Hogan Lovells, which earlier this week changed the way it reports some of its financial results, is set to trim its U.S. business services ranks by more than 40 staffers as part of a voluntary retirement program.
The Global 100 firm confirmed last month that it would offer voluntary retirement to some 400 staffers in the U.S. who had been with Hogan Lovells for at least five years, while also seeking to shed another 90 jobs, including 12 legal support positions, as part of a U.K. restructuring plan.
Hogan Lovells’ voluntary retirement program closed last week and the firm has now confirmed that between 10-to-12 percent of its 400 staffers in the U.S. accepted its offer, meaning that about 45 employees are now poised to leave the firm. Hogan Lovells initially expected that between 20 and 40 staffers—or about 5-to-10 percent of U.S. employees—would accept its offer. But despite the additional retirements, some jobs will not be lost.
“We are looking at each role on a case-by-case basis,” the firm said. “Some we will replace in the relevant office or elsewhere, some will be moved to Louisville and some we will not replace.”
Hogan Lovells launched a $9 million global business services center in Louisville last year that focuses on billing, conflict checks and technical support. The firm also has other back office operations centers in Birmingham, England, and Johannesburg, South Africa, both of which opened in 2014. Hogan Lovells, which is not looking to shed any other support service roles, expects that the “vast majority” of jobs it cuts in the U.K. will transfer to Johannesburg.
The move to trim staff was taken in part due to a number of early retirement requests Hogan Lovells said it had received from its business services ranks. The firm has said it would offer “enhanced terms” for those involved and noted that such downsizings would enable Hogan Lovells “to look again at our business services roles and where we deliver those services from.”
Hogan Lovells is also changing the way it reports its financial results in a push to more closely align the firm’s international partnership with its U.S. arm.
In a break from previous reporting, the global legal giant has filed results for its international limited liability partnership (LLP)—the partnership of London-based legacy firm Lovells, which is financially separate from its Americas arm—for the eight months leading up to Dec. 31, 2016.
From next year, Hogan Lovells will file results for the international LLP at the same time as its firm-wide figures, with both sets of accounts covering a calendar year. Historically, results for its international LLP have run up to the April 30 financial year-end more commonly used by law firms in the U.K.
Hogan Lovells said that the shift had been made “to align our accounting period with the way that we manage the business.”
For the eight months up to Dec. 31, 2016, Hogan Lovells’ international LLP took in £492 million. While an accurate comparison with the previous year is complicated by the change in reporting period and exchange rate fluctuations, the firm said that it represented a “notional year on year increase” of some 15 percent, and that underlying gross revenue is “up by around 4 [percent]” when disregarding the impact of currency shifts.
Profit for division among equity members came in at £144.8 million for the eight-month period, while the firm’s net cash position improved from £50.1 million on April 30, 2016, to £77.2 million at the end of 2016.
According to the firm, the profit figure represents “a notional year-on-year increase of approximately” 19 percent, but that if the effects of currency fluctuation were eliminated, profit before tax would be “broadly flat” when compared with the previous year.
The accounts also show that Hogan Lovells’ management team was paid £9.5 million for the eight-month period, compared to £8 million for the previous full financial year. Hogan Lovells said that the higher total pay figure was a result of a change in the definition of the management team, with board members also now included alongside the firm’s international management committee.
Hogan Lovells saw its global gross revenue rise 6 percent in 2016, to $1.925 billion, while profits per equity partner remained mostly flat at $1.253 million. About 52 percent of its gross revenue was generated in the Americas, with London and continental Europe contributing about 41 percent into Hogan Lovells’ coffers.
The firm announced this week its hire of Norton Rose Fulbright energy finance and projects partner Arun Velusami in London, although its Tokyo corporate head, Rika Beppu, decamped for Squire Patton Boggs in the city.