Eversheds results: revenue dips as PEP falls 27%

It's a hard-nosed business world out there and "sharing your client's pain" doesn't make commercial sense. I see cuts on the horizon for underperforming partners.

Toatesy -27 May 2009 | 13:36

How do you turn a 6% fall in revenue into a 27% hit on profits? It's hard to see how the fall should have been more than 20%.

Anonymous -27 May 2009 | 14:03

If you have a profit margin of about 25%, a 6% drop in income will hit profits by 27% as all of the decline is lost profit. Remember, once an organisation is into profit for the year, every other £1 made is pure profit. In tough times the effect is magnified the other way.

Leeds Partner -27 May 2009 | 14:14

It would have that impact if you didn't cut costs. Patently, Eversheds did cut costs, they also cut them early and didn't offer very generous pay-outs. So I come back to the original question, how about that 27% fall?

Anonymous -27 May 2009 | 14:33

Eversheds has around 150 equity partners so profits are down from £83m to £61m - by about £22m. Turnover is down £24m - therefore all lost revenue has gone to the profit line. Not surprisingly really as it takes about six months to turn the tap off on salaries, especially by the time you have paid three months notice and even just the minimum of statutory redundancy. Eversheds' first wave of consultations didn't end until November 2008 (seven months into their year). It will be interesting to see all the other firms report and how much currency appreciation will have benefited those with profits from overseas (see Lovells' recent announcement). When the Euro slides next year - (and look at the forward exchange rates - November 2009 rates are already down 10% from 30 April) 2010 will probably be worse.

Finance-man -27 May 2009 | 16:22

Hiring freezes would have had an upfront impact on costs. A firm of that size could have sliced off millions in costs. Eversheds refers to a 16% fall in staff levels - they didn't achieve all that through redundancies.

Anonymous -27 May 2009 | 16:53

£404,000 PEP strikes me as a very convenient figure - sounds much more than £396,000. I'd bet that everything has been done to keep profits up. Remind me in 10 months time to look at their published accounts to see if PEP is still £404,000 - but if it isn't all the fuss will have been forgotten then. It would be much better if firms didn't announce unaudited results as they are meaningless. Better to wait to announce PEP when the figures are audited (like Ashurst) then no-one can blur the truth. It would be interesting to look back at the results season last year to see if unaudited PEP was higher or lower then the final audited figure.

Old cynic -27 May 2009 | 18:31

Only Eversheds would seek to spin as a good thing making redundancies early. The real issue is whether they got rid early of the senior management that got them into this mess. The answer is NO - they promoted the managing partner to chief exec!When the good times return, hopefully people will remember how shabbily Eversheds treated its staff during the bad times.

Annonymous -27 May 2009 | 21:02