Kennedys senior partner Nick Thomas describes 2018/19 as a year of consolidation: ‘The acquisitions are up and running and, despite those investments, we had growth all over the place throughout the year.’
In 2017/18, this insurance and shipping specialist was hands down the star performer of the 26-50 bracket in revenue terms, recording a 31% rise in global turnover and 14% for UK income on the back of sustained geographic expansion. But, while it failed to emulate that racy performance in 2018/19, with 10% revenue growth to £216m, what is far from average is Kennedys’ five-year track. The firm has grown revenue 68% since 2014 when it turned over £128.5m and has increased headcount by 51% in the last five years on the back of a dynamic international investment drive.
The growth in headcount has meant that profit per equity partner has remained flat over the last five years. Thomas sees the top-line growth as evidence of the plan coming together of these various investments, including the 2017 merger with US insurance specialist Carroll McNulty & Kull in 2017, which has paid off by contributing to a 16% revenue rise in the region to £35.9m. At the end of the last financial year, Kennedys had 120 lawyers – 13% of its 934-strong headcount – in the US.
The Asia-Pacific region has been a similar standout, with revenues increasing by more than a quarter to £35.7m, while Latin America more than doubled its turnover to £6.2m, with the firm establishing three new associations in each of the Dominican Republic, Guatemala and Panama in March. UK revenue was up 6% to £126m, proving that global investment has not been at the expense of the firm’s domestic business.
But Thomas is looking forward to another year of double-digit growth in 2019 and is keen to banish any threat of complacency creeping in, putting another US deal at the top of his to-do list.
Are you happy with the firm’s position?
Nick Thomas: I’m very pleased with the year. It was pretty much a year of consolidation while we hunkered down. Where I wouldn’t want to be is below the leading City firms and just a generalist. We don’t pretend to be full service. Big specialists like us and Clyde & Co have a purpose.
What has the market been like for you?
Thomas: We have not seen a fall in business in insurance work. Things continue to happen and big definitive stuff continues to go wrong. A point of difference from some of our rivals is that we are continuing to maintain market share.
What goals are you setting yourself?
Thomas: We are actively looking at the west coast of America – we want what we haven’t got there. We’ve spent the last year kissing a lot of frogs. I’m confident we will find our prince or princess, but it’s an ongoing search. The sooner we can have a proper offering there the better. The plan is to have a formal associated office with a view to eventually doing a merger.
Are clients pushing harder for lower rates?
Thomas: You need to know your business well enough to say ‘I know my business and I know that I can’t do it for less than that’. You can say: ‘We won’t be able to do it in London for that price but we could be able to do it in, say, Birmingham or Sheffield.’
Where do you stand on law firm IPOs?
Thomas: There’s never enough money in a flotation. You’re asking your partners to drop 40% of their income for five years. It’s not something we’re interested in – we’re happy with an LLP. Some of our products on the tech side would lend themselves to joint ventures or spin-offs. But there won’t be an IPO of Kennedys – at least, not while I’m around. It’s not the way to keep your people interested.