While Clifford Chance and Linklaters both recorded impressive increases in revenue and profit per equity partner (PEP) in 2016/17, Allen & Overy (A&O) blew its closest rivals away with a 25% rise in PEP, which jumped from £1.21m to £1.51m, while revenue saw a 16% increase to £1.52bn from £1.31bn. On a constant currency basis, A&O saw a 6% increase in its revenues and a 14% rise in PEP.
A&O is now the second-largest Magic Circle firm in revenue terms, overtaking Freshfields Bruckhaus Deringer in the Legal Business 100.
Speaking to Legal Business, managing partner Andrew Ballheimer says its offices in the UK, Africa, Middle East, Australia, the US and Hong Kong had been significant successes for the firm this year with a strong performance across litigation, arbitration, capital markets, banking, leveraged finance, M&A, restructuring regulatory and project finance.
Making a splash in automation, Ballheimer adds the firm’s derivatives-focused product, MarginMatrix, has performed particularly well after A&O teamed up with Deloitte in the first joint venture between a Magic Circle firm and a Big Four accountant.
We are proud of the results, given the volatile backdrop. Our real growth appears higher than the legal market and that’s pleasing.
Andrew Ballheimer, Allen & Overy
In terms of talent investment, the firm made several lockstep-breaking hires in the US, bringing on a five-lawyer finance team led by leveraged finance partner Scott Zemser from White & Case, and a three-partner Paul Hastings team led by the US firm’s leveraged finance head Bill Schwitter.
A&O also made a substantial investment in IP, picking up three partners from Simmons & Simmons this year, including its former IP head Marc Döring following the hire of former colleague Marjan Noor, who moved to the firm in June last year.
There were, however, some high-profile losses, with Latham & Watkins picking up heavyweight banking lawyer Stephen Kensell and M&A partner Edward Barnett, while Milbank, Tweed, Hadley & McCloy also took on a three-partner team in New York, including the firm’s US senior partner, Kevin O’Shea.
LB: How do you view your performance?
Andrew Ballheimer: We are proud of the results, given the volatile backdrop, especially Brexit, the election of President Trump and stock market uncertainty. Our real growth appears higher than the legal market and that’s pleasing.
LB: Have you had any big pay days to bring revenues up?
Ballheimer: Nothing material. All of our practice areas and offices have done well in a challenging market. It’s a combination of our investments over the years, our geographies and our product base. Our footprint is now broader than our peer group.
LB: Headcount has stayed the same. Were there any partnership changes that would explain a 25% increase in PEP?
Ballheimer: If your question is asking whether we have played around with our denominators, the answer is absolutely not. It’s exactly how it’s always been; it’s full equity partners as a divisor of our profit and in the financial year we’ve achieved a significant growth of profit before tax with a small increase in the average number of full equity partners.
LB: You’ve had a number of impressive hires over the last year, how has that contributed to the firm’s success?
Ballheimer: The Americas has grown, our IP team has hit the ground running and we’ve made some other hires. We have made 31 lateral hires net and that has helped. It’s a constantly evolving business offering, adding on high-quality people with a cultural fit and we will continue to do that.
LB: What is the firm going to do over the next 12 months?
Ballheimer: We have to stay close to our clients and deliver at the highest standard in terms of what our clients require. The period ahead is going to be equally as uncertain, but our business is broad based, well hedged, and ultimately it’s about the quality of our offering and our client proposition. You have to evolve all the time because the demands are changing. It’s challenging, but if we continue doing all the things that we’re doing across all fronts, at least our business is in the best position that it can be in an uncertain world.