The first of the Magic Circle firms to disclose its 2013/14 half year (H1) results, Allen & Overy (A&O) has done so in reasonable style, starting the year with a 7.5% rise in revenues thanks in large part to strong performances in its litigation and finance practices.
H1 turnover at the 2,700-lawyer firm increased to £608m, marking a significant improvement on this time last year, when its 2012/13 H1 revenues dipped by 2.7% on the previous year from £582m to £566m.
While A&O, in keeping with the majority of City firms does not disclose its mid-term profits, managing partner Wim Dejonghe (pictured) told Legal Business that the results were ‘encouraging’.
The firm has attributed its recent financial success to an improvement in trading conditions in most markets, with particularly strong performances in London and across Asia Pacific. In terms of sectors, the litigation practice is said to be heavily engaged across New York, London and Hong Kong in dealing with fast moving foreign exchange probes over the past six months.
However the increase in finance work, particularly capital markets, has been a bigger surprise. A&O’s finance practice recently advised on the proposed recapitalisation of the Co-operative Bank and represented the export credit agencies and commercial lenders on the $5bn financing for the $9bn Nghi Son Refinery and Petrochemical Project in Vietnam.
Elsewhere the transactional market remains slow but the firm pointed to its high profile roles advising GlaxoSmithKline on the £1.35bn disposal of its nutritional drinks brands Lucozade and Ribena to Suntory Beverage & Food, and Novartis on the $1.7bn sale of its transfusion diagnostics unit to Spanish company Grifols.
Dejonghe said: ‘We expected a strong performance in litigation, but the one that really outperformed my expectations was capital markets.
‘South East Asia has always been a strong market for the firm, but I was pleasantly surprised by our results in China and Hong Kong, considering the growth in those markets has slowed down and many players have now entered the market; there are now 254 law firms in China.’
Dejonghe added that work has slowed down in Continental Europe while recovery in the US has been healthier.
‘These results put us in a very strong position at the half-year given that many markets around the world are only showing early signs of recovery,’ he added. ‘They also underline that our strategy continues to deliver and that our global footprint provides an ideal hedge to the varying conditions in the global economy. We will continue to remain focused on our competitiveness to ensure that we can build on what has been a very encouraging first half.’
The results come as the H1 results revealed so far have told a positive story, with Clyde & Co, Gateley, Trower & Hamlins and Weightmans all turning out an increase in revenue as Olswang’s H1 revenue jumped by 15% and Field Fisher Waterhouse saw a spike of 7% in its turnover.