Many areas of work and client segments were back to 2019/20 levels by the last quarter of the last financial year.’
John Schorah, Weightmans
Wegener also offers a wry explanation for the supposed success of other firms during the last year: ‘Some firms cut salaries more than others, especially for support functions.’
Weightmans has dropped four positions in the table, after a disappointing 5% fall in turnover to £97.9m. PEP took an even more substantial hit, tumbling 8% to £265,000, with managing partner John Schorah conceding that the pandemic had an impact on performance: ‘Covid and the first national lockdown in March last year unsurprisingly had a temporary impact on a number of our areas of work, especially during the first half of the financial year. In the second half, we began to see a marked upturn in demand and activity. Many areas of work and client segments were back to 19/20 levels by the last quarter.’
Just like WFW, Weightmans can also point to significant investment to at least partially explain its relative under performance, with over 100 new recruits joining the firm over the year. There were also a record 85 partner promotions, and the firm plans to open a ‘new and modern’ Leeds office in the new year.
It was a less-than-stellar year for Stephenson Harwood also, with the firm following up on last year’s stagnating revenues with a 2% dip in turnover to £209m. Stephenson Harwood did not disclose its profits last year, however this year PEP stood at £685,000, down significantly from 2019’s £727,000 figure.
Again following the WFW path, the firm did not sacrifice staff salaries throughout the pandemic, as chief executive Eifion Morris says: ‘Unlike the measures adopted by other businesses, our global leadership team chose not to ask staff to work reduced hours for reduced pay, or to take unpaid leave. In fact we allowed additional time to accommodate the personal challenges that the pandemic presented and treated everyone in a grown-up way.’
‘There’s a huge wall of money in the market and it continues to be driving the M&A and private equity boom in tech and pharma. I can’t see any sign of that abating.’
Chris Lowe, Watson Farley & Williams
Morris also highlights the fact that the firm ended up 8% higher than budgeted for the year, and credits a strategic overview of its China practice for boosting profitability by 13%. In May 2020, Stephenson Harwood closed down its Beijing office and shifted the focus of its Hong Kong outpost towards litigation, corporate M&A, asset finance and private wealth.
Riding the wave
By and large, it has been a success story for the second 25 of the LB100, but the nebulous nature of that success persists. RPC’s Miller is equally puzzled: ‘I don’t think there has been a particular pattern. So much depends on your client base – those who have a strong sector focus have probably done a bit better. But I spend hours looking at the market and there’s no obvious trend.’
Robertson offers: ‘The legal sector has done better than expected across the board. This pandemic generated legal work, and it hasn’t undermined confidence in the overall economic system like in 2008 when people worried if ATMs would still dispense cash. Overall it hasn’t been as threatening to businesses.’
Where does that leave firms going forward? Overall, mid-market leaders are confident that they can continue to ride the current wave, as Lowe observes: ‘There’s a huge wall of money in the market and it continues to be driving the M&A and private equity boom in tech and pharma. I can’t see any sign of that abating soon and firms with strong private equity and FTSE 100 practices will be doing very well.’
Reed concludes: ‘There are a few rumblings in the economy with inflation coming, shortage of labour, China and the US facing off against one another. The stories aren’t necessarily great ones but I think we’re well-positioned to ride whatever is coming from an economic perspective.’ LB
Diversity: gender balance at senior level
Around 80 LB100 firms provided gender diversity data of some kind. The majority of data applies to UK only lawyers, although some international firms provided global data, as requested. Overall, the representation of women in the LB100 continues to move in the right direction, moving up one or two percentage points on last year’s survey, but the gap at senior level remains very clear.
Which firms have the biggest UK business?
