Legal Business

‘Great progress everywhere but fastest in the US’: CC posts 28% Stateside hike as PEP rebounds

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Financial results Clifford Chance

Clifford Chance (CC) has become the third magic circle to reveal its financial results for 2023-24, posting global revenue growth of 9% to £2.3bn, up from 5% last year. 

Profit, meanwhile, saw double-digit growth of 10%, up to £856m.  Profit per equity partner (PEP) was up slightly from £2m to £2.04m, back to the figure reported in 2021-22 after a slight dip last year. 

Commenting on the results, global managing partner Charles Adams said: ‘In another year of very strong performance, our record profits have enabled us to make substantial investments in our global team and operations. These strategic investments are already yielding benefits for our clients and our firm and position us for long-term success.’ 

When discussing the drivers of growth, Adams highlighted CC’s global litigation and disputes resolution and regulatory investigations teams, which accounted for more than 20% of the firm’s total income. He also emphasised the firm’s focus on the energy transition and infrastructure investment, as well as the technology sectors. 

The firm’s private capital sector was also highlighted, noting that in 2023, CC advised on 224 M&A deals with a total value of $208bn. Standout mandates during the year included advising Partners Group on the sale of public sector cloud software company Civica, while the firm has also been working with longstanding FTSE 100 client Informa on its £1.2bn offer for Ascential and acting for Unilever on the sale of its water purification business, Pureit, to water technology company A. O. Smith.

Over in the US, the firm saw a 28% increase in revenue. ‘We are making great progress everywhere, but fastest in the US,’ commented Adams. 

Along with its newly opened Houston office, and its offices in New York and Washington, the firm added a total of 19 partners during the year, bringing  total number in the US to 115. Notable hires include New York finance partner Jason Ewart, who joined from Latham & Watkins, and energy and infrastructure partner Marcia Hook, who moved from Kirkland & Ellis in Washington. 

In the firm’s Houston office, which has been open for just over a year, partner headcount has doubled to 14, with a total of 41 fee earners. New hires include M&A partner Jonathan Bobinger, who joined from Baker Botts, and energy and infrastructure partner Jonathan Castelan, who moved from Latham to co-head the firm’s energy transition group.  

The firm’s US progress will be closely watched by market peers given recent successes enjoyed by its magic circle competitors, with Freshfields making strides across the pond with an impressive run of high-profile hires, and Allen & Overy securing its long-awaited merger with Shearman & Sterling to form A&O Shearman.

elisha.juttla@legalease.co.uk

For more, see Magic Circle in the US: Running to stand still

Legal Business

‘Slightly alarming’ – Clifford Chance, Linklaters, A&O Shearman match Freshfields’ NQ pay hike

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Salaries Clifford ChanceLinklaters

Clifford Chance and A&O Shearman joined Linklaters this week in matching Freshfields’ NQ pay hike from £125,000 to £150,000, leaving Slaughter and May the sole Magic Circle firm still on the lower rate.

Following the pattern set by Freshfields earlier this month, all three firms are also increasing trainee pay. First-year trainee salaries at each firm will rise from £50,000 to £56,000, while second-year trainee salaries will increase from £55,000 to £61,000.

Commenting on the pay rises, Linklaters firmwide managing partner Paul Lewis said in a statement: ‘We are committed to rewarding our people competitively in our market. Our salary changes reflect this and enable us to attract and retain exceptional lawyers to provide the highest quality service to our clients.’

A&O Shearman’s statement, meanwhile, quoted new London managing partner Denise Gibson: ‘Our compensation structure gives us flexibility to reward expertise, performance and wider contribution and is designed to be highly competitive to reflect the markets in which we operate.’

The move also means that legacy Shearman lawyers at the now-merged firm will avoid taking the pay cut they faced when it was reported in April that A&O Shearman would stick with the legacy A&O NQ salary of £125,000 rather than matching Shearman’s £145,000.

However, some recruiters are warning that this latest round of NQ and trainee salary hikes will raise concerns among mid to senior-level lawyers.

Speaking to Legal Business, David von Dadelszen, director at James Legal, said: ‘This is a slightly alarming continuing trend that isn’t reflecting of increasing salaries for more senior lawyers where it may create retention issues. Clients must question getting advice from junior lawyers who are paid so highly.’

In a similar vein, Hannah Benger, business manager at Montresor Legal told LB: ‘Magic Circle salaries usually level out at the mid to senior level, which may create some issues, particularly given the consistent increases at leading US firms.’

