Allen & Overy (A&O) is the latest Magic Circle firm to release its LLP accounts for the 2013/14 financial year, posting a 7% profit-before-tax increase from £497m to £532m, while average profits per full partner were up 6.7% to £1.12m.
The firm also posted net assets of £378m, up by 9.2% from £346m in 2012/13. In comparison turnover was less impressive, growing 1.6% to £1.21bn from £1.19bn the year before. A&O said that while its banking and litigation practices saw strong growth, volatile markets particularly challenged the firm’s capital markets and corporate groups. ‘We continue to see intense competition, pricing challenges and pressure from clients to reduce total legal spend,’ said the firm in the filings.
A&O also saw lower operating costs in general, with staff costs reducing by £15m from £439m to £424m, mainly through greater efficiency savings from its Belfast legal and support services centre which, at the beginning of 2013, the firm moved a number of support roles to from Europe and the US. In October, A&O revealed plans to recruit a further 100 staff to the centre over the next five years after the number of matters being processed doubled in the financial year to April 2014. The fall in staffing costs was also aided by a £2.3m lower restructuring cost and reduced pension benefit.
Cost reduction was supported by a 4.1% decline in overall staff headcount. Headcount dropped from 4,628 to 4,439 with fee-earner heads reducing 5% and support staff numbers decreasing 3%. However, staff bonuses across the group increased 9.6% to £31m.
Partners’ capital contribution, on the other hand, was slightly lower than the previous year, totalling £146m in 2013/14, compared to £149m in 2012/13, while the total number or partners (526) was roughly the same as the year before. Average profit per full partner was £1.12m, up from £1.05m the year before, while the highest paid equity member took home £1.7m in 2013/14 – 6.8% more in comparison to 2012/13 when the highest paid partner received £1.6m.
Linklaters filed its 2013/14 accounts with Companies House in early December last year, revealing a turnover of £1.25bn and profits of £377m. However, the firm saw an increase in its staff costs from £566 to £597m.