Simmons & Simmons has posted a 10% drop in profit per equity partner (PEP) for the 2015-16 financial year to £585,000, as the firms costs rose "significantly".

However, it remains the second highest level achieved by the firm following a record high of £650,000, a jump of 17%, in 2014-15.

In 2015-16, revenue edged up by just 1.7% to £295.1m, up from £290.1m, while net profit slipped 6.23%.

Simmons managing partner Jeremy Hoyland said: "Increases in our cost base adversely affected profitability. The reality is in previous years we had been quite tight on the costs, which held flat for a number of years. But we have seen a significant rise in costs at the firm."

A key cost during the past financial year was lawyer salaries, he said. "Both more lawyers and paying more to existing lawyers. Responding to pricing pressures in the UK market with some fairly significant rises in lawyers' salaries was the biggest part."

He also said that an increase in rental costs – such as the expansion of the firm's Luxembourg office and adding additional space in Duesseldorf – contributed to the fall in PEP.

The run-up to the UK's referendum on membership of the European Union and its aftermath also weighed on costs, he said. "We saw declining transactional levels after Christmas. As it got closer, there was more impact and people decided to put some deals on hold," said Hoyland.

Hoyland said the firm's contentious litigation practice had a "tremendous" year, and also highlighted intellectual property and real estate as practices that were performing well

He added that Simmons' partners in Europe are not expecting a "big impact" from Brexit on their levels of activity in 2016-17, but said he remained "concerned" about the impact on transactional volumes in the UK.

The firm is in the middle of a three-year business plan, voted through on 1 May 2015 and running through to 30 April 2018.

As part of the plan, partners are expected to improve relationships with US firms and the firm has created more structure around which US firms partners refer work to. The firm has an alliance with US finance boutique Seward & Kissel, among other relationships.

In addition, the firm is looking to focus more on areas including management and investment funds, energy and infrastructure, financial institutions, life sciences and telecoms, and media and technology.