July 31, 2004
UK Firms and Profits-per-Partner: What's Going on Here?
Across the pond, financial news is bad, at least if you're among the top 10 "City" [read: London-HQ'd] firms. Profits per partner are down almost 8% year over year, and there's apparently no sign of recovery from the obvious and understandable post-crash decrease (they're down over 16% from the peak).
Interestingly, the rest of the top 50 UK firms are doing well, with profits per partner up a healthy 9% and revenues up 16%: The top 10 saw their revenues decrease, on average.
The Legal Week article that discusses this hypothesizes that the Top 10 prematurely thought the post-crash clouds were parting and ramped up capacity (and expenses) accordingly, but I'm not buying that explanation. Why would they bet wrong on the economic cycle and the next 40 firms bet right? (Economic jargon digression: Cyclical and seasonal trends are just that, and are contrasted in the argot with "secular" trends which are long-term and immune from cycles and seasons.)
With intellectual honesty I aspire to, the author implicitly admits that being big cannot, in and of itself, mean misjudging the market: The largest US firms with a serious UK presence saw average profits per partner increase 10%.
Posted by Bruce at July 31, 2004 8:12 PM | TrackBackPosted to Finance | Globalization Printer-friendly version
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