A year after recording the standout financial performance of the Magic Circle, Freshfields Bruckhaus Deringer has posted flat turnover for 2016/17 with a top line of £1.33bn.
The results for the firm follow a 7% revenue increase to £1.327bn in 2015/16, meaning turnover this year has increased by just 0.3%. Net income also dipped by 1% to £612m but profit per equity partner (PEP) increased by 5% to £1.547m, up from £1.473m.
However, Companies House filings this year showed turnover at Freshfields as £40m lower than previously reported revenue figures for 2015/16, with the firm stating that exchange rates were the reason for the discrepancy. Against those numbers, revenue this year is up by 3%.
Freshfields’ co-managing partner Stephan Eilers said: ‘Performance from our perspective is stable. We had a challenging year, particularly on the top line, but we’re broadly satisfied with the outcome. We cannot track – as no one can – in detail how these things develop in a £1.3bn business. This year we lost a number of partners in the upper age bracket through normal retirements – for example, Mark Rawlinson leaving us from Morgan Stanley. The London Stock Exchange/Deutsche Börse deal didn’t go through – so there are elements that we cannot track to a structural element.’
This year’s results are in contrast to Magic Circle rival Linklaters, which became the first of London’s big four to announce its results, posting a record high of £1.44bn in 2016/17, a 10% rise, although the leap was largely due to the strong euro and dollar and the weak pound. PEP increased 8% to £1.51m.
The past twelve months for Freshfields has been driven by a desire to improve efficiency with a number of initiatives. The firm completed the fit out of its low-cost services hub in Manchester which the firm opened in 2015. Six finance partners also left the Magic Circle firm at the end of April with two more losing equity status as Freshfields implemented a restructure of its finance practice.
The firm also offered 180 of its staff voluntary redundancy as part of a London secretarial support staff review, which reduced headcount down to around 160.
In February it was confirmed Freshfields had also signed a new lease in the City at 100 Bishopsgate giving it 255,000 square feet, reducing its London real estate by roughly a third.
Looking ahead, Freshfields plans to cut its 103-strong German partnership by up to 20 partners by 2020. It is also expected almost a quarter of the global partnership will be on the firm’s second-tier lockstep as early as 2020.
‘We combined our Cologne and Düsseldorf offices and we now see quite a lot of integration coming out of Europe,’ Eilers added. ‘We continue to invest in Manchester, which is now close to 600 people. The US platform is an area of investment as well.’