Firm posts impressive 8% PEP hike and 7% revenue increase despite headcount drop
With the unaudited results of firms in, Freshfields Bruckhaus Deringer has produced the standout 2015/16 financial performance in what was another muted year for the City’s most powerful law firms.
Freshfields unveiled a 7% revenue increase from £1.245bn to £1.327bn, while profits per equity partner (PEP) now stand at £1.473m, an increase of 8% on last year’s figure of £1.37m. The increase puts Freshfields ahead of Allen & Overy (A&O) and Linklaters but behind Clifford Chance (CC) as the second-highest grossing firm of the big four, according to unaudited results.
The improvement in revenue and profitability comes on the back of a 2% drop in lawyer headcount to 2,275 in a year that saw the City firm move to open a legal services centre in Manchester, relocating lawyers and back-office staff in a bid for efficiencies.
Freshfields corporate partner David Higgins said: ‘Obviously we’ve seen a slight slowdown as we came into Brexit but from a private equity perspective, the year has been very strong. There’s a lot of activity around financial services, particularly for the asset managers.’
In contrast, CC, A&O and Linklaters saw modest growth. CC posted a 3% revenue rise to £1.386bn from £1.35bn, but was the only firm to achieve double-digit growth in PEP, seeing partner profits increase 10% from £1.117m to £1.23m.
‘We’ve seen a slight slowdown as we came into Brexit but the year has been very strong.’
David Higgins, Freshfields
Meanwhile, Linklaters matched CC’s 3% revenue rise, moving from £1.267bn to £1.31bn this year, while PEP also climbed 3% to £1.403m. A&O posted the slowest year-on-year revenue and profit growth: turnover grew 2% to match Linklaters on £1.31bn, while PEP stayed flat at £1.21m. A&O is still the strongest performing big four firm in revenue terms over the last five years, growing its top line 17% between 2010/11 and 2015/16, compared to 16% for Freshfields.
Outside the big four, the picture is mixed, with Ashurst suffering another year of significant losses to again rank as the worst performing UK firm in our Global 100 report (see page 33). Turnover fell 10% from £561m to £505m, while PEP has tumbled 19% from £747,000 to £603,000. New managing partner Paul Jenkins admitted the firm had endured a tough period of trading.
Jenkins said: ‘There are a number of factors behind that, there’s obviously market context, and the impact of major geopolitical issues on our business. Our results are not where I’d like them to be.’
Elsewhere, Berwin Leighton Paisner was the only other top 25 UK-based firm to reveal a revenue dip so far, with turnover dropping 2% to £254m from £259m in 2014/15. Clyde & Co has seen the largest revenue increase of any UK firm in the Global 100, with revenues up 13% to £447m, while Eversheds and Herbert Smith Freehills both increased revenues by 7%. Pinsent Masons saw revenues up by a more modest 5% to £382.3m.
mark.mcateer@legalease.co.uk
See our Global 100 report.