Elite law firms sanguine on Brexit fallout
The elite group of “magic circle” law firms headquartered in London increased revenues last year and signalled the global nature of their work would help them weather any UK downturn caused by Brexit.
Revenue at four of the five firms rose to about £1.3bn each in the year to April 30 2016, helped by an uptick in areas such as mergers and acquisitions, litigation and capital markets.
Financial results published by the law firms showed that partners could on average expect to receive at least £1.2m for the year.
Freshfields reported a 6 per cent rise in revenue to £1.33bn in the 12-month period.
Allen & Overy reported a 2.3 per cent rise in revenue, to £1.3bn, in the same period, helped by global growth in its merger and acquisition and capital markets practices, where it advised on 1,500 deals.
However, A&O reported a weaker second half as advisory work slowed as clients contended with uncertainty around the UK’s EU referendum, the collapse in the oil price and lower growth in China.
Revenue at Clifford Chance rose 3 per cent to a record £1.39bn in the year, helped by strong growth in Asia-Pacific and the Americas.
Linklaters recorded a 3.4 per cent rise in income to £1.3bn in the same period. Slaughter and May does not release public figures.
Freshfields achieved the highest profit per equity partner (PEP) at £1.47m. PEP is closely watched in the industry as a key measure of law firm health.
Average PEP at A&O was flat at £1.2m and at Clifford Chance increased to £1.23m — up 10 per cent on the previous year. At Linklaters PEP rose to £1.45m.
The law firms signalled their global practices in Asia and the US would help stem future weakness from the UK and Europe.
Andrew Ballheimer, A&O’s global managing partner, called Brexit “the largest demerger in history” that would be “unbelievably complex”. He stressed A&O’s business was “well hedged” with just 35 per cent of revenues coming from the UK.
Matthew Layton, managing partner at Clifford Chance, also said the firm was “well hedged” to withstand any future UK slowdown.
Gideon Moore, managing partner at Linklaters, said the “mood is more positive” than immediately after the Brexit vote and there was a feeling we “just have to get on and make the best of it”. He said it was a “different environment to what we had in 2008 and 2009”.
Beyond the magic circle, Herbert Smith Freehills reported a 7 per cent rise in revenues to £870m in the year to April 30 2016, from £815m the previous year, with profit per equity partner up 5 per cent at £840,000.
Ashurst saw revenue hit by sterling weakness, falling to £505m in the year ended April 30, with PEP falling to £603,000 from £716,000.