DLA Piper accounts reveal 80% increase in net debt to £53m

DLA Piper has seen its net debt grow by 80% to £53m, the firm's limited liability partnership (LLP) filings have revealed.

During the 2008-09 financial year the firm swapped its short-term overdraft facility for term debt facilities committed for three years which saw bank loans increase by more than £50m.

The move saw cash in hand at the bank increase by £4m to £34.8m for the financial year, with overall net debt growing from £29.4m to £53m, according to the filings with Companies House.

DLA Piper chief finance officer Paul Edwards said: "We have moved from having largely bank overdrafts which were repayable on demand, to a money market-committed facility renewable in three years. During the period we invested significantly in the business on premises and computer equipment as part our expansion in several jurisdictions. This capital expenditure was funded through partner capital and term loans."

The UK top 10 firm spent an annual total of £21m on property improvements, fixtures and fitting and computer equipment over the year, including the implementation of a firmwide practice management system.

Operational costs grew by 18% over the year from £347.2m to £409.8m, which the firm attributed to investment in regions including the Middle East, Bucharest and Europe, as well as the effects of currency fluctuations.

DLA's UK operation was the only region to experience a drop in turnover in 2008-09, falling from £336.7m to £310.6m in the wake of the credit crisis.

Elsewhere, revenues for the firm's Middle East practice grew by 120% from £10.6m to to £23.3m. Despite this, the Middle East was the firm's only loss-making region during 2008-09 due to costs associated with the rapid expansion.

Total staff costs at the firm grew by 19.2% to £237.9m, with total fee earners increasing by 148 to 1,847 and support staff headcount rising by 386 to 4,495.

DLA's highest-paid lawyer received £1.4m in 2008-09, a 19% drop on the previous year's figure of £1.7m. When the firm reported its results for the last financial year, average profits per equity partner stood at £645,000.

Edwards added: "It is interesting looking back over the last two years of global economic and financial crisis. While we have faced challenges, we respond quickly to these and are happy with the way we have ridden out the storm. Our geographical coverage and the breadth of our practice has served us well.

"The Middle East was a challenge but we have restructured appropriately and expect it to do much better. We also look confidently to more growth across Asia this year."

Fellow UK firm Bird & Bird has also recently filed its LLP accounts for the 2008-09 financial year with Companies House.

The accounts show that staff costs rose by 20% to €93.9m (£82.5m) over the year as total fee earners (excluding partners) and support staff numbers rose by 199 to 1,105.

During the year Bird & Bird took out two bank loans valued at €12m (£10.5m) secured by a debenture, which Legal Week first reported in June. The firm's overdraft increased by 90% from €6.7m (£5.8m) to €12.8m (£11.1m) in 2008-09, with the firm citing clients taking longer to pay due to the economic climate.

Cash in hand at the bank increased by 32% to €6.7m (£5.8m), up from €4.2m (£3.7m).

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