The members present their annual report and financial statements for the year ended 31 December 2024.
The principal activity of the Limited Liability Partnership continued to be that of the provision of legal services from offices in London. The Limited Liability Partnership provided legal services from offices in Paris until a decision was made in September 2022 to close it.
The results for the year and the financial position at the year end were considered satisfactory by the members.
The Limited Liability Partnership has two categories of member: equity partners and fixed share partners.
Fixed profit shares are paid in twelve annual instalments during the year to which they relate. Bonuses profit shares payable to fixed share partners are normally calculated and paid in April following the year to which they relate.
Equity partners are also equity partners of the parent LLP. After the allocation of profits to fixed share partners, residual profits of the LLP are allocated to a bare trust, of which all equity partners are beneficiaries. The parent LLP takes responsibility for the allocation of the combined profit of the parent LLP and the bare trust, and for distributions to all equity partners of the LLP and parent LLP. The profit allocated to the bare trust is transferred to the intercompany balance between the LLP and the parent LLP; cash movements between the LLP and the parent LLP occur on an ad hoc basis depending upon the working capital requirements of the businesses.
The capital requirements of the LLP and the parent LLP are determined by the Management Committee and are reviewed regularly. Each fixed share partner is required to subscribe capital to the LLP, unless otherwise agreed. The amount of capital subscribed by each member is usually linked to earnings allocated to that member as a fixed share. On leaving the partnership, a member's capital is usually repaid within 12 months for fixed share partners and within 36 months for equity partners. Equity partners subscribe capital to the parent LLP and on elevation from fixed share partner to equity partner their capital in the LLP is transferred to the parent. There is no opportunity for appreciation of capital subscribed. Just as incoming members introduce their capital at “par”, so the retiring members are repaid their capital at “par”.
The designated members who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, Moore Kingston Smith LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
The members are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008) requires the members to prepare financial statements for each financial year. Under that law the members have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice. Under company law (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008) the members must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Limited Liability Partnership and of the profit or loss of the Limited Liability Partnership for that period. In preparing these financial statements, the members are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Limited Liability Partnership will continue in business.
The members are responsible for keeping adequate accounting records that are sufficient to show and explain the Limited Liability Partnership’s transactions and disclose with reasonable accuracy at any time the financial position of the Limited Liability Partnership and enable them to ensure that the financial statements comply with the Companies Act 2006 (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008). They are also responsible for safeguarding the assets of the Limited Liability Partnership and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
We have audited the financial statements of Brown Rudnick LLP (the 'Limited Liability Partnership') for the year ended 31 December 2024 which comprise the Statement of Comprehensive Income, the Statement Of Financial Position, the Reconciliation of Members' Interests, the Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the members' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the limited liability partnership’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the members with respect to going concern are described in the relevant sections of this report.
Other information
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
The objectives of our audit in respect of fraud are: to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the Limited Liability Partnership.
Our approach was as follows:
We obtained an understanding of the legal and regulatory requirements applicable to the Limited Liability Partnership and considered that the most significant are: the Companies Act 2006 as applied to Limited Liability Partnerships by the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008, the regulations of the Solicitors Regulation Authority, data security regulations (GDPR), labour and tax regulations, the Limited Liability Partnerships SORP, and UK financial reporting standards as issued by the Financial Reporting Council.
We obtained an understanding of how the Limited Liability Partnership complies with these requirements by discussions with management and those charged with governance.
We assessed the risk of material misstatement of the financial statements, including the risk of material misstatement due to fraud and how it might occur, by holding discussions with management and those charged with governance.
We inquired of management and those charged with governance as to any known instances of non-compliance or suspected non-compliance with laws and regulations.
Based on this understanding, we designed specific appropriate audit procedures to identify instances of non-compliance with laws and regulations. This included making enquiries of management and those charged with governance and obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Use of our report
This report is made solely to the Limited Liability Partnership’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006 (as applied by the Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008). Our audit work has been undertaken so that we might state to the Limited Liability Partnership’s members those matters which we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to any party other than the Limited Liability Partnership and the Limited Liability Partnership’s members as a body, for our work, for this report, or for the opinions we have formed
Brown Rudnick LLP is a Limited Liability Partnership domiciled and incorporated in England and Wales. The registered office is 8 Clifford Street, London, W1S 2LQ. The partnership number is OC300611.
