Eleven-strong club sees 2% overall drop in turnover against magic circle firms' increase

Firms in the City-based £100m group have fallen further behind the magic circle over the last financial year.

The 11 firms in the group, which include all of the City top 10 outside the magic circle as well as CMS Cameron McKenna, SJ Berwin, Bird & Bird, Berwin Leighton Paisner (BLP), Denton Wilde Sapte and Nabarro, on average saw turnover drop by 2%, with profits per equity partner (PEP) down by just over 23%.

In contrast, the magic circle achieved a slight increase in turnover against a drop in PEP of only 12.3%.

Bird & Bird was the star performer achieving a 29.6% jump in revenues, with Lovells the only other member to achieve double digit growth in turnover. Macfarlanes fell out of the group altogether, with a 10.8% drop taking revenue to £99m.

The group faired even worse by PEP, with SJ Berwin seeing the second biggest fall in the top 50, with a fall of almost 49% to £410,000. Ashurst, BLP, Dentons and Nabarro all saw profits drop by more than 30%, leaving the group without a single member with PEP of £1m plus.

SJ Berwin senior partner Jonathan Blake (pictured) said: "We are disappointed with the results. They are not acceptable for a firm with our level of ambition. We are going to focus on improving these results in the future by looking at our areas of strength and deepening our client relationships as well as increasing efficiency and looking at costs."

While the drop in activity levels over the last year has highlighted the differences between the chasing pack firms and the magic circle, it is broadly in line with the mid-tier City firms below them in the rankings. They averaged a slightly smaller dip in revenues and PEP, with six of the firms seeing falls in PEP of more than 30%.

Travers Smith fell nearly 10 places in the tables after seeing turnover drop by 20% and PEP by nearly 40% as a result of its heavy exposure to the battered M&A and private equity markets.

David Willis, managing partner at Herbert Smith, commented: "Last year could have been better, but considering how ghastly the outside world has been doing, it could have been a lot worse. Overall I'm pleased with the financial performance."

David Harris, Lovells' managing partner, added: "It will be a tough year in which many clients will continue to suffer, with work levels remaining uneven. Many firms will be looking to the counter-cyclical areas of their practices to drive their performance."