LB100 LAW FIRMS
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 2010/11. (Usually 1 May 2010 to 30 April 2011.) We call these the 2011 results.
SOURCES
An overwhelming majority of firms that appear in the LB100 co-operate fully with its compilation (see ‘Transparency’, next page) 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.
TURNOVER
Law firm revenue figures do not include VAT and disbursements, interest or anything other than the worldwide fees generated
by lawyers for their work during the last financial year.
HEADCOUNTS
Full equity partners, non-equity partners and lawyer numbers are all requested as full-time equivalent averages over the firm’s most recently completed financial year. They are rounded to the nearest whole number. Total lawyer numbers include partners, associates, assistants and trainees, but not paralegals.
Firms that have high numbers of paralegals (such as Irwin Mitchell, which does a lot of volume litigation) have correspondingly
high revenue-per-lawyer figures.
PROFIT PER LAWYER
Profit per lawyer, cost per lawyer and revenue per lawyer are rounded to the nearest £1,000.
PROFIT MARGIN AND NET INCOME
The profit margin is net income as a proportion of turnover. Net income is the pre-tax profit that is to be shared among the full equity partners. We sometimes refer to this as just profit.
NON-EQUITY PARTNERS AND PEP
We recognise that firms have developed a variety of partnership structures and levels. We count only full equity partners in our profits per equity partner (PEP) calculations. 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. Non-equity partners are excluded from our PEP calculations.
Legal Business defines PEP as the division of net income to be distributed to full equity partners, divided by the mean number of
full equity partners at a firm over the course of a financial year. It 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.
COMPOUND ANNUAL GROWTH RATE (CAGR)
CAGR is a standard tool for measuring the performance of a business over time. In effect it tells you at what rate a business would have grown annually over a defined period to reach its current position if it had grown at a uniform rate over those years. In this report we have applied the CAGR to PEP and turnover over five years, with results from the 2005/06 financial year comprising the base year.
FOOTNOTES
- DLA Piper. For the first time we have included DLA Piper’s worldwide revenues, including its US LLP, in our tables. All figures apply to year-end 31 December 2010.
- Hogan Lovells and Norton Rose. Figures for these firms are worldwide revenues as accounted for from separate profit pools under a Swiss verein structure.
- SNR Denton and Squire Sanders Hammonds. As these firms have yet to complete a full financial year as merged entities, financials are UK-only figures based on legacy Denton Wilde Sapte and Hammonds’ results.
- Taylor Wessing’s figures include its UK, French and German businesses.
- McGrigors’ figures are a forecast to year-end 30 September 2011.
Transparency
Legal Business takes the compilation of the LB100 very seriously. We make every effort to ensure that the figures we publish are accurate and precise. The overwhelming majority of firms co-operate fully with us in this regard and it is our impression that these firms also take the publication of these figures seriously. Each year the level of information that firms are willing to provide increases, and this year was no exception.
Among the 110 firms featured in the survey, just eight declined to provide any financial information formally. In LB100 rank order, these were: Slaughter and May; Thompsons; Keoghs; Russell Jones & Walker; Clarke Willmott; Dickson Minto; Hugh James; and DMH Stallard. Another nine – Norton Rose; Barlow Lyde & Gilbert; Olswang; Ince & Co; Travers Smith; Mishcon de Reya; Cobbetts; Gordons; and Payne Hicks Beach – would not disclose some profitability (including top and bottom of equity) figures.
The rest of the figures in the main LB100 tables are based on data provided by the firms themselves, with a few exceptions in the top and bottom of equity range.