Marking your own homework: Dentons and a defence of PEP

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Alex Novarese takes a jaded view of the latest attempt to avoid transparency

It would almost be too easy to pick holes in the letter that Dentons has supplied to the media to justify its attempt to withhold its profits on the basis of Olympian high principle. But I won’t let that stop me.

The letter, authored by Dentons’ chief executive Elliott Portnoy and chair Joe Andrew, sets out a number of arguments as to why Dentons won’t disclose basic information on the profitability and the margins on which it operates. Without exception, they lack substance, though to varying degrees. Indeed, it’s notable that Dentons largely fails to make any of the credible arguments for not supplying figures on profit per equity partner (PEP).

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Law Society back in black as intervention costs double and Hudson receives 19% pay rise

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The Law Society’s latest financial accounts show that the cost of dealing with an increasing number of firms in financial difficulty doubled from £3m to £6m, in a year that saw the body enter the black for the first time since 2010 and soon-to-retire Law Society chief executive Des Hudson receive a pay rise of nearly 20%. Continue reading “Law Society back in black as intervention costs double and Hudson receives 19% pay rise”

RBS: some recovery in sight but weak demand and 5,000 surplus solicitors still define turbulent legal market

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Disaggregated, wrestling with tight margins, reliant on defensive mergers and probably still with more than 5,000 un-needed solicitors in England and Wales – the good news is that there actually is some good news in a new report on the profession from the Royal Bank of Scotland (RBS).

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Countdown: HMRC’s LLP tax changes to go ahead in April

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The controversial debate over taxation of limited liability partnerships (LLPs) has reached a decisive stage as changes are scheduled to press ahead on 6 April, while individuals have been allocated more time to contribute capital, HM Revenue & Customs (HMRC) announced late last Friday (21 February).

Having long been accused of unfairly treating all partnerships as tax avoidance vehicles, the Government has been taking meaningful steps to reset the relationship as it has ‘become evident that many LLPs have members who are engaged on terms similar to those of employees rather than traditional partners’, according to guidance notes published by HMRC last week.

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Latest LLP filings show increased borrowing

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BLP bank debt up sharply as 2012/13 annual reports filter through

Growing debt was a recurring theme in the limited liability partnership (LLP) accounts filed in January, led by Legal Business 100 top-20 UK firm Berwin Leighton Paisner, which, after a year of partner departures and a significant drop in profit per equity partner, revealed a 223.7% increase in bank borrowing in the 2012/13 financial year.

The 790-lawyer firm’s borrowing ballooned to £45m from £13.9m in the previous year, on the back of new bank loans totalling £31.1m.

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Bank spend – RBS warns of £3bn extra litigation costs ahead of next month’s financial results

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In a statement rushed out late yesterday (27 January) to soften the blow of its official results announcement next month, Royal Bank of Scotland (RBS) has revealed that it is heading for a pre-tax loss of between £7bn-£8bn after setting aside an extra £3bn to cover litigation and compensation costs.

The retail bank, which was rescued from collapse by the Government in 2008 at the height of the financial crisis and continues to be dogged by claims arising out of that era, has set aside £1.9bn to cover ‘various claims and conduct related matters affecting group companies, primarily those related to mortgage-backed securities and securities related to litigation, following recent third party litigation settlement and regulatory decisions.’ Continue reading “Bank spend – RBS warns of £3bn extra litigation costs ahead of next month’s financial results”

Guest post: ‘Chasing short term profits is the enemy of long-term success’ – A conversation with Freshfields’ Ted Burke

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I recently had the chance to sit down with Ted Burke, outgoing managing partner of Freshfields Bruckhaus Deringer. I’ve known Ted for years and with the recent announcement that he would be stepping down at Freshfields to join Arclight Capital Partners as COO and general counsel it was time to catch up.

When we sat down, I asked Ted to reflect on his years at Freshfields (head of the firm since 2005). He opened: ‘It’s the oldest great firm in the world.’ Founded in 1743 with the Bank of England as a client, which remains a client today. The firm has been successful over 270 years, Ted observed, but not at all times, and it has had to change repeatedly. ‘No business can last more than a generation without changing.’ Continue reading “Guest post: ‘Chasing short term profits is the enemy of long-term success’ – A conversation with Freshfields’ Ted Burke”

Hill Dickinson sees H1 revenues up 6% following summer cash call

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Top-40 LB100 firm Hill Dickinson has posted a half year increase in revenues from £54.9m from £51.9m this time last year, after asking members to increase their capital contributions during the summer.

The 520-lawyer firm issued a £2.8m cash call in August after a year of heavy investment, including opening an office in Monte Carlo and Hong Kong. The firm then underwent a strategic review earlier this year which included the sale of its Chester office in July to Knights Solicitors and announcing 83 redundancies.

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Regulatory squeeze – JP Morgan sees rare loss after setting aside $9.2bn in legal fees

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As if any reminder was needed of the impact that increased regulation and the continuing fallout from the financial crisis is having on the banking community JP Morgan on Friday (11 October) reported a $380m third quarter loss after setting aside $9.2bn to cover its legal fees.

The results are the first quarterly loss for the bank in eight years, with chairman and CEO Jamie Dimon claiming that its ‘strong underlying performance’ this term was ‘marred by large legal expense.’

JP Morgan last reported a quarterly loss in 2004, also as a result of legal expenses, in that case related to WorldCom and Enron. Continue reading “Regulatory squeeze – JP Morgan sees rare loss after setting aside $9.2bn in legal fees”