With a few years of pain behind them, City 50 firms are feeling better. But is it still too early to bring out the champagne?
Previous concerns that London’s place on the global financial stage could be eroded seem to have been forgotten this year. While the UK economy is still in a state of flux, the capital has maintained its standing as one of the world’s leading financial centres, adding some confidence to the majority of the industry’s leading law firms. Average London revenue across the 50 largest firms in the capital fell by just 4% during 2009/10. Still feeling the aftershocks of the global financial crisis, the numbers made for tough reading. But after a more stable period, in part thanks to some canny management, an increase in litigation mandates, a recovering corporate market and a rise in financial work, the landscape doesn’tlook too bad. This year, City 50 firms saw revenues remain flat compared with last year. And while London offices continue to contribute less to international firms’ global turnover, there were still some impressive performances.
More than half of the firms in the City 50 (both US and UK) saw an improvement on last year’s figures, with Berwin Leighton Paisner (BLP), Clyde & Co and Stephenson Harwood all posting double-digit turnover growth. BLP had the strongest year of all the UK firms in the City 50, billing 17%more in London during 2010/11. The firm owes its success to a steady growth strategy and continued investment in finance, corporate and litigation, resulting in a 14% rise in revenue per lawyer (RPL) to £331,000 from the £290,000 it posted last year. Likewise, Stephenson Harwood’s London office added £10m to its top line in 2010/11, marking a 14% increase in billings for the year. The firm saw revenue climb from £72.7m in 2009/10 to £82.7m in 2010/11. Clyde & Co’s City office added £12m to the top line during 2010/11, bringing revenue for the firm’s largest office to £124m. This number will leap considerably now that Clydes’ merger with Barlow Lyde & Gilbert has been voted through.
The top of the market continued to tighten its grip. The top ten firms billed £45m more than this year, with combined revenue of £3.33bn in 2010/11 against £3.29bn last year
After a strong performance year, Mishcon de Reya makes its debut in the table after billing more than £60m in London. The arrival of Mishcons means that Weil, Gotshal & Manges drops out. Set against a backdrop of two years of declining London revenues, in 2010 Weil Gotshal billed 12% less than last year, with fee income standing at £49m. The firm’s City management has sought to bolster its London offering after hiring eight new partners since January (see LB216, page 16). Of the US firms, the London offices at Latham & Watkins, Mayer Brown and Skadden, Arps, Slate, Meagher & Flom all performed well. Each saw revenue figures improve significantly over the year, cementing their status in the City. Chicago-based Kirkland & Ellis had a stellar year.
The firm moved up 16 places after its City revenues shot up by 32% to £66.3m. Perhaps the firm is working its lawyers even harder this year, as RPL has shifted from £615,000 during 2010 to £745,000 in 2011. But a number of impressive restructuring mandates and significant lateral hires (private equity stars Gavin Gordon and David Arnold moving from Ashurst in 2010 being one standout example) have contributed to Kirkland’s impressive top line growth. That progress looks set to continue after the firm made a play for the lucrative high-yield market with the hire of Ward McKimm from Shearman & Sterling in April.
Shearman’s fortunes have been less gilded. By no means the worst performer in the group, the US firm’s London turnover remained almost flat this year at £63.3m, while RPL was also nearly flat at £581,000.
The top of the market continued to tighten its grip. The top ten firms billed £45m more than this year, with combined revenue of £3.33bn in 2010/11 against £3.29bn last year.
LG and Trowers & Hamlins were the only firms to post double-digit drops. LG’s income fell by 10%, moving it down eight places, while Trowers’ 11% revenue drop moved it down ten positions. ‘The year was just a bit quieter than the previous year. International work continues to be strong which is important to us,’ says LG managing partner Hugh Maule. He adds that the firm has doubled its international revenues in the past 12 months.
Also in need of improvement are Clifford Chance and Dewey & LeBoeuf. The pair reported 8% dips in London turnover.
On average, London accounts for 43% of these firms’ revenues. The proportion of City revenues is likely to fall in the next few years as the sector continues its global expansion, despite London maintaining its place on the world financial stage.