These financial statements have been prepared in accordance with the Statement of Recommended Practice "Accounting by Limited Liability Partnerships" issued in December 2021, together with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008.
The financial statements are prepared in sterling, which is the functional currency of the Limited Liability Partnership. Monetary amounts in these financial statements are rounded to the nearest pound.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The limited liability partnership generated a profit before members' remuneration of £7,548,133 (2023: £4,324,082) for the year ended 31 December 2024. At the balance sheet date the limited liability partnership had net assets attributable to members of £29,148,537 (2023: £26,394,824) including cash at bank of £1,526,827 (2023: £2,832,824).
At the time of approving the financial statements, the members of the Management Committee of Brown Rudnick LLP (organised under the laws of England and Wales) (“BR-UK”) have a reasonable expectation that BR-UK has adequate resources to continue in operational existence for the foreseeable future.
BR-UK continues to thrive at every level, including through recruitment and elevations of partners, associates, and trainees. The practice is highly-regarded by our clients and our peers and is viewed as a platform in which lawyers can grow their practices. The management team actively and strategically manages its practice focus.
A review of detailed budgets and cash flow forecasts has been completed on which the BR-UK Management Committee is satisfied that BR-UK has adequate resources to continue in operational existence for the foreseeable future.
Thus, the BR-UK Management Committee continues to adopt the going concern basis of accounting in preparing the financial statements.
Fee income represents revenue earned from work undertaken by fee earners under a wide variety of contracts to provide professional services. Revenue is recognised as earned when, and to the extent that, the firm obtains the right to consideration in exchange for its performance under these contracts. It is measured at the fair value of the right to consideration, which represents amounts chargeable to clients, including expenses and disbursements but excluding value added tax.
Revenue is generally recognised as contract activity progresses so that for incomplete contracts it reflects the partial performance of the contractual obligations. For such contracts the amount of revenue reflects the accrual of the right to consideration by reference to the value of work performed. Revenue not billed to clients is included as accrued income in debtors and payments on account in excess of the relevant amount of revenue are included as deferred income within creditors.
Where fee income is contingent on events outside the control of the firm, the outcome of the revenue transaction cannot be estimated reliably until the contingent event occurs. Prior to that date revenue recognised is restricted to the level of expenses incurred.
Members' participation rights are the rights of a member against the LLP that arise under the members' agreement (for example, in respect of amounts subscribed or otherwise contributed, remuneration and profits).
Members' participation rights in the earnings or assets of the LLP are analysed between those that are, from the LLP's perspective, either a financial liability or equity, in accordance with section 22 of FRS 102. A member's participation rights including amounts subscribed or otherwise contributed by members, for example members' capital, are classed as liabilities unless the LLP has an unconditional right to refuse payment to members, in which case they are classified as equity.
All amounts due to members that are classified as liabilities are presented within 'Loans and other debts due to members' and, where such an amount relates to current year profits, they are recognised within ‘Members' remuneration charged as an expense’ in arriving at the relevant year’s result. Amounts recoverable from members are presented as debtors and shown as amounts due from members within members’ interests.
Once an unavoidable obligation has been created in favour of members through allocation of profits or other means, any undrawn profits remaining at the reporting date are shown as ‘Loans and other debts due to members’ to the extent they exceed debts due from a specific member.
As the LLP has an unconditional obligation to divide its profits in full and to return members’ capital on retirement, all profit is classified as members’ remuneration charged as an expense and all undrawn profit and partners’ capital are classified as Loans and other debts due to members, except for the original capital contribution by the parent LLP of £2 which is classified as equity.
Once an unavoidable obligation has been created in favour of members through allocation of profits or other means, any undrawn profits remaining at the reporting date are shown as ‘Loans and other debts due to members’ to the extent they exceed debts due from a specific member.
