Legal Business

The big stories of the past two months

Robust revenue and profit growth for UK and US firms

First to report on a 2021 calendar-year basis, US firms set a high bar for impressive gains as robust financial results were released. Another bumper year for private equity saw Kirkland & Ellis retain its title as the world’s highest-grossing law firm with revenue exceeding $6bn for the first time following a 25% increase, while profit per equity partner (PEP) spiked by more than 19%, reaching $7.38m.

Kirkland eclipsed rival Latham & Watkins’ already striking results. It had been heralded as the first firm to breach the $5bn revenue barrier when it announced in March its soaring turnover of $5.49bn, a 27% surge from $4.33bn last year. The firm’s PEP also jumped 26% to $5.71m from $4.52m.

Meanwhile, Goodwin was among the US firms unveiling the most aggressive financial gains for 2021. The firm added more than $400m to its top line, with global revenue up 33% to $1.97bn from $1.48bn. In the City, it boasted a 63% spike in revenue up to $161.8m from $99.1m.

More recently, UK-based firms have started to reveal their 2021/22 year-end results. Osborne Clarke reported impressive progress, with a 19% increase in overall turnover from €341m to €407m, while domestic revenues grew 20% from £166.4m to £199.1m. The firm credits its lateral hiring successes, as well as ‘favourable’ market conditions, for its gains.

National law firm Keystone Law is flying the flag for alternative business structures with its impressive 27% surge in revenue from £55m to £69.6m and a jump in profitability from last year’s £6m to £9m – up 52%. However, fellow listed firm, Ince, has had less cause for celebration. After a tumultuous year, it saw a 3% dip in revenue from £100.2m to £97m, citing its recent data breach and Russia’s invasion of Ukraine as contributing factors to the decline.

Leading firms have demonstrated their resilience until now, defying predictions of a slowdown from the pandemic and geopolitical risks. But against the backdrop of war and a looming recession, the question is whether such a trajectory is sustainable over the next financial year.

Ashurst seeks stateside suitor

In May, we reported that Ashurst is understood to have revived its search for a US merger partner.

The US is a declared strategic priority for the firm, while market sources claiming to have knowledge of the matter have suggested Crowell & Moring, Locke Lord and Orrick as potential fits.

Ashurst’s US ambitions are not new, but as its slew of unsuccessful potential merger matches since the turn of the millennium show, finding a merger partner is no easy task. Previous courtships include Latham & Watkins, which came to an end in 2000 due to mutual suspicion of compensation structures.

The firm is not alone in struggling to secure a transatlantic tie up, as UK firms are yet to replicate the impact of their US counterparts in London. Allen & Overy learned a similar lesson when merger talks with O’Melveny & Myers ground to a halt in 2019.

While any possible discussion has yet to reach a formal stage, the right merger could be a game changer for Ashurst, which currently has just 15 partners based in the US.

Price of home working

Stephenson Harwood (office pictured) has sparked controversy for part of its flexible working policy that gives lawyers the option to work from home full time for a 20% pay cut.

Criticisms have largely focused on the firm’s bottom line and have pointed to employees’ ability to provide the same, if not more, value for the firm working from home. However, others see the move as a worthy trade-off against skipping commuting costs and London rent.

Of course, it opens an important conversation as to who is most likely to adopt remote working options – namely parents, those with disabilities and mobility issues – and how it might impact their progression. But with many large firms requiring a minimum of three days in the office as standard, SH’s policy at least offers flexibility of choice.

The backlash underlines the thorniness of the return-to-office debate. Most agree that full-time office working is a thing of the past, but will firms prove willing to come forward with creative alternatives?

Mishcon presses pause on IPO plans

Mishcon de Reya’s hotly anticipated IPO has been postponed, it has confirmed.

‘We have decided to put our IPO plans on hold for the foreseeable future due to market conditions. We remain an ambitious and bold business with a clear strategy and vision for our future,’ said the firm.

Mishcon has been mulling over listing since at least 2019, with the proposal voted through by partners in September 2021. However, the firm has been tight-lipped about its progress since appointing an independent non-executive chairperson and directors ‘in readiness for an IPO’ in February.

The firm has not had an easy ride approaching its floatation plans. In addition to market instability, which has bred a general hesitance around IPO filings, it faced unflattering press attention in January, when it was hit with a record £232,500 SRA fine for breaching money laundering rules.

For now, while the firm is insistent that this is a temporary setback, this indefinite delay is unlikely to be popular among the more antsy of its IPO advocates.

megan.mayers@legalease.co.uk