Business Opinion: It really should come as no surprise to hear, as we did last week, that the number of people seeking to train as solicitors is up 56 per cent this year.
It would be nice to think that the 555 people enrolling with the Law Society this year were driven by the desire to right wrongs, fight injustice and make Ireland a better place. Sadly, they are more likely to be in it for the money.
The legal profession is well paid, of that there is no doubt. Quite how well paid is far from clear. We are afforded the odd glimpse of the remuneration earned by barristers via the public accounting of the costs of tribunals.
But the earnings of the other half of the profession are much more closely guarded, primarily because solicitors' firms are unlimited partnerships and thus not required to make public even the basic information that companies must provide under the Companies Act.
The same situation applies in the UK, but for some reason the larger firms are much more open about the profits they make. Last week saw the publication of the Legal Business 100, a comprehensive survey of the finances of the largest law firms in the UK.
It is mouthwatering stuff. The best paid solicitor last year was a Mr Alastair Dickson, who trousered £1.2 million (€1.56 million), at Dickson Minto, a boutique firm that specialises in private equity deals.
The biggest UK law firm in turnover terms was Clifford Chance, with income of £950 million on which it made profits of £226.5 million. This worked out at an average revenue per lawyer of £323,000 and profit per partner of £562,000. These figures are pretty typical for the top five UK firms. The average revenue per lawyer is nearer £250,000 for the top 20, with profit per partner in around £350,000. At the bottom of the list was DMH, which turned over £15.2 million. Its 14 equity partners shared profits of £2.5 million or £175,000 each.
It would be fascinating, to say the least, to have this sort of information for the five big Dublin firms; A&L Goodbody, William Fry, Matheson Ormsby Prentice, Arthur Cox and McCann FitzGerald. But, one suspects this is an aspect of international best practice that Dublin's legal profession will be slow to adopt. In the meantime the best we can do is extrapolate from the UK data.
The big five Irish firms have an average of 58 partners. Arthur Cox has the most with 71, and William Fry the least with 41. There is a cabal of UK firms of this size in the survey. Reynolds Porter Chamberlain, with 59 partners and placed 39 in the list, is typical. Last year it turned over £47 million and with a profit margin of 38 per cent had a net income of £17.7 million. Revenue per lawyer was £200,000 and profit per partner £285,000. This suggests that the typical partner in a big Dublin firm takes home a tidy €370,000.
It's a goodly sum, but legal sources say it might be rather underselling the Irish fraternity. They argue that the big Irish firms really compare better with the larger UK firms, because like them they tend to have a finger in every pie.
This assertion is reasonable if you look at the amount of mergers and acquisitions work done by Irish firms. Business information group Thompson publishes a league table of European law firms based on the value of the deals that they advised on in the last 12 months. A&L Goodbody tops the table for the year to the end of August and comes ninth in Europe, advising on transactions totalling €67 billion. William Fry was involved in deals worth €2.3 billion and Matheson Ormsby Prentice in £1.7 billion worth. Legal sources say the latter two figures are more representative of the big Irish firms than the A&L Goodbody figure which represents an unusual 12 months for the firm which was Irish counsel for a number of large international deals.
Certainly the gap between A&L Goodbody and the rest is much smaller in an alternative league table of M&A work compiled by Mergermarket. In the 12 months to last December A&L Goodbody advised on deals worth €2.2 billion in the Irish market, not too far ahead of William Fry (€1.8 billion) and Arthur Cox (€1.79 billion).
It seems reasonable then to assume the big five Irish firms advise on deals worth around €2 billion a year, which bumps them up in terms of the Legal Business list and establishes their peers as firms like Denton Wilde Sapte (13 in the Legal Business 100) and Hammonds (15 in the list). These firms have a turnover of between £125 million and £174 million. Profit margins range from 19 per cent to 32 per cent and net income from £25.5 million to £54 million. Revenue per lawyer ranges from £181,000 to £247,000 and the all important profit per partner figure is between £321,000 and £415,000.
Splitting the difference and taking £368,000 as an average for partner profits in UK firms in this bracket, it suggests that the typical partner in a big Dublin law firm is earning not far south of €500,000 a year. And that is not taking into account that UK firms such as Denton Wilde Sapte could have up to twice as many partners to share in the spoils as their Irish counterparts.
