Operating profits at Norton Rose Fulbright’s (NRF) Eurasian business fell 7.5% to £115.8m in the year to 30 April 2017, the firm’s latest LLP accounts have revealed.
The fall in profits for this segment of the business, which includes the legacy Norton Rose operations, came despite a 3% rise in turnover from £444.3m to £457.9m.
It resulted in the firm’s top-earner bringing home £1.4m, 12% less than the year before despite the average number of members remaining essentially flat at 241 compared to 242 at the end of April 2016.
The firm also cut remuneration for management by 13% from £5.94m to £5.16m but spent more on its staff. The number of fee earners was reduced from 1,094 to 1,085 and business services staff from 1,129 to 1,118. But salaries, social security payments and pensions cost the firm 8% more at £213.2m compared to £197.2m in 2015/16.
Fee income grew 3% to £252.4m in the UK and 5% to £118.2m in the rest of Europe, but fell from £78.2m to £77.8m in the rest of the world.
NRF is in the middle of its 2020 strategy, including the implementation of a practice management system from SAP and moves to re-engineer its business for global clients.
Speaking to Legal Business in the summer, global chief executive Peter Martyr – who started his sixth term last month – said the firm was in a ‘transitional phase, a time of transformation and structural changes’.
He added: ‘A lot of what we are doing has been designed to drive efficiency and flexibility. It will take about five years for the strategy to be fully implemented. We are now in year two.’
Meanwhile, Dentons’ UKMEA business also published its LLP accounts, showing the firm’s top earner brought home 15% less than last year even though the firm’s turnover and profits increased slightly.
The highest-earning member’s remuneration was down from £1.3m to £1.1m as the firm grew both the number of its members – from 124 to 129 – and fee-earners – from 435 to 484.
The firm had a total of 929 staff at the end of the financial year, costing it £84.9m, 8% more than last year.
Dentons also slashed the remuneration for its top management team 9% from £4.3m to £3.9m.
These numbers do not include the combination with Scotland’s Maclay Murray & Spens, which went live at the end of October last year and brought the firm’s UK headcount to 200 partners and 600 other lawyers.
Turnover at the firm in 2016/17 was broadly flat at £170.3m compared to £169.2 the year before, while operating profit grew from £47.2m to £48.2m.
Financial results published in the summer showed a 9% fall in the LLP’s profit per equity partner to £481,000. UK and Middle East chief executive Jeremy Cohen admitted at the time the firm would have ‘preferred to have a better profitability’ and pointed to a ‘fairly flat year’ in the UK market.
Both NRF and Dentons had less than half the cash at the end of April 2017 compared to the year before. The former had £25m in the bank and in hand compared to £56.3m the year before, the latter £7m compared to £15m.