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Freshfields lags Magic Circle as management pay drops 20% amid muted top line growth

The management of Freshfields Bruckhaus Deringer has seen a 20% drop in pay even as its Asia business offered a silver lining with double-digit turnover growth.

Published today [31 January], the City giant’s LLP accounts for the financial year to 30 April 2019 make for subdued reading as the firm grew its top line by only 4.2% – or £61m – to £1.493bn from £1.432bn the previous year. Management pay fell from £18.6m to £14.9m.

The accounts show a lagging financial position in revenue terms among its Magic Circle peers to have reported so far. Clifford Chance’s (CC) turnover reached £1.693bn after adding £70m to its top line in a year of 4% revenue growth and Allen & Overy (A&O) benefited from a foreign exchange gain of £9m to achieve 5% revenue growth to £1.627m from £1.552m in 2018.

Freshfields’ revenue growth in Europe was especially lacklustre, with the firm increasing turnover in its most mature region by a slim 1.5% to hit £1.15bn. Asia revenues took a turn for the better, growing 27% to £157m from £124m the previous year. Also a fillip, given its increasingly urgent US strategy, will be a 7% uptick in revenue from its stateside business.

Operating profit grew 6% to £508.4m even as the firm invested £1.8m in its office relocation to Bishopsgate later this year. Staff costs increased around 4% to £692.4m in spite of its secretarial and support staff numbers falling from 2,062 people to 1,987.

Other headline figures at CC were a 5% decrease to its UK LLP’s operating profit to £260m amid rising pension costs, while management at City rival Allen & Overy (A&O) saw an 8% pay rise to £16m.

The Freshfields LLPs cap off an eventful financial year at Fleet Street. It was the year buyout star Adrian Maguire finally succumbed to the allure of Kirkland & Ellis in January 2019 and restructuring partner Ryan Beckwith was suspended amid #MeToo allegations in April ahead of a damning and high-profile Solicitors Disciplinary Tribunal prosecution.