Travers Smith news, updates and analysis | Page 2 of 12

Travers Smith has today (26 August) reported a modest 5% rise in revenue to £195m from £185.7m. This represents a slowdown from the firm’s 15% hike last year as it is impacted by the war in Ukraine and resulting macroeconomic challenges.

Profit per equity partner (PEP) fell 9% to £1.105m from £1.22m in 2021. Meanwhile, equity partner numbers stayed broadly flat with 58, one more than last year.

The firm’s later year end of June 30 meant that it was hit heavier in its final third than other firms by the economic disruption caused by the outbreak of the war and the subsequent rising costs globally.

This is not the first time the firm’s growth has been thwarted by economic volatility. Its 2020 setback of a 1% revenue drop, a 11% slump in net profit and a 20% fall in PEP was attributed to the coronavirus pandemic and exacerbated by its later financial year end.

Edmund Reed (pictured), who assumed the role of managing partner in 2021, is optimistic despite the challenging backdrop. He said of his first year at the helm: ‘It has been an extraordinary year. Who would have thought we would have ended up here, with all the things happening at the moment and what we read in the news? Against that we have had a pretty resilient set of results. We continue to be confident in our model and have continued to invest appropriately in the things we think we will drive profitability over the coming years.’

In the past year, the firm promoted 11 to the partnership and in August 2021 announced the relocation of its City HQ to Stonecutter Court planned for 2025. It also launched several legal technology projects, developed by the firm’s in-house team, including automated eSigning service TSSign.

Among the firm’s headline achievements, it won a protracted $5bn civil fraud claim brought by Hewlett Packard Enterprise relating to the $11bn acquisition of Autonomy. Other contentious highlights included defending a European truck manufacturer in damages claims arising from the European Commission’s Trucks cartel decision and conducted an investigation and cultural review following allegations of sexual misconduct against senior executives at a FTSE 250 company.

Elsewhere, its asset management team advised Nest on its £600m move into private equity with its partnership with Schroders Capital. M&A transactions to note included advising Brewin Dolphin on its recommended £1.6bn takeover by RCB Wealth Management, and assisting Ancala Partners with its acquisition of aerial emergency services businesses from Babcock International in Italy, Spain, Portugal, Norway, Sweden, Finland and Mozambique.

Looking forward, Reed predicts continued growth across the corporate and M&A, asset management and disputes and investigations practices, but remains alive to the challenging realties of the coming year:

‘It is incumbent on all businesses to be as agile and nimble as possible. We’re a world away from where we were two months ago, let alone the two months before that, so it makes it a very difficult environment in which to make very confident predictions. Having said that, the strategy remains to focus on and to drive heavily towards those three areas. We will continue to invest appropriately and develop our business to be well placed in the short, medium and long-term.’

Megan.mayers@legalease.co.uk

The financial performance of Travers Smith has seen a dramatic double-digit bounce-back as turnover increased 15% to £185.7m and profit per equity partner soared 22% to £1.22m. The eye-catching PEP result came even as the number of full equity partners remained broadly flat at 57 compared with 56 last year.

The provisional results for the year ended 30 June 2021 announced today (9 August) will be a welcome return to form after last year’s disappointing showing when the firm suffered a 1% revenue drop to £160.9m, stymying a decade-long run of uninterrupted turnover growth. PEP also fell 20% to £1m, with the results being adversely affected by a reporting period that ran to the end of June, rather than April, giving the firm greater exposure to the pandemic downturn.

Travers’ managing partner Edmund Reed attributed the figures to continued investment in the business, including building across core areas of asset management, M&A and dispute resolution and investigations. ‘This has enabled us to attract a number of significant instructions from clients, which have kept our teams busy. None of us were expecting that we would be living and working under lockdown restrictions for such a long period of time. The way our people performed during the crisis continues to be amazing: by supporting each other both professionally and personally, every team across the firm has contributed to produce these excellent results. I am very proud of what we have achieved through this extraordinarily difficult period.’

‘The next 12 months will no doubt present new challenges, but we go into our new financial year in very good shape, confident in our model, and with a healthy pipeline of work. I am grateful for the support and trust placed in us by both our people and our clients,’ added Reed.

The firm promoted seven lawyers to the partnership during the year, across the focus areas of dispute resolution, private equity and financial sponsors funds, finance and financial services and markets.

In July, the firm also said it had recruited infrastructure finance specialist Ben Thompson from Weil, Gotshal & Manges to work closely with the corporate team led by Spencer Summerfield, Mohammed Senouci and Jonathan Walters.

