A little light shines on law firms' income

Business Opinion: Declan Moylan is probably not the most popular lawyer in Dublin right now. The Mason Hayes & Curran managing partner's decision to disclose his firm's fee income last year has opened a chink through which some weak sunlight has shone on the interesting topic of the finances of Dublin's big law firms.

The figure, which he volunteered in an article in this paper, was picked up by the UK legal publication the Lawyer, which used it as the basis for its own analysis of Irish law firms' income. In arriving at estimates for the larger Irish firms the Lawyer availed of the wealth of experience it has acquired over the years through carrying out similar exercises over the years on British firms.

While the approach is less than scientific, it's worth noting that none of the firms demurred when the figures were run by them ahead of publication. For the record, the turnover figures for the top five firms are: Arthur Cox, €66.5 million; McCann Fitzgerald, €60.8 million; A&L Goodbody €58.9 million; Matheson Ormsby Prentice €50.3 million and William Fry, €47.5 million.

The Lawyer also looked at some of the leading mid-sized firms, including Mason Hayes & Curran, which grew its fees to €23 million. Also included were O'Donnell Sweeney with fees of €19 million and Dillon Eustace with €18.5 million.

The firms were somewhat less co-operative when it came to profitability, but the survey puts the profit margin of the big firms at around 35 per cent. The Lawyer concludes that Arthur Cox is the most profitable and thus the best payer, with the highest paid partners - who also own a share in the firm - taking home something between €1 million and €1.5 million a year. But, the survey concludes, the profit per equity partner in the big firms works out at an average of €500,000.

The Lawyer survey is without doubt an interesting read, but does it really matter how much money the big law firms make?

Equally, whose business is it but their own as to how much their by-and-large hard working partners take home at the end of the day?

The second question is perhaps the hardest to answer as, without a doubt, most people's interest in how much lawyers are paid is simply prurient. It's a somewhat different thing to the chief executive of a quoted company disclosing his salary so that shareholders can asses if he is worth the money they are paying him.

The counter argument is that partners' pay and profits at legal partnerships pretty much amount to the same thing. Once you have the profit figures the average incomes are easily calculated.

And there are plenty of reasons for law firms to disclose their profits, ranging from the idealistic to the pragmatic.

But, the reasons why law firms don't disclose their financial figures are more interesting, and provide plenty of fodder for conspiracy theories. Of these the most compelling is that as long as the law firms all stay silent on profits their clients will not be able to come to a view as to whether they are getting value.

If, for example, you are a US multinational or some other big business and you arrive in Ireland and want to hire a law firm, you would presumably inquire from the various firms looking for your business what their fees are. By some happy coincidence you would find that they all charge pretty much the same and that the best ones in Ireland are not much cheaper than the better ones in London and New York. And why not, you would be asked. Most of them have experience in these markets and there are plenty of deals done in Dublin that would test the best British and US firms.

You might, however, baulk at paying these prices if it was obvious to you that your Irish lawyers did not carry anything like the same level of costs as their international peers. Their biggest saving - it would become apparent - is in the area of staff, particularly legal staff, who earn significantly less than counterparts abroad.

You might then also start using your considerable power to play the firms off against each other . Who knows where that might lead, possibly to the advent of real competition in a sector that just about everyone from the OECD to Eddie Hobbs seems to think could do with some.

We are obviously still some way off from this happy day. But last week we came a little closer. Two-and-a-half cheers for Mr Moylan.

jmcmanus@irish-times.ie