DWF has a great London office and a big overdraft
The law firm which gobbled up financial crisis casualty Cobbetts and then moved into a spanking new office high up in London’s iconic Walkie Talkie building is feeling the pinch.
Figures released in DWF‘s annual review show that the firm shed 200 full-time employees as a result of a “careful balance of natural attrition and modest restructurings” as staff numbers dropped from 2,350 to 2,160.
Meanwhile, profit at the firm fell 7% for the year ending 30 April 2015, dropping from £50.4 million to £46.7 million, while profit per equity partner plunged by 16% to £325,000.
At the same time, borrowings have increased from £13 million in 2014 to £32 million in 2015. DWF’s debt includes £21.3 million in bank loans and a £10.8 million overdraft.
Amid rising costs — office space in the Walkie Talkie which the firm moved into last year costs substantially more than the City average — DWF’s growth has been stagnant for two years now, with the firm’s revenue nudging up by just 1% this year, up from £189 million to £191 million.
And in another concerning sign for the firm, DWF’s trainee retention rate is also down, with the firm managing to hang onto just 74% of its qualifying trainees this autumn — a result that places it well below the big law firm average.
The firm’s managing partner, Andrew Leaitherland, framed the lower numbers in terms of a bold strategy that is seeing DWF invest in the future, while also acknowledging that the insurance market — a line of work on which the firm heavily relies — has taken a hit in recent years.
Highlighting investments in technology, 22 lateral partner hires, the opening of the firm’s first international office in Dubai last year, and the move to the Walkie Talkie, Leaitherland commented:
We know it takes more than one year to see these investments pay back and we are already seeing these returns this year. So our plans for growth and investments are not denuded despite operating within markets such as insurance where our clients are experiencing profit challenges, and where we can we have responded with cost-saving changes.
The challenge now for Leaitherland — who became DWF’s managing partner in 2006 aged just 36 and wowed the market with his bold acquisition of stricken northern giant Cobbetts in 2013 — will be to keep everyone at his firm bought into his ambitious vision.
One of the few law firm leaders to have a Twitter account, Leaitherland’s tweets have sometimes been laced with hubris. For his followers it will be interesting to see how he handles himself now life is tougher.