Legal Business Blogs

Freshfields rides out choppy deal market to outpace CC and A&O with £82m revenue hike

Freshfields Bruckhaus Deringer posted a revenue increase of 7% to £1.327bn for the 2015/16 financial year, clawing back from last year’s flat results when revenues rose just 1% to £1.245bn. The increase puts the firm well ahead of Magic Circle peers Clifford Chance (CC) and Allen & Overy (A&O), which posted revenue increases of 3% and 2.3% respectively.

Co-managing partner Stephan Eilers (pictured) said while the Brexit vote had been a surprise, the firm had the largest and probably the most successful financial practice in Frankfurt and the strongest EU/regulatory practice in the financial markets in London and in Brussels.

He added: ‘The main reasons for our success across the year, particularly on the revenue side are continued growth in the US with the corporate enlargements we have taken there.

‘The German-US links have strengthened with the corporate enlargement in the US and on the cost side Manchester is now taking hold of our efficiency issues.’

The Magic Circle firm also increased its profits per equity partner (PEP) to £1.473m, just slightly under its 2013/14 figure, which sat at £1.48m before the firm saw an 8% dip last year bringing PEP to £1.37m.

The year was marked by the opening of the firm’s Manchester back-office centre, stripping back its worldwide support network in the process. Dubbed the Global Centre, Freshfields hopes to extend the function to other international offices, offering a 24/7 service, starting with Europe and Asia.

Eilers added that the legal services centre should post more than £10m in turnover next year, and while this year it was still an investment, this year it should break even.

Across the next five years the firm aims to open two more international hubs with one earmarked for Vancouver, Canada and one in Asia.

The firm advised on 190 M&A deals worth $587.6bn in 2015 according to Dealogic’s global league table, taking on a number of key roles in notable transactions across the past year. Freshfields continues to instruct Anheuser-Busch InBev in its takeover bid for SABMiller, which would create a $275bn company and won the mandate advising BG in the £47bn takeover by Royal Dutch Shell. It also took a lead role advising the London Stock Exchange (LSE) in its third attempt at a tie-up with Deutsche Börse, which would create a combined value of about £21bn.

Of the Magic Circle firms, both CC and A&O have posted more subdued increases in revenue. The first of big four to release their financials this year, A&O, posted another year of growth with revenue rising by a modest 2.3% to £1.31bn. Amid the slowdown in top line growth PEP remained stable at £1.2m following last year’s 8% jump. Meanwhile CC’s revenues were up 3% to £1.39m while PEP has leapt by 10% to £1.23m, the firm’s highest to date.

Read our wrap of big four 2015/16 financial results here.

Read more about the firm in: ‘The last champions – meet the leaders intent on sealing Freshfields’ place in the global elite’