HSF boosts revenues by more than 10% as PEP inches downwards

Herbert Smith Freehills (HSF) has announced a 2.5% drop in profit per equity partner (PEP) for 2016-17, alongside a 10.6% rise in revenue.

The results take the firm’s turnover to £920.5m, up from £832.2m last year, while PEP has fallen to £760,000, down from £779,000.

Last July, the firm announced 2015-16 turnover of £870m after choosing to report on a currency-neutral basis; however, the firm’s limited liability partnership (LLP) accounts, which were filed in February this year, included a revised figure almost £40m lower.

This year, the firm has used an average currency conversion rate which, according to chief financial officer Steve Bowers, should result in “a much closer correlation” to the audited numbers the firm will report in its LLP accounts next year.

The firm goes into the new financial year with 337 equity partners – up five from last year – of a total partnership of 478.

Global CEO Mark Rigotti (pictured) told Legal Week: “We’ve continued the progress we have made in terms of our market positioning and brand. This year we saw a marginal decrease in profit due to external geopolitical headwinds such as the US election and Brexit, and also because we were at a high point in our investment cycle. I am pleased with the results, given that environment.”

Rigotti cited HSF’s Germany practice as a particularly strong performer, growing its revenues by 70%. The firm’s Madrid, Paris and Moscow offices all saw double-digit revenue growth, while the global disputes practice achieved its best financial results ever.

He added: “We’ve had some great hires in Europe, including the Paris banking litigation team [which joined from Hogan Lovells in January]. We are also really proud of the way our alternative legal services business has continued to expand – it is achieving around a 7% revenue increase year on year.”

Last year, the Anglo-Australian firm opened an office in Kuala Lumpur and announced it will launch an alternative legal services centre in Johannesburg later this year, its eighth such base around the world.

However, HSF has seen a series of partner exits during the past 12 months, with more than 20 departing the firm across London and the Asia-Pacific region.

Rigotti acknowledged that the firm saw a higher departure rate than usual, but said the majority of those exits were either managed by the firm or retirements. He said: “The overall number of departures during the year was higher than usual, but the amount of people leaving for other firms is not what drove the numbers. While we don’t have a big equity management programme, we are always looking at performance.”

Rigotti has led the firm as sole CEO since May, after the firm announced last year that it would phase out its joint CEO leadership structure.