Thursday, 30 July 2009

Turnover and PEP in UK Law Firms - More Thoughts

I blogged earlier this months about statistics and the need for a longer term view (see here). Today "Legal Week" has written about firms' turnover and PEP figures - and the need for longer term measures.

A small amount of analysis shows some interesting information. The top 50 UK firms' data from 2001 to 2009 is very interesting. Using the "Legal Week" data, I looked to see what would have happened to a firm which in 2001 had a turnover of £70 million and PEP of £250,000. By 2009, the data suggests it would have had a turnover of just under £135 million and PEP of just under £350,000 - rises of 92.8% and 38.7% respectively. Not too shabby at all.

As expected, the firms at the top of the list for year-on-year growth tend not to be those showing the highest for turnover and PEP in 2009. In fact only one firm in the top 10 for PEP made it in the top 10 for turnover growth (DLA Piper with Average PEP of £645k and turnover growth from 2008 of 16.3%). There was also only one firm in the top 10 of revenue per lawyer (RPL) in 2009 which made the top 10 for profit growth from the previous year (Freshfields with RPL of £400.4k and profit growth of 0.6%).

More interestingly 6 firms made both the top 10 for turnover growth and the top 10 for profit growth (Kennedys, Berrymans, HFW, Ince, WFW and Clyde).

All this just adds weight to the need for longer term measures rather than focussing on year-on-year PEP. I propose a move to publishing different measures as a matter of course:
  • Five year average PEP
  • Five year PEP growth
  • Five year average Revenue per Lawyer
  • Five year RPL growth
  • Five year average profit
  • Five year profit growth
Each of these should be easily available - and the five years' data should be published in graphic form to make it even easier to see the trends.

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