HFW attributed a 1% dip in revenue from £200m to £198.7m to a ‘prudent’ reduction in lawyer headcount during the pandemic, while profit per equity partner (PEP) also slipped.
PEP was down 2% from last year’s record high of £683,000 to £669,000, which the firm chalked up to the drying up of pandemic-era cost savings: ‘HFW saw exceptional cost savings during the pandemic. These cost savings diminished during FY22 as countries across the firm’s global network began to return to normality.’ Equity partner levels are understood to have remained broadly flat on last year.
HFW said that in addition to pandemic-enforced lawyer headcount cuts (the firm said average lawyer headcount was down 2% from 2021), ‘a strengthening of the British Pound’ impacted the firm’s revenue by 3%. The firm claims that without this, revenue would have increased 2% to £204.9m – 60% of HFW’s total turnover is generated outside the UK, up from 35% a decade ago.
Managing partner Jeremy Shebson [pictured] told Legal Business: ‘It was a concerted aim of the partnership to spread our revenue out internationally. Giles [Kavanagh, senior partner] and I were part of a sector in aerospace that became a key player in growing the international side of the firm. Likewise, our other key sectors require us to be global in nature.
‘Nevertheless, it is quite important to us that we see ourselves as one firm. And it was very important to [former senior partner] Richard Crump, who oversaw a shift in international billings from 30% of the firm to 60% in a decade.’
Shebson added: ‘In 2021 we really did experience exceptional savings, and managed the business very carefully. Since then our people have started moving around the network much more, and we’ve revamped our IT system, while also starting to make other investments.’
Despite this year’s muted results, HFW is broadly on an upward trajectory: both revenue and PEP have grown by more than 40% since 2015.
Fortunes were better at Clyde & Co where revenues grew 3% from £639.6m to £650m on a constant currency basis, and 2% in pounds sterling.
Profit increased by 4% from £153.3m to £159m, although PEP was marginally down from £715,000 to £708,000. Clyde pointed to an inflated number of equity partners in the last year to explain the PEP drop, as partnership numbers swelled thanks to 21 lateral hires and 23 internal promotions.
Partner numbers will be further expanded in the next financial year, as Clyde’s merger with insurance firm BLM went live in July. The combination is set to produce a £740m firm, with 2,600 lawyers and 480 partners worldwide.
Clyde has been particularly expansive in recent times – last year the firm opened offices in Chile, Phoenix, Las Vegas and Denver in the US as well as an office in Canada via a tie-up with SHK Law Corporation. This has translated into a global shift in revenue sources: last year over half (56%) of the firm’s revenue was generated outside the UK, with North America now contributing 22% of firm-wide turnover.
The long-term view for the firm is favourable: in the last decade, revenues at Clyde have more than doubled, while PEP has gone up 29% despite a 90% boost in partner headcount.
Clyde chief executive Matthew Kelsall said: ‘We are a firm that is ambitious and bold in our approach to growth, which the merger with BLM underlines. Looking forward we are focussed on further strategic expansion, investment in technology and our people, as well as a renewed focus on legal delivery and innovation.’