Firm posts 8% PEP hike and 4% revenue increase
With all of the Magic Circle financial results in, Allen & Overy (A&O) has outperformed its peers in an otherwise muted year of growth for the London elite, which saw both Clifford Chance (CC)’s and Freshfields Bruckhaus Deringer’s profitability drop.
A&O unveiled a 4% increase in revenue from £1.23bn last year to £1.28bn for the financial year 2014/15. Profits per equity partner (PEP) at the 2,500-lawyer firm now stand at £1.21m, a hike of 8% on last year’s figure of £1.12m. The move is testament to A&O’s steady pace setting, which has seen it outstrip its rivals’ growth rate over the last five-year period, and overtake both Linklaters and Freshfields in revenue terms this year.
In contrast, CC, Freshfields and Linklaters have seen turnover flatline, with Freshfields suffering a decline in PEP of 8% to £1.37m from £1.48m last financial year. Revenue at the firm, which was the strongest performer of the quartet in 2012/13, was up just 1% to £1.25bn.
CC, which was last year’s top performer with top line growth of 7%, saw a decrease across the board with PEP down 2% to £1.12m and revenue down 1% to £1.35bn.
Results were marginally better at Linklaters, which saw revenue growth of 5% last year, with turnover edging up 1% to £1.27bn and PEP up 2% to £1.37m. The firm’s managing partner Simon Davies told Legal Business that this result only provided a partial story of last year’s performance: ‘It doesn’t tell you about your new client acquisition and the prospects for next year, it doesn’t tell you about your panel hit rate success, it doesn’t tell you about the current engagement of your people, it doesn’t tell you about the quality of people you’re recruiting from universities, it doesn’t tell you about the quality of feedback you are getting from clients. It is just a snapshot in time. We’re pleased that we’re moving ahead but there is no room for complacency.’
Outside the top four, the financial picture was comparable for Herbert Smith Freehills (HSF), Ashurst and Eversheds who revealed either slow or declining growth. Ashurst was the biggest loser of the three, with financials declining across the piece. PEP was down 7% to £747,000, from a 4% fall in revenue to £561m. Eversheds posted similarly subdued results with a revenue decrease of 1% to £379m last year with PEP creeping up 2% from £731,000 to £749,000. At HSF, results were more positive but largely similar to the slow growth displayed by the Magic Circle. Revenue was up 2% to £815m, with PEP up 6% to £787,000.
Those results come against a buoyant mood among smaller rivals as Pinsent Masons posted a 12% increase in revenue, taking it to £362m, and Berwin Leighton Paisner, Clyde & Co and Simmons & Simmons all posted revenue growth of 5% or more.
kathryn.mccann@legalease.co.uk