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LLP accounts: HSF records ‘exceptional’ revenue growth in Europe as profit holds steady

A standout performance in Europe helped Herbert Smith Freehills (HSF) boost global revenues by 11% in 2016/17, according to the firm’s latest filings with Companies House, although increased overhead saw operating profit barely move.

Global revenues rose from £832.2m to £920.8m, with the firm claiming that its EMEA region ‘generated exceptional revenue growth’. The accounts cited in particular ‘excellent performances in Paris, Moscow and Madrid’ as well as a robust showing from its Asia practices. Mark Rigotti (pictured), chief executive of HSF, commented: ‘It is very encouraging to see another year of growth as our brand continues to strengthen across markets and regions.’

While often overshadowed by its disputes practice, the accounts also highlighted the performance of HSF’s corporate arm. The firm reportedly advised on over 120 cross-border deals throughout the financial year, with a combined value of around $160bn. Among the major mandates was advising Sky on its proposed £18bn buyout by 21st Century Fox.

At the end of last year HSF shook-up its remuneration system, hiking plateau equity shares from 100 to 130 points. The move, which came weeks after Freshfields Bruckhaus Deringer pushed through similar reforms, has given HSF the freedom to extend its core pay ladder and allow top earners to take home well over £1.5m.

But the changes have not come into play in time to affect the most-recent accounts, with the firm’s highest-earning partner receiving the exact amount as in the previous financial year: £1.6m. The number of partners at the firm was essentially static, increasing from 373 to 374. The number of fee-earners at the firm rose 5% from 2,317 to 2,444, with overall headcount numbers increasing from 4,073 to 4,248.

HSF’s key management personnel, which consists of members of the firm’s global executive committee, took home a smaller share of profits in 2016/17. In 2015/16, the group took home a total of £8.7m, compared to £8.5m this year.

The muted payouts most likely reflect the fact that HSF’s operating profit also barely grew, rising less than 1% from £245.7m to £247.9m. The accounts also detailed payments made out to former members, totalling £3.9m, compared to £1.1m the year previous. The firm said the figure represents payment of profit entitlements to partners after they retired.