I encourage you to have a thorough read of the report. What the suggests is that, by adopting new scales such as "Days to Profit" (on page 6 of the report), the magazine is keen to try to reduce the "gaming" of statistics that goes on. For example - an easy way to increase PEP is to reduce the number of applicable equity partners - something a number of the top firms have done. It's certainly easier (if perhaps more expensive in the long run) than trying to increase profit.
While the "Days to Profit" is interesting, I was more taken by the table on page 8 of the report showing the top firms by cost reduction. The report orders the firms by the size of the one-year reduction from last year to this, but for me the interesting numbers are those in the five-year difference in costs. The leading "one-year-cutter" is Freshfields who have cut their costs by 19.3% in one year. Without more detail I can't comment on the efficacy or long-term effect of this size of cuts, but it is, I will guess, related more to the booking of redundancy costs in the previous year than to anything else. Over the last five years, Freshfields have increased their costs by 22.93% which doesn't seem too bad. Hammonds show a five-year change of -5.9%, although I'm not sure I'd use Hammonds as s good example. Wragge & Co show restraint with a five-year increase of less than 10%. These longer period measurements are more useful because they avoid the peaks and troughs of "spend and cut" than tend to characterise the industry.
The tope four firms are analysed in some depth and their performance examined over five years, but with the rest of the firms in the listing, it is business as usual in terms of focussing on turnover, PEP and figures for a single year.
Surely if there is one thing that the last two years have taught us, it is that looking at performance for one year is now use at all in terms of examining the success of a firm. I look forward to the day when firms are ranked by their rolling five-year net profit, amongst other longer-term measurements.
Still - small steps, and the new measurements are better than before.
From the report, my highlights are:
- Barlow, Lyde and Gilbert for strong five-year cost reduction
- Beachcroft and Wragge & Co for doing well on the "Cost per Lawyer" category
- Dickson Minto for achieving 7th place in the "Revenue per Partner" list and performing well again in the "revenue per Lawyer" category
- Sacker & Partners for achieving 7th place in "Revenue per Lawyer"