After what has been an eventful year notwithstanding the havoc wrought by the coronavirus crisis, Freshfields Bruckhaus Deringer has closed out the Magic Circle reporting season by announcing a 3% revenue increase to £1.52bn and flat net profit at £685m.
Profit per equity partner (PEP) stood at £1.82m, slightly down on last year’s £1.839m.
While not as pacey as last year’s performance, when turnover grew £70m to £1.472bn on the previous year’s £1.403bn and net profit edged up 1% to £688m from £683m in 2017/18, the more muted results nevertheless come on the back of a level of investment in the US business unparalleled among the firm’s peer group.
Last October, Freshfields took a surprisingly adventurous tack with the hire of a four-partner M&A team in Wall Street, led by prominent M&A veteran Ethan Klingsberg (pictured), from Cleary Gottlieb Steen & Hamilton.
The move was a substantial shot in the arm for Freshfields’ heady stateside ambitions. Then, early this month the firm announced it had recruited five senior lawyers from major US firms to launch a practice in Silicon Valley under the leadership of Davis Polk & Wardwell securities partner Sarah Solum.
Freshfields’ financials on Wednesday (22 July) follow hot on the heels of Clifford Chance (CC)’s the previous day, with robust growth in the face of the most challenging trading environment since the banking crisis. The City leader said revenues for the 2019/20 period were up 6% to £1.803bn, while profit per equity partner increased 5% to £1.69m. Partnership profit for the year totalled £666m, an annual increase of 5%.
The performance also slightly outpaced the 4% growth at Allen & Overy, and compares favourably with Linklaters, which last week confirmed that its revenue for 2019/20 was up 0.7% to £1.64bn.
Freshfields pointed to a particularly strong year for its antitrust, litigation, arbitration and investigations teams, which it said had achieved ‘record revenues’, thanks in part to defending Volkswagen in civil, regulatory and criminal claims brought globally in response to the emissions case.
Other highlight matters for the year saw Freshfields act on Aon’s merger with Willis Towers Watson, the London Stock Exchange Group’s acquisition of Refinitiv and Paypal’s participation in a fundraising by GoPay.
Financial sponsor-led standouts drove double-digit growth and included advising on the Cinven, KKR and Providence consortium’s takeover of MásMóvil Ibercom.
The technology sector has also fuelled business, with Freshfields advising Google on its $4.5bn investment in Reliance Jio and Hewlett Packard Enterprise on its acquisition of Silver Peak. A significant investment in the firm’s own technology was also cited as a key move as it transitioned to remote-working during the Covid-19 lockdown.
The year also saw a number of reversals that management will be keen to put behind it. Unsavoury headlines last year around the SRA’s prosecution of former London restructuring partner Ryan Beckwith are unlikely to be forgotten in a hurry. The firm also suffered several blows in the form of departures, not least when the well-respected M&A partner Sam Newhouse decamped to Latham & Watkins earlier this year.
Alan Mason, global client partner, said: ‘Technology and life science businesses are increasingly shaping the global economy, and this is being accelerated by Covid-19. Our continued US expansion means we are ideally placed to help these companies achieve their ambitions. Top-tier US talent is critical.’