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
The company has a capitalisation policy of $1,000, in line with that of the US LLP. Therefore, any assets purchased for less than this amount are not included as tangible fixed assets in the Statement of Financial Position.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
The useful lives and residual values of assets are reviewed annually and adjusted if appropriate.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the Statement of Comprehensive Income.
Equity investments are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
At each reporting period end date, the Limited Liability Partnership reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs to sell and value in use.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and an impairment loss is recognised immediately in profit or loss.
Cash and cash equivalents include cash in hand and deposits held at call with banks.
The Limited Liability Partnership has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Limited Liability Partnership's statement of financial position when the Limited Liability Partnership becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances and investments in non-puttable ordinary shares, are initially measured at transaction price including transaction costs. With the exception of shares, they are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Investments in non-puttable ordinary shares for which the fair value cannot be measured reliably are measured at cost less impairment.
Financial assets are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. The impairment loss is recognised in the Statement of Comprehensive Income.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the Limited Liability Partnership transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Basic financial liabilities, including trade and other payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the Limited Liability Partnership’s obligations expire or are discharged or cancelled.
Provisions are recognised when the Limited Liability Partnership has a legal or constructive present obligation as a result of a past event, it is probable that the Limited Liability Partnership will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where the effect of the time value of money is material, the amount expected to be required to settle the obligation is recognised at present value. When a provision is measured at present value, the unwinding of the discount is recognised as a finance cost in profit or loss in the period in which it arises.
The costs of short-term employee benefits are recognised as a liability and an expense.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the Limited Liability Partnership is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to income on a straight line basis over the term of the relevant lease.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Gains and losses on translation are included in profit or loss for the period.
Classification of cash flows
Distributions of profit to members have been classified as operating cash flows, as the Designated Members consider these amounts are in substance paid for services rendered to the LLP as part of its revenue generating activities. Movements in intercompany balances have also been classified as operating cash flows as they predominantly arise in relation to intercompany recharges of revenue and costs.
In the application of the Limited Liability Partnership’s accounting policies, the members are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements have had the most significant effect on amounts recognised in the financial statements.
Unbilled revenue from legal services is assessed on an individual matter basis with revenue earned being ascertained based on time spent to date. Unbilled time is subject to management review and time as measured at standard hourly rates is adjusted where this differs from the amount that is expected to be recovered. For contingent matters where the outcome cannot be estimated reliably and revenue is recognised to the level of expenses incurred, the level of expenses that has been incurred is estimated by reducing fee earner time at standard rates by an estimate of the profit element based on actual historic profit rates. Partner time is excluded.
The LLP makes an estimate of the recoverable value of trade debtors and other debtors. When assessing impairments of trade and other debtors, management considers factors including the ageing profile of debtors and historical experience.
The annual depreciation charge for land and buildings and fixtures, fittings and equipment is sensitive to changes in the estimated economic useful lives of the assets. The useful economic lives are re-assessed annually. See note 9 for the carrying amount of the assets, and note 1.5 for the useful economic lives for each class of asset.
An analysis of the Limited Liability Partnership's turnover is as follows:
The average number of persons (excluding members) employed by the partnership during the year was:
Their aggregate remuneration comprised:
In September 2022 the Limited Liability Partnership made the decision to close the Paris office.
Trade debtors are stated net of bad debt provision amounting to £10,453,952 (2023: £7,594,512).
The Limited Liability Partnership operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the Limited Liability Partnership in an independently administered fund.
The charge to profit or loss in respect of defined contribution schemes was £202,397 (2023 - £246,990).
In the event of a winding up the amounts included in "Loans and other debts due to members" will rank equally with unsecured creditors.
At the reporting end date the Limited Liability Partnership had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
No remuneration for Key Management Personnel has been recognised in the financial statements during the year or prior year. All Key Management Personnel are Equity partners who are remunerated by the parent LLP from the combined profits of the LLP and the parent LLP.
The ultimate controlling party of the Limited Liability Partnership is Brown Rudnick LLP, a United States Limited Liability Partnership, registered in the Commonwealth of Massachusetts.
In accordance with FRS102 section 33 paragraph 33.1A, the company has not disclosed transactions with wholly owned subsidiaries or its parent company within the same group.