Bakers London office set for 33% profits drop-off as revenues fall
Baker & McKenzie's City office looks set to take almost twice the hit on profits per equity partner (PEP) as the rest of the firm, with London PEP expected to have fallen by a third in 2008-09. The international firm's results show that firmwide revenues fell by 3% to $2.11bn (£1.27bn), with PEP falling by 17% to $992,000 (£598,000). However, Bakers expects London turnover to dip by 3.4% to £115.7m, with PEP set to plunge by 33.5% from £572,000 to £380,000.
August 14, 2009 at 09:03 AM
3 minute read
Baker & McKenzie's City office looks set to take almost twice the hit on profits per equity partner (PEP) as the rest of the firm, with London PEP expected to have fallen by a third in 2008-09.
The international firm's results show that firmwide revenues fell by 3% to $2.11bn (£1.27bn), with PEP falling by 17% to $992,000 (£598,000). However, Bakers expects London turnover to dip by 3.4% to £115.7m, with PEP set to plunge by 33.5% from £572,000 to £380,000.
The firm, which operates a 30 June year-end, said London was affected more severely than other offices because costs rose more steeply, while transaction levels reflected the fact that the City was harder hit than many other financial centres.
London head Gary Senior said: "If you strip out those UK firms with exchange rate benefits, they had broadly flat revenue and profits down by a third and we are the same. The market conditions had a significant impact on financial performance, but I do not think we are out of line."
Bakers said that currency exchange rates had had an adverse impact on results, stating that on a currency rate-neutral basis, fees increased by 2% over the year globally.
Despite the overall decline, globally 2008-09 was still the firm's second-best year in revenue terms after 2007-08 and its third best in terms of PEP. Chairman John Conroy said that the firm had taken a number of steps to cut costs during the financial year, including redundancies.
In April Bakers announced that it was cutting 38 lawyers and 86 paralegal and support roles across the US, in addition to six associates laid off in New York in January, while a London consultation in May saw City headcount cut by 70, including 21 fee earners.
Other cost-cutting measures taken by the firm included increasing the amount of work sent to its global support service centre in Manila. Headcount in the Philippines increased by 25% over the last year and now stands at around 500, with the firm estimating that its insourcing operations now save it around $20m-$25m (£12m-£15m) annually.
Conroy said: "We have made a concerted effort to focus on key client relationships and are gratified by the results given the market conditions. Our fiscal year meant we had around eight months exposure to the worst of the downturn but in the fourth quarter we started to see some encouraging signs with productivity increasing."
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