Author: wilks

I called myself wilks when I first started blogging. The idea was that it would afford a measure of anonymity. For much the same reason, there was no photo. Times change, hence the photo, but I decided that even when I changed the blog’s title at the start of 2009, I should remain wilks.

Simple mathematics

From a recent post by Bruce MacEwen’s in Adam Smith, Esq.

Finally, let us never underestimate the yin and the yang of the high degree of leverage on law firms’ P&L’s. That is to say, once you’ve covered your costs (which are, for the record, people @ ~60%, occupancy @ ~30%, and “everything else” @ ~10%), then essentially every additional dollar of revenue drops directly to the bottom line.

Also, if the average law firm’s gross margin is, say, 35%, then–if you do nothing to change your cost base–a 17.5% drop in revenue (highly plausible in this environment) implies a 50% drop in profits.

Add to that the highly liquid market for lateral partners and you have the ingredients for immediate and severe problems.

OK, it is not quite the same in the UK (clearly US firms work on a somewhat higher margin) but close enough.

You cannot keep an old dog down

A post in the Yahoo Financial Stability Group this morning

You may be amused by the following quote from a well-known 19th century economist……

Moderator

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“Owners of capital will stimulate working class to buy more and more
of expensive goods, houses and technology, pushing them to take more
and more expensive credits, until their debt becomes unbearable.
The unpaid debt will lead to bankruptcy of banks, which will have to be
nationalized, and State will have to take the road which will
eventually lead to communism.”

Karl Marx, “Das Kapital” 1867

Essex crabs

The drive home this evening was brightened up by a report on PM (Radio 4) about Chinese mitten crabs, and the damage they are causing along the Thames. Apparently, however, they are edible when they are sexually active.

When the interviewee from the Natural History Museum was asked by Eddie Mair when that was, the answer was that we don’t exactly know: but that when they feel the urge, they move towards more saline water; so  they decamp from their Chiswick Eyot burrows and make their way downstream to Deptford. The suggestion was that they should then be harvested and sold ~ I suppose to the Chinese.