LB100 South – Down South

The situation remains typically sluggish in the South, where firms continue to tread water as far as profits are concerned and struggle for market share in this hugely competitive region.

Yet again, most firms in this peer group suffered flat or declining turnover and many have reported falling equity partner numbers; both signs that, despite unmistakable optimism among lawyers, things are far from pre-crisis levels. Average revenue across the peer group is up just 1% to £29.5m, still down on the £33m average in 2008. Once again, this is the worst-performing peer group in the LB100.

Furthermore, averages for this group linger among the lowest of any region in the LB100. Net income is down across the board, with only Blake Lapthorn making advances by reporting a healthy 21% increase on 2011.

However, the South is in a unique position in that much of the region is able to take advantage of its close proximity to London, luring clients with lower prices and delivering ‘a City service at local rates’.

But in such an overcrowded market, firms are focusing heavily on brand recognition. Thomas Eggar’s managing partner Victoria Brackett says: ‘2012 has been a year of redefining the firm’s personality and strengthening its character in the marketplace.’

‘Because we are smaller than the major UK firms, we can really get to know our clients and get under the skin of their businesses,’ she explains. ‘Our niche is working with them on their day-to-day operations.’

Thomas Eggar appointed Brackett as managing partner in May 2012 and the firm has since restructured the entire management team, giving it a ‘new lease of life’, according to Brackett. The firm needs a boost: 2011/12 turnover is up just 1% and net income is flat.

Improving its profitability should be top of the agenda following a 3% drop in profit per lawyer (PPL). Brackett also admits that the firm is less confident on its pricing than some competitors and it remains tough on not cutting costs, both likely reasons why profit has fallen. ‘A firm looking at profitability is really looking at team structures,’ she says.

In a passive way this has happened already: PEP has increased by 15% but this is down to a 13% fall in equity partner numbers, which Brackett says is down to retirements.

Another firm channelling its efforts into improving its client delivery is TLT. According to managing partner David Pester: ‘It’s been a very challenging 12 months and listening to clients is key when reflecting on what a firm not only needs now but wants for the future.’

 

 

 

TLT had an expansive year, opening up in Scotland and Northern Ireland. The Bristol-based firm acquired Anderson Fyfe’s Glasgow and Edinburgh operations from July, while simultaneously launching a Northern Ireland practice through the lateral hire of banking litigation partner Katharine Kimber from Belfast firm Wilson Nesbitt Solicitors. The set-up costs of its UK expansion, combined with a major investment in IT and office infrastructure, have caused a dip in profits, but revenue is up 3% to £44.5m and Pester sees this as a significant achievement.

‘We are always ambitious, but any increase in turnover is very good in times like these,’ he says. The recent acquisitions should boost revenues by £3m and the firm predicts revenues of £48m by 2013.

Also reporting a marginal revenue increase is Blake Lapthorn, which billed £45.7m, a 3% rise on last year. And after seeing three consecutive years of growth in profitability, managing partner Walter Cha explains that: ‘An improved level and availability of relevant management information has meant that we have a better understanding of what we need to do to achieve our targets.’

‘Continuing development of strategic growth areas and sectors is also starting to make a difference,’ he adds.

Bevan Brittan, which has refocused in the last year to concentrate exclusively on its core strength in advising public services clients, has seen an ever-so-slight drop in revenues from £34.7m to £33.9m, a consequence of the significant reduction in spending in the sector. Nevertheless, this 2% decrease is an improvement on the firm’s compound annual growth rate, which stands at -4%, and managing partner Duncan Weir views the drop in turnover against a backdrop of budget reductions and efficiency savings targets, combined with a slight increase in PEP as ‘a solid performance in tough trading conditions’.

In 2012, the firm shook-up its management for the second time in four years, by making Weir managing partner. Weir and chief executive Andrew Manning have spent recent years trying to recover from the hangover of overexpansion in 2006/07, which caused the 2007/08 PEP to drop to £55,000. With steady PPL growth since then, the firm appears to be making progress.

Weir predicts the market will remain turbulent for a number of years to come as the structural changes and spending reductions continue.

‘Our planning for the changes in services required by our clients coupled with our positioning as “The public services law firm”, places us in a strong position to advise on the transformations our clients now need to achieve,’ he adds.

Elsewhere, Thrings drops out of the LB100 after posting a 4% drop in revenue to £21m and a 38% fall in net income to £1.3m, a value almost three times lower than when it made its LB100 debut in 2008. The firm’s PPL is now just £7,000, a 36% slump from 2011.

Clarke Willmott’s slide down the table continues after seeing turnover fall for a fourth year running to £33.5m, down 37% on 2008’s high of £53.3m. On top of this, the firm reports a 14% drop in net income on last year to £4.93m and an 11% fall in equity partner numbers. LB

hayley.eustace@legalease.co.uk