Herbert Smith Freehills announced a striking 30% increase in profitability as part of its 2020/21 financials today (13 July), with strong international contributions underlining the firm’s robust overall pandemic performance.
The firm’s profit jumped to £366.9m from last year’s £283.2m. This represents an emphatic comeback after profits tumbled by 8% last year amid steep operating costs.
Profit per equity partner (PEP) similarly shot up by a significant margin, increasing 28% from £857,000 to nearly £1.1m.
There was also a respectable 5% rise in revenues, which sees the firm pass the £1bn turnover threshold for the first time. Revenue grew to £1.038bn from last year’s £989.9m, marking eight consecutive years of turnover growth.
The impressive results are no doubt in part a reflection of the firm’s swaggering response to the pandemic, in which HSF picked up headline mandates for the Financial Conduct Authority in the landmark Covid-19 insurance test case and advised Travelport in its dispute with Wex – one of few genuine force majeure cases directly related to the pandemic.
Chief executive Justin D’Agostino (pictured) hailed the firm’s revenue increase, which he attributed to ‘client demand and increased market share’ and the impact of HSF’s international network, telling Legal Business that London revenues were up 10%, while they were up by ‘a similar margin’ in Australia and China was up 7%.
He also reported that a drastic reduction in various operational costs as a result of the pandemic, such as travel and office overheads, also contributed to the major uptick in profit. However he refused to consider the positive year as a one-off: ‘Some savings are one-off but a lot of it comes from embedded different approaches we have taken to travel and other discretionary costs since before the pandemic. I came in with a mandate to improve our productivity and financial performance. Twelve months ago we had seen falling profits, so we shifted towards real financial rigor and discipline.’
D’Agostino also highlighted the contributions from the firm’s entire staff, who he said ‘performed at the highest level in the toughest of conditions’. In March, HSF announced a one-off payment of 5% of salary for all its staff, in recognition of their hard work throughout the year. Also in March, the firm elected a new senior partner, with Australia-based partner Rebecca Maslen-Stannage nominated to succeed London’s James Palmer.