Stephenson Harwood financials: PEP drops 8.5 per cent amid revenue growth

The average profit per equity partner (PEP) at Stephenson Harwood has plummeted by 8.5 per cent to £708,000 from £774,000 last year, while revenue is up 11 per cent from 2015/16.

Last year revenue stood at £158m, which has now increased by £18m to £176m. The firm’s 11 per cent increase in revenue marks the eighth year of consecutive growth for the firm.

Revenue jumped 9 per cent last year, another disappointing year for PEP, which nudged up just 1 per cent from £763,000 to £774,000.

The firm used last year’s exchange rate to calculate its figures, which do not take into account currency fluctuations that have occurred since the UK’s decision to leave the European Union. If changes in currency are factored in, the percentage increase for revenue is about 7 per cent. The firm added that profitability would also be less marked.

Asked about the factors accounting for the drop in PEP, White told The Lawyer: “It will not come as a surprise to our partners that PEP is down by a modest amount, because they will see a strong sense of profitability elsewhere. We feel we’ve had a strong year and done some great things in the business to put it in a good position for the future.”

White drew attention to the firm’s expansion, saying that since 2016, it had taken on 32 partners globally. She said three partners had been added in private equity and that the firm had added to its capabilities in international arbitration, which is has wanted to grow, as well as expanding its offering to clients in China.

“We have grown significantly; revenue has increased by more than 50 per cent in last five years,” White said. “As we grow, we have to make investments and increase the costs for supporting that revenue. In the 2013-14 financial year, PEP was just over £500,000, and then we had two amazing years which were special years, and we recognised we were unlikely to maintain such high profitability.

“It’s always a balancing act between what we spend in any one year and the long-term good of the firm.”

However, White added that the Brexit vote had taken a toll on its real estate and corporate practices.

“Post Brexit, real estate and corporate saw a slowdown over summer months, but by about September we saw a lot of activity in terms of deals that were put off coming back on, and new activity which has very much continued for us.”

White was re-elected in March of this year to lead the firm until 2019. She was first appointed to her role in 2009, meaning she will have led the firm for 10 years at the end of her current tenure.

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