“As a profession, if we are to be taken seriously, we need to move
to a sensible reporting regime that is based on real figures, and not
on those stage statistics that appear.”  The words of an impractical
academic?  A frustrated journalist rattling the cage of law firms’
secrecy?  Try Guy Beringer, Allen & Overy’s senior partner, announcing the
public release of fully transparent, GAAP-compliant, detailed financials
for the firm,
including individual partner-by-partner compensation—a
potentially revolutionary development. 

It gets better:  Beringer insists the rest of the Magic Circle
do likewise, if they want "to be viewed as competent international businesses."

Lest we get ahead of ourselves, A&O’s admirable move comes on the
heels of their conversion to LLP status last year which, in the UK, entails
mandatory disclosure of these figures:  But they’re not whining.  To
the contrary:

David Morley, managing partner of A&O, said: “There is
a trade-off between the limited liability wrapper and disclosure and
we think it’s a fair trade-off. We hope we are setting the standard for
the profession.”

Additional coverage from The Lawyer is here and here; I’ve also requested a copy from A&O directly.

When other firms remove their cloaks, will we see untoward changes in the
profits-per-partner rankings? Does the Sun rise in the East?


Update as of 5:15 pm:  Here’s the
press release announcing A&O’s results, which contains a severely
condensed income statement and balance sheet if you scroll down a bit.   Highlights:

  • The firm is focusing on productivity.  While the total number
    of lawyers was down slightly, productivity rose, permitting revenue
    to grow by 2%.  Combined with driving costs down by 1%, total
    profit was up 8% and PPP was up 5%.
  • North America and China are viewed as the "key growth markets."
  • Pro bono receives genuine resources:  50,000 lawyer hours, or £12-million
    of billable time.
  • The largest single expense is "staff costs" at 41.2% of revenue-no
    surprise whatsoever.
  • Second is "other operating charges," which (although they don’t say
    so) is office rent and associated costs such as telecom and utilities.
  • No other expenses are material.
  • Leaving a gross profit margin (before taxes) of 36.7%, which is handsomer
    than even Microsoft territory.

 

Related Articles

Email Delivery

Get Our Latest Articles Delivered to your inbox +
X

Sign-up for the Insider’s Email

Be the first to learn of Adam Smith, Esq. invitation-only events, surveys, and reports.





Get Our Latest Articles Delivered to Your Inbox

Like having coffee with Adam Smith, Esq. in the morning (coffee not included).

Oops, we need this information
Oops, we need this information
Oops, we need this information

Thanks and a hearty virtual handshake from the team at Adam Smith, Esq.; we’re glad you opted to hear from us.

What you can expect from us:

  • an email whenever we publish a new article;
  • respect and affection for our loyal readers. This means we’ll exercise the strictest discretion with your contact info; we will never release it outside our firm under any circumstances, not for love and not for money. And we ourselves will email you about a new article and only about a new article.

Welcome onboard! If you like what you read, tell your friends, and if you don’t, tell us.

PS: You know where to find us so we invite you to make this a two-way conversation; if you have an idea or suggestion for something you’d like us to discuss, drop it in our inbox. No promises that we’ll write about it, but we will faithfully promise to read your thoughts carefully.