This table lists the top 50 firms by UK revenues only. Once international fee income is taken out of the equation, the relatively strong UK performance of Global 100 firms such as Clifford Chance and Hogan Lovells becomes apparent. NB: This table only lists the top 50 firms by UK fee income that chose to disclose a breakdown of fee income geographically – many international firms are unable to provide this.
| Firms | UK revenue (change on 2020 in brackets) |
|---|---|
| Clifford Chance | £640m (9%) |
| CMS | £481.6m (n/a) |
| Pinsent Masons | £378.8m (n/a) |
| Hogan Lovells | £342m (3%) |
| Clyde & Co | £287.8m (-2%) |
| Addleshaw Goddard | £283.4m (8%) |
| Irwin Mitchell | £275.8m (2%) |
| Macfarlanes | £261m (10%) |
| Ashurst | £254m (n/a) |
| Norton Rose Fulbright | £251.8m (6%) |
| DAC Beachcroft | £251m (5%) |
| DWF | £242m (21%) |
| Bryan Cave Leighton Paisner | £185.4m (n/a) |
| Taylor Wessing | £175.5m (12%) |
| Shoosmiths | £168m (9%) |
| Fieldfisher | £168m (n/a) |
| Osborne Clarke | £166.4m (7%) |
| Kennedys | £151m (9%) |
| Charles Russell Speechlys | £147m (n/a) |
| Mills & Reeve | £122.2m (7%) |
| Gateley | £120.7m (n/a) |
| Slater and Gordon | £111.1m (n/a) |
| TLT | £110m (11%) |
| Burges Salmon | £108.7m (4%) |
| Womble Bond Dickinson | £106.2m (0%) |
| Keoghs | £105.3m (7%) |
| Freeths | £100.2m (-3%) |
| Weightmans | £97.9m (-5%) |
| BLM | £96.3m (-7%) |
| Withers | £92.8m (3%) |
| Browne Jacobson | £85.1m (5%) |
| Brodies | £82.5m (1%) |
| HFW | £81.1m (7%) |
| Farrer & Co | £80m (10%) |
| Stewarts | £79.7m (4%) |
| Shakespeare Martineau | £69.4m (-2%) |
| Blake Morgan | £61.7m (-13%) |
| Forsters | £60.1m (4%) |
| Lewis Silkin | £59.5m (3%) |
| WFW | £59.3m (-1%) |
| Shepherd and Wedderburn | £59.3m (4%) |
| Ince | £58.7m (-8%) |
| Howard Kennedy | £56.9m (0%) |
| Bevan Brittan | £56.1m (10%) |
| Walker Morris | £55.2m (0%) |
| Keystone Law | £55m (11%) |
| BDB Pitmans | £54.8m (5%) |
| JMW Solicitors | £53.4m (12%) |
| Clarke Willmott | £53m (3%) |
| Bristows | £51.9m (3%) |
Diversity: ethnicity
NB: Sixty-two LB100 firms provided lawyer ethnicity data of some kind. The majority of data applies to UK only lawyers, although some international firms provided global data, as requested. While the overall representation of BAME lawyers among the LB100 remains the same (11%), there have been small gains at partner level.
Diversity: Sexual orientation
NB: This data was asked of firms for the first time this year. Percentage is mean average of declared LBGT+ representation across responding firms (51). Some international firms provided available data for UK lawyers only.
Diversity champions: five firms with the strongest gender diversity statistics
| Firm | % equity partners female | % partners female | % lawyers female |
|---|---|---|---|
| Sacker & Partners | 53% | 54% | 61% |
| Boodle Hatfield | 53% | 50% | 60% |
| Kingsley Napley | 43% | 53% | 62% |
| Irwin Mitchell | 35% | 48% | 71% |
| Winckworth Sherwood | 47% | 46% | 61% |
Diversity champions: five firms with the strongest BAME representation
| Firm | % equity partners BAME | % partners BAME | % lawyers BAME |
|---|---|---|---|
| Bryan Cave Leighton Paisner | 19% | 17% | 14% |
| Harbottle & Lewis | 15% | 16% | 12% |
| Hogan Lovells* | 11% | 12% | 20% |
| RPC | 12% | 12% | 14% |
| Linklaters** | N/D | 12% | 25% |
Data is UK only unless stated otherwise.
* UK and US figures.
** Linklaters does not distinguish between equity and non-equity partners for diversity reporting purposes.
Diversity champions: five firms with the strongest LBGT+ representation
| Firm | % equity partners LBGT+ | % partners LGBT+ | % lawyers LGBT+ |
|---|---|---|---|
| Slaughter and May | 5% | 5% | 8% |
| Trowers & Hamlins | 6% | 7% | 5% |
| Withers | 6% | 6% | 5% |
| Russell-Cooke | 6% | 6% | 4% |
| Forsters | 4% | 4% | 8% |
Data is UK only unless stated otherwise.