7 percent increase in revenue and 14 percent increase in average profits per partner in North America
Baker & McKenzie, one of the world’s largest law firms, today announced that the Firm’s global fee income for its fiscal year 2003 (ended June 30, 2003) exceeded US$1.134 billion, an increase of 7 percent over the previous year. Of particular note was the contribution of the North American region where not only revenue grew by over 7 percent but also average profits per partner grew by 14 percent over fiscal year 2002.
The leadership of Baker & McKenzie attributes these strong results to a combination of the continued success of the Firm’s effort to develop its domestic practice in the US, strong client demand and the rewards of the ongoing implementation of the Firm’s enhanced business model for North America.
Under the new business model, the Firm’s 11 US and Canadian offices have undergone a business model reorganization in order to transition the business model from its traditional individual office profit-center approach, to a region-wide profit model which effects the full financial integration of all the office profit centers. The new model was devised to support the Firm’s ‘Best Client Teams’ goal, which aims to ensure that clients have access to the best team of attorneys available to advise them, regardless of geographic location.
Results of the new model to date are impressive – with both revenue and profit rising each financial year since it was rolled-out – since 2001 revenue per lawyer in North America has increased by 18% percent and average profits per partner by 27% percent.
Also announced today is the successful passing of a vote by the North American partners to implement the next stage of the new business model for North America, i.e. a new compensation system across the region. The vote, which passed by approximately 95% of the partners, will ensure that the Firm’s financial compensation system is firmly aligned with its business objectives. The traditional formulaic method of compensation, which incentivizes individual performance on an objective basis, has been changed to a new and subjective partner compensation model. This new model focuses not only on individual performance but also on collective performance and incentivizes partner contributions to financial results, best-team client servicing, practice growth and development, quality management, professional development and training of associates and knowledge management.
Commenting on today’s announcements, John Conroy, North American Managing Partner, said, “The encouraging financial results we have returned since the initial roll-out of our financial integration program in North America speak for themselves and are testament to the success of our new business model and the benefits it offers to our clients. Our shared belief in and commitment to our ‘Best Client Teams’ approach to client service has always been an integral part of the Baker & McKenzie ethos but, going forward, we will have not only the organizational structure but also the financial incentives in place to ensure it is as much a part of our business model as it is of our cultural heritage.”