The warm embrace of suffering; the embarrassment of success
If anyone doubted Legal Week's recent assertion that law firms would this year be concerned with managing client expectations over the awkward level of their profits, one only has to glance at the official statements from Lovells and Eversheds this week accompanying their 2008-09 results.
May 27, 2009 at 08:03 PM
2 minute read
If anyone doubted Legal Week's recent assertion that law firms would this year be concerned with managing client expectations over the awkward level of their profits, one only has to glance at the official statements from Lovells and Eversheds this week accompanying their 2008-09 results.
Lovells spends a good part of its statement stressing that the vagaries of currency movements were largely responsible for its 11% hike in revenue (actually the firm's achievement in getting 1% growth in real terms is respectable, however you look at it).
Not having quite the international exposure of Lovells to invoke, Eversheds instead opts to stress how it has "shared [the] pain" of a client base that has "suffered tremendously".
Not that you could doubt the basic truth of Lovells' claim. With international offices now accounting for nearly 60% of fee income, Lovells, along with the big four, has this year benefited from a big lift in its sterling-denominated revenue. Though it will be less extreme for most other firms, the UK top 25 as a whole will probably see in the region of 5% in extra 'growth' this year due to sharp currency movements. If you assume that revenues across the top 50 will this year be down by around 5% against 2008, in real terms the contraction will be more like 8%.
Still, it's come to something when a firm that a few years ago was criticised by some rivals for not growing its business unveils what will be one of the best-looking 2008-09 performances, only to talk down its own numbers. Eversheds, likewise, is empathising with clients' pain in a manner that will be a fixture of this year's reporting season. The assumption on the part of law firms is that their own relatively resilient profitability will be a less sensitive topic in the middle of 2010, when hopefully some form of stuttering recovery will be underway. If a law firm can find a cost to put down for 2008-09, it's going in. This is one year in which no-one wants to be too successful.
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