She continued: ‘The other Magic Circle firms may find it harder to retain their top talent if they do not match the £150,000 NQ salary level. Although there has been some disparity in NQ pay between the Magic Circle in recent years, this is harder to justify given the significant and uniform increase at Freshfields, Linklaters and Clifford Chance.’

The increases will pile pressure to up salaries on other London firms. Slaughter and May last raised NQ salaries in November, with no further increase after its most recently six-monthly pay review in April.

However, many US firms continue to offer pay packets still more generous than even the increased Magic Circle rates. In Benger’s words: ‘The client base of Magic Circle firms is different to US firm clients who are used to paying a lot more.’

With NQ bonuses to be paid out in the coming months, Benger added: ‘It will be interesting to see what the Magic Circle firms do with bonuses. It is coming up to bonus season, and there is likely to be renewed interest in making a move to premium US firms if Magic Circle firms cannot compete with Cravath bonuses.’

elisha.juttla@legalbusiness.co.uk

alexander.ryan@legalbusiness.co.uk

Legal Business

Energy perspectives: Clare Burgess

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Profile Clifford Chance

What made you decide to become a lawyer and why did you choose to go into infrastructure transactions?

I chose to study law with thoughts of becoming a barrister. While at university I was introduced to City law firms through the milk rounds and was drawn to the emphasis on working as a team, opportunities to work on headline deals, international secondment opportunities… and the law school grants!

Legal Business

‘Doubling down’: CC’s London PE head sets out strategy as buyout partners predict uptick

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Private equity Clifford Chance

Spencer Baylin, Clifford Chance’s recently-appointed London private equity head, discussed his ambitions for the practice with LB as we garnered views from peers on how the market is faring.

In December, CC lifer Baylin stepped up to the role soon after the high-profile loss of Christopher Sullivan to Paul Weiss’ M&A practice amid the US elite firm’s aggressive drive to build a top-tier corporate practice.

Legal Business

Mixed bag for Clifford Chance as it joins the £2bn revenue club but profits and PEP stall

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Financial results 2022/23 Clifford Chance

Clifford Chance (CC) today (19 July) became the second Magic Circle firm to post revenues in excess of £2bn after Allen & Overy achieved that milestone last week.

CC’s headline turnover figure of £2.062bn showed an increase of 5% on last year’s £1.969bn, and marks the eighth consecutive year of revenue growth for the firm.

However, profit remained more or less flat at £781m, compared with a 9% uptick to £783m in 2021/22.

Profit per equity partner (PEP) dipped slightly from £2.04m to £2m, in contrast to last year’s bullish 10% growth.

The firm put its flat profitability down to increased costs. ‘Lawyer salaries are our largest cost’, admitted chief financial officer Patrick Glydon, pointing also to investments in real estate, IT, and business professionals’ salaries.

Global managing partner Charles Adams acknowledged upward pressure on NQ and junior salaries, driven in large part by ultra-competitive US firms: ‘Clifford Chance is a multi-jurisdictional, multi-product firm. We compete with US firms in some of those sectors and geographies. Where we do compete, we have to be able to remunerate our people at competitive rates.’

Global litigation and dispute resolution was the key driver of growth, with ‘increased activity levels across all areas’. At the same time, CC reported steady performance in non-contentious work: ‘Despite a year of subdued M&A activity across the industry, our transactional teams maintained positive momentum buoyed in part by an active tech sector and private capital fund raising’, noted Adams. ‘Demand for our global advisory expertise was robust.’

Looking ahead to 2027, CC has in place a four-year growth plan focused on what Adams called ‘our one-firm priorities of client experience and operational excellence’. With what it calls its ‘People and Talent Strategy’, CC aims to continue to make lateral hires in core areas around the globe, with Adams noting ‘private capital, energy transition, infrastructure, tech including AI, and healthcare and life sciences’ as key growth areas.

‘Our US capabilities remain our top priority’, he said. The firm reported that 42% of its 24 lateral hires in FY2023 were in the US, and noted that this figure does not include the seven partners it recruited to open its Houston office.

Glydon also commented on US growth: ‘We were flat in the US in the first half of last year, as our international competitors were. But we saw high single-digit growth in the second half of the year, and that has continued into this year.’

Adams said that the firm was ‘not pursuing’ a US merger, but was instead focusing on ‘steady and sustained growth’ and ‘a progressive and constant buildup’. However, he noted, ‘we would not rule out any option in pursuit of that strategy.’

