Two sides of the coin – can Travers and Macfarlanes still be classed as City bellwethers?
With their UK-centric business models and focus on private equity, if anyone was going to be hit hard by Lehman Brothers' 2008 collapse and the subsequent implosion of the global financial markets, it was top 50 UK law firms Macfarlanes and Travers Smith. Traditionally paired together as tight and conservative partnerships with a heavy transactional bent and a distinct absence of international networks, some rivals predicted the two would struggle to quickly regain the form that – pre-crisis – had set them apart from many of their mid-market peers. As Macfarlanes senior partner Charles Martin puts it: "Before the downturn the firm was more heavily transactional: private equity, corporate and real estate. All of this stopped in its tracks in 2008 – it was as though we were hit by a freight train in the night." In fact, while profits per equity partner (PEP) fell by more than 30% at both firms in the first chaotic financial year post-Lehman between 2007-08 and 2008-09, the pair's fortunes subsequently recovered well. Travers saw revenues soar by 11.6% in 2009-10 against a 53.5% rise in PEP, with that year's bumper growth helping to ensure that profits in 2012-13 were 5% higher than five years earlier. And while Macfarlanes has yet to regain its boom-time PEP high of £1.1m, at just shy of £990,000 for the last financial year it has come pretty close in far less buoyant market conditions.
When the financial crisis hit the City, many expected the fortunes of UK private equity heavyweights Travers Smith and Macfarlanes to plummet. Five years on and the pair – traditionally seen as bellwethers of the London legal market – have bounced back surprisingly well. Anna Reynolds finds out why
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