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Return to form for Herbert Smith Freehills as profits jump against slight revenue increase

Herbert Smith Freehills (HSF) has registered a sharp increase in profitability in its second full financial year since its merger, as revenues passed the £800m mark.

Boosted by a strong year for the firm’s corporate group and gains made in Asia, and enjoying a period of stability after suffering a number of big-name partner exits following the merger between the UK’s Herbert Smith and Australia’s Freehills in late 2012, HSF posted a 2% rise in revenue to £815m, up £19m. Profitability soared, with net profits increasing by 12% to hit £259.5m. As a result, profits per equity partner grew 8% to pass £800,000.

Mark Rigotti, co-chief executive, said: ‘A highlight of the year was the excellent performance of our transactional practices, demonstrating our ability to compete more successfully for premium cross-border mandates. The strength of our global disputes brand has also continued to bring in some of the highest-profile cases and reputational matters across the globe.’

In a renaissance year for the firm’s corporate group, HSF advised Telefónica on its agreement to sell O2 to Hutchison Whampoa, BHP Billiton on its $11bn demerger and Sky on its transformational purchase of Sky Italia and Sky Deutschland to become a Europe-wide television force. The firm also secured a number of high-profile panel appointments last year, making the roster of legal firms used by Royal Mail, Travis Perkins and EDF Energy.

Sonya Leydecker, co-chief executive, added: ‘London continues to be a strong performer, with the corporate and real estate practices recording outstanding years. Our transactional and disputes practices have driven a good year in Asia, particularly in China and Japan, and we continue to increase market share in Australia. There is a lot of momentum and confidence in the business. We look forward to continued growth through further investment in our network and our people and through innovation in the delivery of legal services.’

The firm recently lost its deputy senior partner, Sydney-based Mark Crean, to Jones Day after the influential partner failed to secure the senior partner post. The partnership elected London corporate heavyweight James Palmer to that position.

In June, the firm announced it was closing its Abu Dhabi office and consolidating its Middle East presence in Dubai. It is also accelerating its US development plans, launching consultations earlier this year to explore a US merger and further office openings outside of New York.

For Legal Business analysis on Herbert Smith Freehills, see: Consumed – Can burning ambition from Down Under recast Herbert Smith for the global stage?