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CC posts flat results but sublets half of Canary Wharf HQ to Deutsche Bank to slash costs

Clifford Chance (CC) has posted subdued results for 2014/15 amid a weakening euro, with revenue falling slightly to £1.35bn and profits per equity partner (PEP) edging down 2% to £1.12m.

Hit by a decline in income from continental Europe, which makes up 35% of CC’s turnover, and moderate growth at its London office, the Magic Circle law firm’s net income was down 2% to £450m.

In common with peers with substantial eurozone exposure, its reported results have been hit by the pronounced weakness of the euro against sterling. The firm estimates that underlying revenue growth was more robust than the 1% fall  in sterling accounting, with revenue expanding 3% on a constant exchange rate basis. UK revenue, meanwhile, edged up 2% to £477m. PEP fell by £30,000 to peg the average partner pay at £1.12m, down from £1.15m.

Asia-Pacific was a bright patch, with revenues up 5% to £205m meaning that the region now contributes 15% of turnover. CC’s Delhi-based knowledge centre received around 4,000 instructions last year, with Layton pinpointing that strong growth as behind the firm was now ‘working on India 2.0’. He added: ‘Our India operation has been a real success for us and we now think it’s time to go to the next level. We believe there are ops to increase usage of the Knowledge Centre team and expand its areas of work.’

Caroline Firstbrook, who arrived as chief operating officer earlier this year from management consultancy Accenture, will lead the development of the Delhi outfit. The firm’s US results were up 2% to £156m, 12% of its income.

Announcing the results, CC confirmed that it has secured a substantial deal to slash its UK cost-base, after subletting 400,000 sq ft of office space at its headquarters in Canary Wharf to Deutsche Bank.

The move will herald a substantial shake-up of CC’s operations in Canary Wharf, where the firm currently houses over 1,500 permanent staff, to accommodate the move, including taking on another site locally to handle support staff.

CC has around 1m sq ft of office space at Canary Wharf, though it already has a number of sub-lets in the 33-storey building at 10 Upper Bank Street.

The property shake-up will take place in the autumn in a move CC managing partner Matthew Layton (pictured) says will come from ‘using space more effectively’ and guaranteed ‘no job losses as a result’.

The firm will also be letting go of its Ukrainian office, which opened in 2008 and currently holds 14 lawyers, with the office set to become an independent practice by the end of 2015.

The move will see CC’s three Kiev managing partners – Olexiy Soshenko, Dmytro Fedoruk and Yehven Deyneko – split off to form a new outfit called Redcliffe Partners. Under the agreement, CC and Redcliffe Partners will enter into a ‘best friends’ referral arrangement, with the London firm’s current Kyiv-based lawyers and business services staff all transferring to Redcliffe upon completion. Layton commented: ‘The firm has an ambitious new global strategy which is dependent on us strictly concentrating our investment and resources on our priorities. The new arrangement frees up the Redcliffe team to pursue exciting opportunities for further developing their client offer in Ukraine.’

Magic Circle rival Allen & Overy recorded a 4% rise in revenue for the last financial year to £1.28bn, while Linklaters posted a 1% rise in revenue to £1.27bn.

See Legal Business’s Global 100 coverage tomorrow to find out how CC fares against the world’s largest law firms