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Message: <blockquote data-quote="Andrei Radu" data-source="post: 218425" data-attributes="member: 36777">There are a variety of different financial metrics you can look at:<ul> <li data-xf-list-type="ul">Profit Per Equity Partner (PEP): the headline indicator of financial success, but which is better seen as a very "rough" measurement due to its susceptibility to being "gamed" as mentioned before (by restricting equity partnership ranks or even de-equitsing - i.e. moving the low-performer equity partners to non-equity tier). A firm's PEP figures however extremely important in the market for attracting star lateral partners with big books of business - as partners seek to move to firms that will maximise their expected earnings.</li> <li data-xf-list-type="ul">Profit Per Partner (PPP): a lesser used metric, which is however arguably more useful than PEP in that it cannot be "gamed" by using the non-equity partnership tier. However, it is not a perfect indicator of success either, as it can also be artificially boosted if a firm has more fewer partners per associates than its rivals. </li> <li data-xf-list-type="ul">Profit Per Lawyer (PPL): this is a similar metric to the aforementioned revenue per lawyer (RPL), but instead of assessing the firm's capacity to generate high fees, it instead indicates the efficiency of its practice (as it also accounts for costs incurred per lawyer). </li> <li data-xf-list-type="ul">Profit Margin: this measure represents the portion of a firm's revenue that it retains as a profit after subtracting all of its costs (essentially, how much of the turnover goes to the profit pool pile of capital). This metric is highly correlated with the aforementioned PPL, but instead of assessing profitability with a view to the efficiency of utilisation of its practitioners, it assess it at a firm-wide level.  </li> </ul>Besides looking at these figures for the 2024/2025 Financial Year, you can also take a look at their figures in past years to ascertain a firm's growth and make inferences as to its potential future trajectory. Besides financial figures, a couple of other lesser known indicators of good business prospects and high quality of practice would be the following:<ul> <li data-xf-list-type="ul">Presence of Chambers ranked practitioners: it is incredibly hard for an individual partner to earn a Chambers ranking, so this is an indicator that they are an extremely accomplished lawyer in their area. As such, if a firm has a higher number of Chambers ranked partners in a practice area, this suggests it may have a stronger practice than its rivals; </li> <li data-xf-list-type="ul">Average deal/case values: as mentioned before, the average value of the matters a firm works on is a good indicator of the prestige of its practice - the higher the stakes for clients, the more they are willing to pay huge legal fees to have the best legal practitioners working on it. </li> <li data-xf-list-type="ul">Total deal value rankings: a somewhat more popular metric, a high annual ranking for total deal value advised on suggest a firm is doing well both in terms of quantity and of quality of mandates it works on. </li> </ul></blockquote>

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