The first of the Magic Circle to report financials this year, Allen & Overy (A&O) posted another year of growth with revenue rising by a modest 2.3% to £1.31bn. Last year turnover had risen by 4% to £1.28m.
Amid the slowdown in top line growth, profits per equity partner remained stable at £1.2m following last year’s 8% jump.
Profit before tax slid 1.4% to £562m with the firm pointing to accounting provisions for pensions and property costs as the reason for the dip.
Citing a particularly strong year for its global disputes and M&A practices, A&O boasted impressive performance in its London office although managing partner Andrew Ballheimer acknowledged a Brexit slowdown. He said: ‘The second half saw a slowdown with China, the oil prices and there’s obviously been Brexit. It’s been steady, it’s been solid and we’re pretty pleased.’
During the 2015/16 financial year the firm advised on over 1500 deals globally across M&A, debt and equity capital markets, loans and projects. Ballheimer (pictured) said: ‘Historically A&O’s always been a finance firm, but our corporate and M&A are now at the top tier. We’re now a very well-balanced business.’
A&O said alternative delivery models have contributed to the firm’s financial results with revenues for Derivatives Services unit aosphere climbing by 20% across the past financial year. The number of consultants in its flexible resourcing business Peerpoint grew by 75% following its Asia Pacific launch, while headcount in its legal services hub in Belfast also grew by over 20%. A&O refused to say how much these models generated in turnover.
Finance and operations director Jason Haines said: ‘These businesses create interest in the market. Clients come to us for the new products and that brings with it a lot of the traditional work as well. We’re creating new relationships and new opportunities.’
The firm has revealed its intentions to grow across US, China and Europe, with both Ballheimer and senior partner Wim Dejonghe setting their sights on funds, finance, private equity, TMT and regulatory compliance as sectors they will be looking to bulk up.
A&O has also worked on a joint venture with Deloitte, the first between a Big Four accountant and a Magic Circle law firm. The new service – dubbed MarginMatrix – will deploy automation to help banks address incoming global regulation of the $500trn over-the-counter (OTC) derivatives market. A&O will run the programme and provide legal input, while Deloitte will provide project management to large teams of negotiators in multiple jurisdictions.
Read our wrap of big four 2015/16 financial results here.