Macfarlanes PEP rebounds with 8% gain as revenue climbs 4%

Macfarlanes’ profit per equity partner (PEP) rebounded by almost 8% in 2016-17, after dropping by 16.7% during the previous financial year.

The increase takes the City firm’s PEP up to £1.38m, against a 4% rise in revenue to £167.6m, up from £161.03m in 2015-16 when it remained flat on the previous year. Operating profit in 2016-17 grew by 4% to £85.85m.

In contrast to many UK firms, Macfarlanes’ billings in overseas currencies are small so its results do not reflect any gain from exchange rate fluctuations.

Macfarlanes senior partner Charles Martin said: “These are rapidly changing times for law firms. Client needs and market conditions change all the time. We have great people who relish the opportunities that this creates. We are pleased with these results for last year, but [are] under no misapprehensions about the challenges ahead.”

Prior to 2015-16, the firm had seen two years of impressive growth, with revenue growing by 22% and PEP climbing by 21% in 2013-14, and revenue rising by 14% in 2014-15 alongside a 29% hike in PEP.

The strong financial performance comes after Macfarlanes launched an office in Brussels to accommodate one of its recent partner hires from King & Wood Mallesons (KWM), after closing its small Johannesburg office at the end of 2016.

The firm closed in Johannesburg – at that point its only office outside London – at the end of October.

While partner departures from Macfarlanes are rare, the firm saw two practice heads leave during the last financial year – competition head Marc Israel, who joined White & Case earlier this year, and financial services head David Berman, who joined Quinn Emanuel Urquhart & Sullivan in late 2016.

Key deals for the firm in the 2016-17 period include advising on London-listed property company Kennedy Wilson Europe Real Estate’s $4bn (£3.7bn) merger with its US parent company. Macfarlanes is advising Kennedy Wilson Holdings, alongside Wachtell Lipton Rosen & Katz.