Which firms are the most profitable? In this table we blend together all of our profitability measures, including PEP, profit per lawyer and profit margin, to discover which of the top 100 firms are the most profitable.
The 100 firms have been ranked according to their mean rank on all three measurements.
Continue reading “LB100 2012 – Behind the Numbers: Profitability Revealed”
THE GLOBAL 100: Legal Business examines the key financial data from the world’s top 100 law firms.
The world’s 100 largest law firms have faced another challenging year of depressed economic markets and little to no transactional work. So how have they fared? LB finds out
The combined revenues of the 100 biggest law firms in the world reached new heights this year. Setting a five-year Global 100 record, combined turnover came to over $81bn, greater than the Olympian levels the market reached in the boom year of 2007. In broad strokes it has been another year of single digit rises in revenues, profits and lawyer numbers. But with inflation running at around 3% in the UK and the US, performance in real terms has been more muted than those top-line figures suggest. The past financial year was essentially a flat market, a solid performance but nothing to set the world alight.
Mishcon de Reya was a standout performer in the 2011 LB100, jumping 11 places on the back of a 37% leap in turnover. LB charts the firm’s recent success and asks senior management where it is heading.
Kevin Gold, Mishcon de Reya’s managing partner, leads the way to a meeting room clutching a walking stick, the result of a motorcycle accident in June 2008. He broke his leg and encountered a number of complications while recovering, including contracting MRSA in hospital. For almost two years, as he underwent 19 operations restoring him to mobility and health, Gold was not always around. But such was the strength of the firm he had shaped over the preceding ten years that Mishcons went from strength to strength during that time becoming, as Gold puts it, ‘pretty unique’.
In tearing up the rulebook in this year’s Legal Business 100, this peer group has changed radically to reflect the global transformation of some firms and the increased national profile of others.
To our new Major International peer group (see page 84) moves global giant DLA Piper – whose presence in the Major UK group, contrasting with firms such as Burges Salmon, was always incongruous – and Squire Sanders Hammonds which, following a major transatlantic merger, can no longer be considered just a national UK firm.
London’s Midsizer legal landscape looks a little different this year. Field Fisher Waterhouse and Withers move into the Major City ranks, each with revenue surpassing £90m, establishing them as major forces in the City.
More impressive, however, is the entrance of litigation boutique Stewarts Law into the LB100 this year. And what an entrance it is. One of the standout performers across the whole table, the firm has had a bumper year.
Many of the firms in the Major City group will look back on 2010/11 with mixed feelings. Some firms will feel a sense of relief that, broadly speaking, any further disasters were averted but others will be frustrated that key transactional markets refused to pick up significantly. Strategically, however, there are still a couple of firms in the group that have to ask themselves some difficult questions over the coming year.
The peer group has changed somewhat since last time around, with Hogan Lovells and SNR Denton, as a result of transatlantic mergers, moving to the newly created Major International group.
In comes a new peer group to the Legal Business 100. Thanks to a flurry of transatlantic marriages over the past 18 months, it is no longer appropriate to sit the likes of DLA Piper, Hogan Lovells, Norton Rose, SNR Denton and Squire Sanders Hammonds in their old peer groups.
Take DLA Piper. Historically the firm has never been judged on the basis of its global business in the LB100 because the firm operates a Swiss verein structure with two separate profit pools and, up until now, it probably wasn’t appropriate to do so. Of this group DLA was the forerunner in terms of US ambition when it moved into the market, pulling off a three-way deal with Chicago firm Piper Rudnick and Californian firm Gray Cary Ware & Freidenrich in 2005.
Things have changed in the Legal Business 100 this year. At least seven firms have merged with others, either overseas or at home, while another three have bolted on chunks of the now extinct Halliwells. Five of these firms have seen superficial revenue rises as a result of consolidation, while it is impossible to analyse the fee income ebb and flow at Norton Rose and Hogan Lovells because of recently completed mergers.
The Global legal market is stratifying at a pace never seen before. From the rocketing profits on Wall Street to the rapidly expanding global giants, which model paid off in this year’s Global 100?
Whether your strategy is to devour the world whole, or take it piece by piece, financial centre by financial centre, global competition has never been fiercer. Bounding straight into the top ten of the Global 100 this year is the newly merged Hogan Lovells, while a dose of revenues from down under has seen Norton Rose rocket into the top 40. Continue reading “Global 100 – Slice by slice”
