Herbert Smith Freehills (HSF) has recorded its ninth consecutive year of growth, with across-the-board increases in revenue and profit.
Global turnover saw a respectable 6% uptick from just over £1bn to £1.1bn, while overall profit increased 4% from £366.9m to £381.2m. Profit per equity partner (PEP), rose 6% from £1.099m to £1.163m.
Chief executive Justin D’Agostino hailed the ‘hat-trick’ of positive financial metrics, telling Legal Business: ‘The main story this year is strong client demand across the board, but particularly in our corporate and transactional teams. They have advised on transformative deals and are playing in the top league.
‘The other key contributor was our Asia-Pacific practice – we saw phenomenal results coming out of Australia, which has seen an M&A boom, as well as China and Hong Kong.’
The results were particularly pleasing for D’Agostino, who unveiled his ‘Ambition 2025’ strategy earlier this year, which placed a focus on boosting the firm’s transactional firepower as well as leveraging HSF’s historic presence in Asia. According to D’Agostino, the region was up by ‘double-digits’.
As outlined in our recent ‘HSF: Between two peaks’ long read, an underweight private capital offering has long been the elephant in the room for the firm. But HSF is certainly on the right track, boasting an impressive mandate from London, with partners Mark Bardell and Gavin Davies advising Evergreen Coast Capital Corporation on its $16bn acquisition of Nielsen Holdings.
And in terms of mainstream M&A, a team led by Australian M&A partners Tony Damian and Andrew Rich assisted Sydney Aviation Alliance with its A$32bn buyout of Sydney Airport – the largest cash and infrastructure takeover in Australia’s history.
The performance of New York was also eye-catching, with the firm also reporting double-digit growth. Commentators have long been touting HSF as a potential US merger suitor, but the slow and steady approach appears to be paying off. HSF made major lateral partner investment in the region last year, attracting financial litigation partners Marc Gottridge and Lisa Fried from Hogan Lovells.
Other international jurisdictions posting significant growth this year were Australia, Hong Kong, Belfast, the Middle East, Paris and Madrid, while London was highlighted as performing ‘strongly’.
HSF’s profit increase is even more flattering when considering its 34 global partner promotions last year, the largest promotion round in the firm’s history. Alongside 14 lateral partner hires, the firm’s partner headcount swelled by roughly 1 to 2%, according to chief financial officer Steve Bowers.
The firm is clearly serious about the war for talent – it attracted headlines earlier this month when it announced a bold 14% uptick in newly-qualified (NQ) salaries from £105,000 to £120,000. It did not take a shrewd observer to note the timing of HSF’s announcement, just a day after Allen & Overy declared it was freezing its NQ rates at £107,500.
D’Agostino played down any opportunism however: ‘There’s intense competition for talent in the international legal sector. We took steps to make sure our remuneration was competitive. We are making investments very deliberately – the firm is ambitious.’
As for the upcoming year and potential economic headwinds, D’Agostino is upbeat: ‘We are confident with the strategy that we have in place. Will we see the same M&A activity in the next 12 months? Probably not, but the market remains buoyant. We are keeping the momentum for the first few months of this year and in some senses, we are exceeding it.’