Similarly, the firm did not rule out further office openings, both in the US and around the world. ‘The answer is a sort of constant maybe’, said Adams. ‘We shall see what sort of talent we can recruit, and what opportunities we can unlock.’

alexander.ryan@legalease.co.uk

Legal Business

Life During Law: Jeroen Ouwehand

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Profile Clifford Chance

I never thought I would be a lawyer. I’m from Amsterdam, and I did a student traineeship in 1991, which was quite a common thing for Dutch law students back then. It’s like a summer internship at a law firm. I was blown away by Clifford Chance – the dynamism, the people, the quality of the work. I just loved it. I was given the chance to apply for a job to start the year after and I got it. That was quite unusual in those days because the job market wasn’t easy.

If you’d asked me at the age of 23 or 24, I would have said I wanted to go into international relations or business. Before I studied law, I was thinking of going to a university in the US which was strong on international relations, then go and work at an international organisation. My fascination with international relations very much came into force in my former role as senior partner and now as leader of our global ESG board.

Legal Business

Clifford Chance names Cohen first New York managing partner amid fresh bid to crack America with Houston office opening

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Office openings Clifford Chance

In the wake of Allen & Overy’s stated ambition to merge with Shearman & Sterling, announced in May, Magic Circle peers have found themselves in the unenviable position of having to demonstrate to the market that they also have a coherent US expansion strategy.

Clifford Chance (CC) did not disappoint, on 15 June naming Ness Cohen as the first ever managing partner of its New York office. Cohen, a real estate lawyer by trade, has worked at CC since 1998 and was promoted to the partnership in 2007. He has also held the positions of regional practice area leader of the Americas real estate practice and chair of the Americas personnel committee.

Legal Business

‘An excellent foundation from which to build’: Clifford Chance appoints new office managing partner in New York

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Leadership Clifford Chance

Less than two weeks after Clifford Chance revealed the opening of a new office in Houston, the firm has announced the appointment of long-time CC real estate lawyer Ness Cohen as managing partner for its New York office, while also continuing to serve as real estate practice leader of the Americas.

Speaking to Legal Business, Cohen said: ‘The firm decided that it would make sense to have a New York office manager generally, especially with New York being one of our largest offices and also with our growth ambitions in the US.’

Cohen said that regional managing partner for the Americas, Sharis Pozen, approached him and said many of his fellow partners put his name forward for the new role. Pozen is based in CC’s Washington office, although she will be in New York for one week a month.

‘We just had an offsite meeting in Philadelphia for the US partners, as well as our colleagues in São Paulo, mainly to talk about our overarching global strategy. The alignment between the two is very clear. The global strategy identifies, among other things, that the US is a focus area,’ Cohen explained.

Cohen started at New-York based Roger & Wells back in 1998. The following year, the firm merged with Clifford Chance and Pünder Volhard Weber & Axster in Germany in a three-way merger. ‘[It] was really ambitious. To do one merger is feat, imagine pulling off a three-way merger that brought together three best-in-class firms,’ he added.

He was promoted to CC partner in 2007 and his practice focuses on real estate private equity, joint ventures, acquisitions, dispositions and financings involving real estate.

Earlier this month, the firm announced the opening of a new office in Houston, bolstering its global energy and infrastructure practice in the US.

‘Our entry into the Houston market is underway by an extremely appealing range of lateral candidates, which exemplifies the essence of our US strategy. The New York strategy is very similar, and we’ve brought in a fair number of laterals recently, integrating them into our office and the region,’ Cohen said.

‘There are some other ambitions that are underway with respect to potentially other locations. It’s safe to say that the firm as a whole sees the US as a region it can really achieve outsize growth.’

Cohen explained that the firm’s key focus areas are energy and infrastructure, technology, life sciences and healthcare, while it also seeks to build on other sectors.

‘We see our existing team as an excellent foundation from which to build further and grow out further. In other areas where the firm outside the US is extremely strong, we can use that and leverage it to build further. Houston is a good example of that.’

Cohen has also headed up the firm’s Personal Committee since 2011. He said ‘I really enjoy that role. It deals with everything, including our lawyers’ work-life balance. But that’s something that probably we’ll be looking to transition, since it wouldn’t make sense for me to keep that role with this.’

elisha.juttla@legalease.co.uk

Legal Business

‘Our clients led us to Houston’: Clifford Chance launches energy-focused Texan office as part of US expansion plans

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Office openings Clifford Chance

Clifford Chance has opened a new office in Houston, bolstering its global energy and infrastructure practice in the US.

The firm has hired seven Houston-based partners to join the office, including Jonathan Castelan and Trevor Lavelle, who both join from Latham & Watkins. However, at this stage, Clifford Chance was unable to confirm the names of the remaining five partners or the firms they are moving from.

