Q&A: Matthew Jones on how SNR Denton's EMEA PEP rose by 48%

SNR Denton yesterday announced a 48 per cent year-on-year jump in profits per equity partner (PEP) and a 38 per cent YoY increase in profits in Europe, the Middle East and Africa (EMEA) in 2011/12.

The unaudited financial results for EMEA report that the firm achieved PEP of £350,000 and profits of £28m on revenues of £145m.

How did the firm achieve this substantial growth in profits over the past year? EMEA chief executive Matthew Jones reveals all to Managing Partner.

Which efficiencies were introduced in operations and service delivery?

There was a range of areas in which we focused our efforts.

There was a process of reshaping and resizing some of our offices – we’ve restructured our operations in Istanbul and Paris in the present period.

Moving along the spectrum, there have been a number of headcount reductions in several areas, not just in the lawyer and partner population, but also in business support staff.

We’ve also seen reductions in the range of variable costs – IT, IS, travel, marketing, our establishment costs, billing information – that kind of thing. And we’ve also seen reductions in some of our indirect employment costs in terms of the variable inputs from areas like shift work.

The other area in which we’ve seen quite a profitable outcome is in the financial discipline of the firm. We’ve been across-the-board increasing financial discipline around the promptness of time recording, billing and collection, just so that the wheels are turning much more effectively than before. And that of course inevitably leads to more profits arising from the existing workload.

What changes were introduced to further integrate sector knowledge, geographic reach and service line expertise?

Since the combination of Sonnenschein Nath & Rosenthal and Denton Wilde Sapte in 2010, we’ve embarked upon a very interesting and fruitful integration process. These are multi-year integrations because the business is so large and we are continually discovering new opportunities and crossovers as the business progresses and expands.

We’ve seen, therefore, that to increase the rate of improvement, there has to be more active collaboration between teams on both sides of the Atlantic and within the EMEA region itself. There has been greater focus on the organisation of our sectors, service lines and client service teams, so that people are working on a much more integrated basis in relation to those areas.

We’ve also introduced a programme that is very much targeted at educating people about the full range of capabilities and strengths of the firm and therefore improving cross selling. That’s been very effective and a high priority management initiative that’s been led from the top.

It’s a programme that we’ve generated ourselves – we haven’t brought in lots of external consultants for that. It’s had huge buy-in across the firm and has become in itself a very effective integration tool because, just by the process of getting involved in this programme, people have begun to see all sorts of possibilities within the business and their own practice areas.

People now have a much more integrated view of the firm’s sectors, geographic reach and service line expertise. We think that is important for all of our lawyers, because only once they have that holistic understanding of the firm do they become more effective both internally and externally with clients.

How has the firm measured the benefits of the combination in attracting new clients, work and lateral recruits?

As you would expect, we have some fairly automated processes for the collation of that kind of information. We have global processes that look at new business intake, track referrals from one region to another and track work that has been jointly pitched across regions and offices, including new clients and/or new panel arrangements.

We also have manual processes which intervene with the data and ensure it is correct and is not throwing up any anomalies. Then, once these originations are tracked and analysed, we report on them internally through various groups, including our global advisory committee on a quarterly basis. We produce a global report that gives people on that committee detailed itemised lists of instances of origination, trend analysis and the full tabulation of data.

We also look at business development tracking through our BD teams. This is more of a manual process and is part of their day job, but includes recording and tracking information across the regions, introductions, client meetings, client interactions, pitches and presentations.

What tends to happen is that each of these are tracked and updated in reports right to the end of the process – where there is a win or not or some other outcome – and looking at whether or not it generates revenue. Ultimately, this will lead into some profitability analysis when there’s a history of work to be analysed.

There are some other mechanisms that we use. A key growth area for us is bringing in lateral recruits, particularly at partner level. We have a process to make sure that all of our newly-joined partners are appropriately integrated. Through that, there’s a process of understanding from them the business they bring, the preparation they need to have and how it’s working. So, at the management level, that tracking is also going on.

Those are the tools that we use to measure the success of the combination. We always set out the objectives for measuring the success of the combination as being in those principal areas, what we call the ‘but fors’: work, clients or lateral recruits which, but for the combination, we would not have secured.