Hogan Lovells resets financial reporting in push for closer alignment with US arm

Hogan Lovells is changing the way it reports its financial results, in a push to more closely align the firm’s international partnership with its US arm.

In a break from previous reporting, the firm has filed results for its international limited liability partnership (LLP) – the UK-based legacy Lovells partnership, which is financially separate to the firm’s Americas arm – for the eight months to 31 December 2016.

From next year, the firm will file results for the international LLP at the same time as its firmwide figures, with both sets of accounts covering a calendar year. Historically, results for the international LLP have run to the 30 April financial year-end more commonly used by UK law firms.

The firm said the shift had been made ”to align our accounting period with the way that we manage the business”.

For the eight months to 31 December 2016, the international LLP took in £492m. While an accurate comparison with the previous year is complicated by the change in reporting period and exchange rate fluctuations, the firm said that it represented a “notional year-on-year increase of 15%”, and that underlying revenue is “up by around 4%” when disregarding the impact of currency shifts.

Profit for division among equity members came in at £144.8m for the eight months, while the firm’s net cash position improved from £50.1m at 30 April 2016 to £77.2m at the end of 2016.

According to the firm, the profit figure represents ”a notional year-on-year increase of approximately 19%”, but if the effects of currency fluctuation were eliminated, profit before tax would be ”broadly flat” on the previous year.

The accounts also show that the firm’s management team was paid £9.5m for the eight-month period, compared to £8m for the previous full financial year. The firm said the higher total pay figure was a result of a change in the definition of the management team, with board members also now included alongside the firm’s international management committee.

The latest results come after the firm this February announced that global revenues had climbed by almost 6% to $1.925bn in 2016, while profits per equity partner (PEP) stayed flat at $1.253m. The transatlantic firm generated roughly 52% of its turnover in the Americas, with London and continental Europe contributing 41%.

London revenue growth slightly outperformed the firm’s global performance, rising 7% to £282m.

The firmwide results came after the last accounts filed by the international LLP – covering the 12 months to 30 April 2016 – showed non-US turnover rising 8% from £591m to £638m, with PEP up 25% from £698,000 to £879,000.

Last month, Hogan Lovells announced that it is restructuring its global support function, with 90 London roles cut or moved to its business services centres in Birmingham and Johannesburg. The firm is more than tripling the space it occupies in Birmingham, in part to accommodate the new support staff.

The firm has also offered voluntary retirement to hundreds of its US support staff, in a bid to shrink the ranks of its senior business services staff across the Atlantic.