The lateral hires will be joined by existing Clifford Chance partners Devika Kornbacher, Alexander Leff, and Anthony Giustini. Kornbacher is co-head of the firm’s technology group, while Leff is a renewable energy and infrastructure partner and Giustini is the senior partner for the firm’s worldwide projects group, co-leader of the energy transition initiative, and leader of its clean hydrogen task force.

Speaking to Legal Business about the Houston launch, regional managing partner for the Americas, Sharis Pozen said: ‘This play in Houston is all about extending our energy and infrastructure practice. We have a market-leading practice globally and the one piece of it that was missing was Houston and having a hub in the US for energy and infrastructure. So that’s what drove us to Houston.’

She added: ‘We have about 700 folks in total in the United States. We have almost 500 fee earners and 95 partners. So, we’ve been fortunate to be able to build a fantastic team in the US that’s very connected to the rest of our firm.’

The new office will primarily focus on energy and infrastructure, with the Texan location dictated by the needs of existing clients.

‘Our clients led us to Houston. Many of them are global clients headquartered in Houston and they are primarily energy and infrastructure clients. Houston right now is an incredibly dynamic marketplace. It is the fourth-largest city in the United States, one of the most diverse, and it’s really the hub of the energy transition,’ Pozen explained.  She added that she was hopeful that the Houston base would prove to be an attractive offering for new clients as well.

The launch has been several years in the making. Commenting on the process, Pozen said: ‘We’re discerning, and we play our own game. That’s who we are. So, we’ve watched other firms with some global reach go into Houston and watched the successes and those that haven’t been as successful, and we’ve learnt. In our world, there isn’t always that first-mover advantage. Often history shows that the person who sits back and watches goes in even stronger and better.’

Pozen also credited the reach and foresight of global managing partner Charles Adams as a driving force behind the office opening. The firm plans to expand the Houston office with more growth expected over the coming year, with the strategy for the next three to four years to remain on the lookout for new talent and continue to grow the team when it makes sense.

‘We will look to build out the team further for sure. That is the plan. It’s part of our plan to expand in the US generally, and we have been expanding in the US. We plan on continuing to strategically grow. We are not just a growth-for-growth’s-sake firm. We are a strategic grower and meticulous about our execution,’ Pozen added.

Currently, Clifford Chance’s Americas revenue makes up 13% of its global turnover. However, with the move into the Texan market, the firm is placing its bets on the energy transition sector as the route to breaking the US. As the magic circle firms consider their US expansion plans, the proposed Allen & Overy and Shearman & Sterling merger will see another magic circle firm make headway in Texas, giving them access to offices in Austin, Dallas, and Houston if the partner vote is passed.

Holly.mckechnie@legalease.co.uk

Legal Business

CC and Freshfields dish out US associate bonuses to match American rivals

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Associates Clifford ChanceFreshfields Bruckhaus Deringer

Clifford Chance (CC) has become the second Magic Circle firm to dish out competitive year-end bonuses to US associates, after Freshfields Bruckhaus Deringer matched US competitors’ rates last week.

Both firms will pay their junior lawyers a lump sum based on their year of qualification. At both CC and Freshfields, newly qualified (NQ) associates will receive a prorated bonus of $15,000, the 2021 class of associates will receive a $20,000 pay-out, while at the top-end, seven and eight-year associates will receive $105,000 and $115,000 respectively.

Freshfields first confirmed its bonus scheme in a memo sent on 1 December, while CC’s announcement also came in the form of a memo, sent by Americas managing partner Evan Cohen yesterday morning (6th December).

Baker McKenzie set the ball rolling earlier this year, announcing its bonus rates on 21 November. While Bakers’ NQs will miss out on a lump sum, its 2021 cohort will also receive $20,000 while those who qualified in 2015 will similarly pocket $115,000.

The Magic Circle firms’ new bonus schemes match the scales awarded by Wall Street stalwarts Cravath, Cleary Gottlieb, Davis Polk, Paul Weiss, Willkie Farr and Cadwalader, according to Above the Law.

The news comes as the Magic Circle firms continue their attempts to crack the US amidst a highly competitive market for talent. Both firms have made strides with high-profile US hires of late: Freshfields made the headline hire of former Cravath M&A partner Damien Zoubek in September 2021 and added private equity partner Allison Liff from Weil a month later. CC likewise hired Osler, Hoskin & Harcourt managing partner Paul Seraganian in New York in November 2021.

megan.mayers@legalease.co.uk