Clifford Chance has emerged as the strongest-performing Magic Circle firm financially for 2013/14, as the UK elite all unveiled unaudited sterling figures to coincide with the launch of the Global 100 this month.
The 3,000-lawyer firm has revealed a 7% rise in revenues to £1.36bn, up from £1.27bn in 2013. Profit per equity partner (PEP) has increased significantly to push average partner drawings back to over £1m after a blip last year, up a trend-busting 16% to £1.14m from £983,000.
Senior partner Malcolm Sweeting told Legal Business that a revitalised domestic market was a key component of the firm’s success: ‘We had a very strong year in London, which is connected to the EMEA region. The idea that growth is dead in the original key territories is wrong. Performance this year for the firm would suggest that.’
This was a point echoed by Allen & Overy (A&O) global managing partner Wim Dejonghe, whose firm has performed the strongest of the Magic Circle firms over a five-year period. A&O has announced a 2% revenue increase for 2013/14 to £1.23bn, while PEP was up 7% to £1.12m. A factor in the increase in profitability has been the success of A&O’s Belfast office, opened in 2011, which Dejonghe said contributed seven-figure costs savings during the last financial year.
‘We expect further growth in London – there was a nice pick-up in revenues there over the last year,’ he added. ‘Banking and litigation are very strong; corporate is recovering. Capital markets was busy up until the end of 2013 and softer in the first quarter of 2014, but has now picked up again.’
Meanwhile, Linklaters turned in a much stronger performance in 2013/14, revealing solid 5% turnover growth to £1.26bn, while PEP increased by 6% to £1.39m. Managing partner Simon Davies also attributed the success to a revitalised European market, particularly in Germany and the UK.
Freshfields Bruckhaus Deringer, last year’s leading Magic Circle performer, experienced a slightly muted year in 2013/14. Its turnover increased by 1% to £1.23bn and PEP increased by 6% to £1.48m.
A renaissance in domestic markets, particularly for corporate work, is a prevailing theme of this year’s Global 100 report, published on pages 29-81. And while the UK Magic Circle performed impressively in their home currencies, in dollar terms – thanks to a weaker pound in 2013 and a dominant US market – these firms continue to be outpaced by US rivals. The Wall Street elite have seen an impressive return to form on the back of big-ticket M&A mandates, with Simpson Thacher & Bartlett the most impressive performer of all in 2013 with turnover increasing 15% to $1.13bn, alongside double-digit profit increases with profit per lawyer up 18% to $701,000 and PEP up 19% to $3.17m.
The Global 100 as a whole managed 4% growth in total revenues to $88.63bn, a figure somewhat flattered by a number of transformative mergers coming online, such as Norton Rose Fulbright, the tripartite combination that created Dentons a year ago and the full integration of Ashurst with its Australian business in 2013.
Total profit was $33.95bn, an increase of 5%.