‘Challenging market conditions’ – a quick search of the LB news archives finds that phrase, or some variation of it, coming up time and time again over the years.
But while the legal industry has faced many challenges since the turn of the century, from the global financial crisis to Brexit, Covid and beyond, the good times have, in the main, outweighed the bad, with resourceful firms turning adversity into opportunity.
So as the latest UK financial results continue to roll in, the question is whether 2023-24 will be viewed as yet another challenging year, or one to look back on with fond memories.
Based on results so far, it looks like the latter. At the top of the market, the picture is undeniably positive. Both Clifford Chance and Linklaters came out broadly in line with the market average of around 10% revenue growth, taking them comfortably above the £2bn mark. While the picture at Freshfields Bruckhaus Deringer is as yet unconfirmed after its decision to swerve the UK reporting season, even the biggest sceptics would be surprised if it did not follow suit.
Elsewhere, while legacy Allen & Overy’s 2023-24 revenue growth of 3% was less spectacular, that will be quickly forgotten when the newly merged A&O Shearman takes its place in the global top ten with combined revenues of $3bn, while the firm also saw out the final pre-merger year with a hefty 21% PEP hike.
As traditional bellwethers for the UK market, Macfarlanes and Travers Smith have also both posted hugely encouraging results, with double-digit revenue and profit growth, despite persisting questions over their resolutely UK-centric models, not to mention a steady stream of partner exits from Travers. These figures suggest Slaughter and May will also have enjoyed a similarly fruitful year.
However, a more mixed picture emerges when looking at large, UK-heritage firms which have retained a network of offices across the country alongside global expansion.
At Eversheds Sutherland – one of the firms to cite ‘challenging economic conditions’ this year – revenues for its business outside of the US rose by just 3%. The firm is one of a group which have long since shunned the ‘UK national’ tag to pursue international ambitions, but still has 11 bases across the country.
And other comparable firms in this bracket, such as CMS, Pinsent Masons and DLA Piper – which have nine, eight and seven UK offices respectively – all also posted slower-than-average single-digit revenue growth this year.
Another telling result was that of Dentons’ UK, Ireland and Middle East business, which saw growth of just 6%, despite an 18% hike for Ireland and 22% in the Middle East, pointing to a tougher picture in the UK alone, where the firm now has four bases, down from six at the turn of the decade.
But while those firms with one eye on the UK and another on the wider world are slightly behind the pace this year, a quartet of ‘pure’ national firms with a laser-sharp focus on the UK – Freeths, Browne Jacobson, Weightmans and Mills & Reeve – have all managed to beat the market average and post a second consecutive year of double-digit growth.
While the market may well continue to be challenging, the most important challenge might just be ensuring your firm has clarity of focus.