Fides Weekly Update – 21st June 2019

Hello and welcome to the Fides Weekly Update, your digest of this week’s key legal trends, moves and developments from across the globe.

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This week:


1).  Unpaid client invoices total a third of combined revenue at top UK law firms, research finds

Law firms have increasingly large amounts of unpaid bills sitting on their balance sheets, which is hurting their cash position, according to an analysis of the top 50 LLP accounts by Legal Week in conjunction with Smith & Williamson.

The top 50 LLP’s (excluding Slaughter and May) had £5.6 billion due from clients at the end of the last financial year, marking a 9% increase on 2016-17 despite dwindling cash reserves at law firms.

According to the data, the top 50 firms collected £17.3 billion in fees during this time, meaning that unpaid invoices amounted to almost a third of their total combined revenue.

Allen & Overy had the highest value of unpaid client bills, with £538.5 million due to the firm, where Browne Jacobson had the lowest at £19.3 million. CMS had the highest percentage change year on year, with a 91% increase in unpaid bills to £186.3 million after its three-way merger went live in September 2017. Full breakdown of the firm’s accounts are available here.

U.K. firms have traditionally been slower to chase payments than U.S. firms operating in the City, with clients taking on average 121 days to pay U.K. top 50 firms last year. Of this, Travers Smith were the fastest to turn around bills with an average turnaround time of 73 days last year, where Irwin Mitchell were the slowest, with clients taking on average 268.8 days to pay their bills.

Combined, the top 50 firms had £1.325 billion in cash on their balance sheets at the year-end, alongside bank loans and overdrafts totalling £875 million, leaving them with about £450 million in net cash.

However, monthly staff costs came in at £610 million, meaning that firms are relatively thinly capitalised and vulnerable to volatile market conditions – something that faster client bill payments could help to offset.

Nick Randall, associate director at Smith & Williamson, said: “Law firms are and have always been notoriously bad at their lock-up cycle, which is fairly obvious as seen by measuring the balance sheet against the turnover at these firms.

“If clients were to stop paying the law firms for a couple of weeks or a month because there were shocks to the economy, and because firms may hold onto their cash and not pay suppliers, some of these law firms could face significant cashflow problems because it’s all wrapped up in things that clients could withhold.”

However, head of professional services Giles Murphy continued to add that, based on the analysis, if firms were able to reduce their outstanding bills by just 10% by the year-end, that would more than double their net cash positions.


2). Movers & Shakers 


Panel Watch

Lloyds Advisers Gear Up for Fight As Process to Cut Panel Begins

Legal team cuts expected at Centrica



Nokia Chief Legal Officer Heading to ABB as Her Replacements Are Named

Maria Varsellona to become group General Counsel at ABB, a Switzerland-based robotics and technology company

Eversheds Sutherland Appoints New Europe Leader To Spearhead Growth

Eversheds Sutherland has appointed longstanding partner Helen Thomas to the new position of European Managing partner

BAML European legal chief departs for EY

The long-serving EMEA general counsel at the Bank of America Merrill Lynch Sajid Hussein has stepped down after 14 years to join Big Four accounting firm EY.



Pinsent Masons Partner Exit is Seventh This Year

Belfast infrastructure partner Adrian Eakin moves to Riyadh for a new role at the Kingdom of Saudi Arabia National Centre for Privatisation

Another Partner Leaves Squire in London

Real estate partner John Danahy is to leave Squire’s London office for King & Wood Mallesons

Goodwin Procter Hires Heavyweight Taylor Wessing Life Science Team

U.S. firm Goodwin Procter has hired a heavyweight four-partner team from Taylor Wessing, led by international corporate co-head David Mardle. Three additional partners – Malcolm Bates, Tim Worden, and Adrian Rainey – are due to join upon completing their notice periods.

Linklaters Hires Freshfields Milan Partner To Lead Local Practice

Roberto Egori joins Linklaters to lead its Milan based tax practice

Clifford Chance Loses Two More Lawyers in Australia

Former partner Jennifer Hill and former counsel Sean Houthuysen have left the firm, leaving the Magic Circle firm’s Perth office with two partners

A&O’s consulting arm hires 3VB’s sole female silk

Catherine Gibaud QC, the only female silk at 3 Verulam Buildings, is leaving to join Allen & Overy Consulting on a part-time basis

Weil Gotshal targets Deloitte Legal for Warsaw team hire

A team led by tax partner Leszek Tokarski, including tax specialists Maciej Kostrzewski and Artur Ciechomski, and several associates joined the US firm’s Warsaw office early this month.

City O’Melveny exodus continues as Akin Gump hires private equity funds duo

Private equity funds lawyers John Daghlian and Mary Lavelle set to join US rival Akin Gump Strauss Hauer & Feld


Mergers & Alliances

Eversheds Bolsters Russian Presence Via Local Firm Merger



Fieldfisher Records Third Successive Year of Double-Digit Revenue Growth

Stephenson Harwood Breaks £200M as PEP Growth Recovers

CMS Grows Global Revenue, Rolls Out New Management Structure

Pinsent Masons Raises NQ Pay Across UK Offices

Slaughter and Pay: £100k for NQs


Inclusion & Diversity

Hogan Lovells Launches Mandatory Anti-Bullying and Harassment Training In UK

Freshfields’ Ryan Beckwith to Face Full SDT Hearing

‘A Partner Tricked Me Into His Hotel Room’ – The Unseen Victims of Law’s #MeToo Problem

One in Three General Counsel Plotting Enhanced Diversity Targets For Advisers

Mayer Brown launches scheme for senior-level mentoring


Innovation & Technology

‘Crazy Ideas’ Welcome: How Orrick Is Working to Build an Innovation Culture



City Reacts to Untimely Death of Corporate Heavyweight Juan Picon

Top 50 Firms Have £5.6BN Of Unpaid Client Invoices

Freshfields Frankfurt Office Raided Again

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