Private-client focused Speechly Bircham has become one of the latest LB100 firm to post its limited liability partnership (LLP) accounts at Companies House, blaming its near-double digit drop in profits on fees due from one client despite overall cash collection having improved.
The top 60 firm, which revealed a broadly flat revenue, down 0.9% to £57m from £57.6m for the 2012/13 financial year, saw a 9% pre-tax profit slide to £18.4m from £20.1m.
Describing the last financial year as one of ‘consolidation’ after a period of expansion and the opening of overseas offices in Zurich and Luxembourg, the firm said profits were ‘adversely impacted by a significant provision made in respect of fees owing by one client of the firm,’ relating to the period before 1 May 2012.
Wages and salaries paid out reduced from £17m to £16.4m, while the average number of fee earners dropped to 157 from 165. Profit allocated to the member with the highest entitlement was £376,000 compared to £405,000 the previous year. Average profit per full equity member was also down to £286,000 from £309,000 during the 2011/12 financial year.
The firm’s bank loans and overdrafts reduced substantially to £5.4m from £9.2m – a 41% reduction which it said ‘reflects the improved focus on cash collections. With modern offices and good IT systems we have limited capital expenditure requirements over the next few years.’
The firm in November opened an office in Paris with an 11-strong team focused on private wealth tax planning and corporate and litigation services to private clients, private equity investors and corporates.
However, the firm also abandoned merger talks with fellow private client firm Withers last summer – a union that was seen as more advantageous to the smaller Speechly than Withers due to the considerable gap in underlying profitability between the pair.
Elsewhere, Ashurst’s LLP filings for the 2012/13 year last week revealed that the firm’s net funds reduced considerably from £20.9m to £6.9m during that period, while its cash at the bank and in hand also fell by 66% from £21.2m to £7.2m in 2013.
During the year, the group entered into finance leases and other financing transactions in respect of assets with a total value at inception of £140,000 from £35,000 in 2012.
The top-20 firm, which merged with Blake Dawson last year, officially tying up with what has been rebranded Ashurst Australia in November, saw its turnover to April 2013 increase marginally from £321m to £323m as its overall profits fell by 3.7% to £97.9m from £101.7m.
Overall operating costs at the firm increased by 4.1% from £214.8m to £223.5m, while staff costs also grew from £137.6m to £143.9m between 2012 and 2013.
Ashurst’s highest paid member took home 11% less in 2013, receiving £977,000 compared to £1.1m in 2012.
Meanwhile, Hill Dickinson’s LLP accounts for 2012/13 also last week stated that it had been a year of strong performances from the top 35 firm’s marine and health business groups, offset by the ‘continued impact of the UK economy for commercial legal services and also price pressure in certain sectors’.
Turnover increased by 2.2% to £113m, but profit before members’ remuneration fell by 13.4% to £27m.
The firm stated that an element of this decrease related to ‘significant actions taken by the board between February and April 2013 as it implemented a full review of client service line and geographic reach.
‘The outcome of this review necessitated a reorganisation and reduction of headcount and associated overhead expenditure,’ the LLP report concludes, adding, ‘The full benefit of this review will be most strongly evident in our anticipated financial performance for the year ending 30 April 2015 although it will also contribute significantly in the current financial year.’
Hill Dickinson announced in April 2013 that it would be reviewing jobs ‘in response to the prevailing market conditions’ and in July announced a total of 83 job losses, including 14 partners and 69 employees – 44 of which are leaving on a voluntary basis.
The news was confirmed shortly after the firm’s announcement that it had sold its Chester office to Midlands firm Knights Solicitors.
jaishree.kalia@legalease.co.uk
sarah.downey@legalease.co.uk