Travers offered up a long list of desirable mandates for the year across its asset management, M&A and disputes and investigations practice areas.  Teams acted for longstanding client Medicxi, the European life sciences investment firm, on a €200m structured secondary transaction, Investec Bank on one of the first ESG-linked subscription facilities in Europe and Nortel Networks UK Pensions Trust on a further buyout, bringing the total value of transactions between the Nortel Networks UK Pension Plan and Legal & General to over £2.5bn.

M&A highlights include advising Inflexion on its partnership investment in Digital Wholesale Solutions, a leading independent unified communications and cloud platform provider, currently a division of Daisy Group, and Macquarie Capital Principal Finance on its acquisition of a majority stake in Wavenet Group Holdings Limited. Disputes teams have handled matters including Hewlett Packard Enterprise on fraud claims amounting to $5bn, with parallel criminal proceedings in the US, arising out of the $11bn acquisition of Autonomy in late 2011.

The firm also points to a number of technology projects developed by its in-house team, which have created significant efficiencies and cost savings for clients.  These include Etatonna, the first legal industry data labelling AI platform, which labels concepts in contracts for the purpose of automated document review, and its first product, a free force majeure app for clients.

Commenting on the results, senior partner Kathleen Russ (pictured) was bullish: ‘Our continued success reflects our firm’s stellar reputation in our core areas and is a testament to the hard work, resilience and commitment of everyone in the firm. Our teams have been there for our clients every step of the way throughout the pandemic. At the same time, many of our people continued to do inspirational things – helping those in need and contributing to the wider community, while at the same time doing all they could to support each other. I am incredibly proud of our firm and grateful to our teams for all their efforts.’

nathalie.tidman@legalease.co.uk

Travers Smith has suffered one of its biggest financial setbacks due to the coronavirus pandemic, recording an 11% slump in net profit and a 20% fall in profit per equity partner (PEP), its provisional results revealed. 

The provisional figures, announced on Thursday (30 July) show a 1% revenue drop to £160.9m from £162.5m last year, stymying a decade-long run of uninterrupted turnover growth. PEP fell to £1m, with the results being adversely affected by a reporting period that ran to the end of June, rather than April, giving the firm greater exposure to the pandemic downturn. 

The numbers are a far cry from last year, when Travers celebrated its tenth consecutive year of revenue growth with an 11% increase in turnover as PEP grew by 4% to £1.25m. In 2018/19, revenue had seen a 70% increase over five years.

Speaking to Legal Business this morning (Friday 31 July), managing partner David Patient (pictured) noted the drawback of the entire last quarter of the financial year taking place during the crisis, but was characteristically upbeat in the face of adversity.  

‘You’ve got to put things in context. Wind back to the dark days of lockdown, it was surreal watching the pandemic sweep across the world, and it hit us very quickly. Back then, I had three questions: “Will we be able to work? Will the clients need us? Will we get paid?” And the answers, thankfully, were: “Yes we can, yes they did, and yes we did,” said Patient, adding that he was proud of how the firm’s people were able to make a success of lockdown. 

‘One should not simply assume that law firms will have uninterrupted growth. Every so often, something serious comes along, like the global financial crisis 0f 2008/9. We had been bracing for turbulence in this current year as we left Europe and expected growth to be flat or decline. We mustn’t forget Brexit, but this crisis has overshadowed everything.’ 

Upsides for the year included investment in technology that enabled staff to adapt to enforced working from home, as well as advising on a raft of matters. This included advising Hewlett Packard on fraud claims amounting to $5bn and criminal proceedings in the US arising from the $11bn acquisition of Autonomy in late 2011. 

Deal highlights included advising Rothesay Life on its £3.8bn buy-in of the Asda Group Pension Scheme, Willis Pension Scheme on a longevity swap transaction with Munich Re to manage risk on around £1bn of pension liabilities and EQT on the sale of its Credit business segment to Bridgepoint. 

Travers introduced what Patient called ‘prudent financial measures… to protect our business’. In April, the firm reduced monthly drawings for all partners and deferred partner profit distributions until the longer-term trading position becomes clear.  

The firm has not accessed the government’s Job Retention Scheme all and members of staff have been kept on full pay throughout the lockdown. Travers has deferred its annual salary review until later in the year, but it has awarded firm-wide bonuses, albeit at a reduced rate. 

It made up five new partners on 1 July across the corporate and equity capital markets, derivatives & structured products, dispute resolution, employment, and finance teams, and also posting a 90% retention rate for its autumn 2020 newly qualified lawyers.    

Patient refused to be downcast: ‘We are not out of the woods yet and I wonder how far we are even into them. The situation is challenging and will continue to be challenging, but I’m a glass–half–full man. There are significant clouds on the horizon, but the outlook is good.’ 

nathalie.tidman@legalease.co.uk