Income down at Freshfields
MAGIC circle law firm Freshfields Bruckhaus Deringer has posted a double digit drop in revenue, marking the largest income fall reported by the elite UK legal group this year.
Turnover for the year fell by 11 per cent to £1.14bn on the back of depressed transactional markets and a drop off in M&A activity.
Freshfields chief executive Ted Burke told City A.M. yesterday that the fall in revenue was directly in line with the firm’s expectations.
He said that one-third of the firm’s business comes from the corporate and M&A practice and despite seeing a steady flow restructuring mandates, the drop off in takeovers impacted its revenue streams.
Burke said: “Like many other businesses, we have seen a downward trend in our financial results over the past year but, given the very difficult markets and ongoing economic uncertainty, the results are relatively healthy.”
The firm, which saw partner profits of £1.4m, is celebrating news that it has received a landmark instruction from client BP to advise on a defence strategy in the event of a hostile takeover bid.
London corporate chief Mark Rawlinson is leading a team advising BP, with expectations that the instruction could earn Freshfields tens of millions of pounds in legal fees. BP’s instruction can be seen as a massive blow to regular adviser Linklaters, which has maintained a relationship with the embattled oil major for decades.
Elsewhere, Clifford Chance (CC) said revenue for the year came to £1.19bn, marking a five per cent drop on the year, as revealed by City A.M earlier this week.
Managing partner, David Childs said: “Given the challenging market conditions, this is a strong set of results with our profitability much improved and back on track.”
The firm scored a number of high-profile instructions over the year, including acting for Kraft on its £11.9bn takeover of Cadbury and Royal Dutch Shell on its $12bn (£7.8bn) joint venture with Brazilian bio-fuel giant Cosan.
The world’s 10 largest law firms (US dollars)
Ranking Turnover Profit margin Profit per equity partner
Baker & McKenzie 1 (+4) $2,112m (-3%) 34% $997,000 (-17%)
Skadden, Arps, Slate, 2 (+2) $2,100m (-5%) 45% $2,052,000 (0)
Meagher & Flom
DLA Piper 3 (-2) $1,948m (-14%) 22% $1,050,000 (-16%)
Clifford Chance 4 (+2) $1,879.1m (-14%) 28% $1,409,000 (12%)
Linklaters 5 (-3) $1,852.5m (-17%) 43% $1,797,000 (-13%)
Latham & Watkins 6 (+1) $1,821m (-5%) 45% $1,902,000 (5%)
Freshfields Bruckhaus 7 (-4) $1,786.7m (-19%) 52% $2,201,000 (-11%)
Deringer
Allen & Overy 8 (-) $1,644.2m (-12%) 37% $1,712,000 (-1%)
Jones Day 9 (-) $1,520m (0%) 40% $759,000 (-7%)
Kirkland & Ellis 10 (+2) $1,428m (6%) 47% $2,424,000 (8%)