SJB top earner took home £1.2m last year despite 50% PEP fall to £410k

Mr Three Per Cent

And it then follows in this approx 100 equity partner firm, that this top earner took home 3.25% of the entire firm's distributable profits. The question is did he bill around £3.5m to justify such a share? I guess he did.

Rhubarb & Custard -26 Jan 2010 | 15:39

Obsession with profit per partner

What is the obsession with PEP? There are two parts here - firstly the financial health of the firm - it made £38m on turnover of £184m - a healthy 21% (when compared to other industries). When you aggregrate all staff and partner remuneration together I suspect it will be greater than 50% of turnover. This is the threshold that the country is getting excited about with the investment bankers. Perhaps the government should add a bonus levy on the fat-cat lawyers? Secondly there is how the firm chooses/agrees to split its profits between its partners - and that is always a real issue - but should be confined to the partners themselves. You will get the comments like the one in the post above about billing - but is the £3.5m billing profitable? I'd rather bill £1m and make 50% profit than bill £2m and only make 20% profit.

Mike -27 Jan 2010 | 09:12

Law firms are not banks

Mike - law firms are partnerships which do not have external shareholders. The problem with banks siphoning off 50% of profits for the remuneration of bankers is that that money should go to the shareholders. In capitalism, the owners of the capital (i.e. the shareholders) should get the benefit of the risk taken with that capital. In the case of law firms, the holders of the capital (the partners) get the benefit, hence the lack of objections comparable with those made against the banks.

Protesting against law firms' exorbitant fees, and the complete lack of market forces in setting fees, is, however, very justifiable. I have never understood why law firms advertise their bloated profits so blatantly, with little thought given to the way it might appear to clients.

Disappointed, of Chancery Lane -27 Jan 2010 | 13:30

So it's OK if law firms make bloated profits as long as no one knows about it? That way, presumably, they can keep fleecing unsuspecting clients.

The banking comparison is daft - banks are in the firing line for having contributed to wider problems in the economy and for paying out large bonuses when the only reason they didn't collapse was huge state support. No one cared much what they paid out when they were assumed to have been profitable rather than propped up by the taxpayer.

Hmmmmmm -27 Jan 2010 | 14:14

No, it's clearly not OK to fleece clients in private, but from a self-preservation perspective it makes more sense for law firms not to rub it in their clients' faces quite so much.

Disappointed, of Chancery Lane -27 Jan 2010 | 15:12

There's no middle ground - either profits are disclosed or they are kept private. Disclosure, which is generally regarded as a good thing in markets, is not rubbing clients' noses in it.
Not disclosing profits would give clients less information on which to make an informed decision about the fees they are being charged.

Hmmmm -28 Jan 2010 | 11:16

Most top firms are now LLPs, so their annual accounts are publicly available. Whether they choose to publish their figures or not, the likes of Legalweek will report them anyway, so the point seems fairly academic.

In any event, if clients were that bothered by their chosen law firms making huge profits, they would choose to instruct less profitable firms and things would start to balance out. The fact many don't change their lawyers suggests that clients either don't care or don't know.

?Confused? -02 Feb 2010 | 13:39