figures hold promise
It ishalfwaythroughthe financial year, so the big law firms are focusing on their revenue and profit figures. The half-year figures have become an important indicator of where the market is going and, at the six-month stage, it looks as if UK law firms are set for another record year.
The best performer by far was Slaughter and May, where revenue was up 30 per cent on the same time last year. If the workflow continues in the same vein, the partners would average an almost unimaginable 2.5m per year in profit. That would mean a jump of 79 per cent from last years figure of 1.4m.
Slaughters practice partner David Frank said: Its extremely encouraging. But were only halfway through.
However,itwas notall jubilation at Slaughters. Some partners warned that the second six months did not look as promising as the first. But even if transactional work slows, Slaughters will pull away from Linklaters again as the Citys most profitable firm.
Last year the gap narrowed between the two, as Linklaters made up massive ground on Slaughters. Still, Linklaters had a pretty good first six months itself. Its revenue was up 22 per cent on the previous years
Other firms to turn in excellent performances were those with strong mergers and acquisition (M&A) practices. The figures of both Ashurst and Freshfields Bruckhaus Deringer were up some 25 per cent. Also doing well was Allen & Overy, up 18 per cent, and Clifford Chance, up 16 per cent. But best of all was silver circle firm SJ Berwin, whose corporate and real estate departments powered the firm to an impressive 35 per cent rise in revenue.
So why are law firms doing so well? It comes down to one thing: M&A activity plus equity capital markets, otherwise known as flotations on the London Stock Exchange. London has now overtaken New York for stock market listings, which means that UK lawyers have benefited massively. ButwhyhasNewYork traditionally the biggest global centre for public listings begun to lag behind?
Lawyers say it is all down to Sarbanes-Oxley, an act brought in after a wave of corporate scandals in the US, which was designedtotightenup governance within companies. However, the rules are now seen as restrictive and bureaucratic, with the result that Londons more liberal listings regime has benefited. And, in turn, so have UK lawyers.
but not for every firm
Some firms turned in less than impressive figures at the half-year. Any firm with a bias towards litigation saw only minor increases. Clyde & Co was up 5 per cent, Lovells and CMS Cameron McKenna were disappointed with only 4 and 6 per cent respective hikes, while Hammonds, whose current management is struggling with a comeback after the firm teetered on the brink a couple of years ago, managed completely flat figures.
The problem is that many have committed themselves to bonuses that have increased the costbase.Onemanaging partner says that all firms will need at least an 8 per cent rise in revenues just to keep partner profits on the same levels as last year, let alone keep pace with rivals. The second six months should be interesting.
China: the new must-be
Keep an eye on what law firms are doing in China. A stream of UK firms, including Clydes, Norton Rose, Pinsent Masons and Wragge & Co, has opened or announced an intention to open there, while Mayer Brown Rowe & Maw (MBRM) has just opened in Hong Kong in order to build a China practice.
Statistic of the month: international firm Baker & McKenzie is the largest foreign firm in China. But listen to this for good news for UK firms: out of the top 10 foreign firms in China by headcount, eight are headquartered in the UK, including Clifford Chance, Linklaters and Freshfields. Lawyer 2Bs advice is: start learning Mandarin now it will put you ahead of the pack.
Firms credited in gay poll
The feelgood story of the month comes from gay rights charity Stonewall, which published the names of six firms it rated highly for being gay-friendly. Clifford Chance, Herbert Smith, MBRM, Linklaters, Pinsents and Simmons & Simmons all
made it on to the list, as did the
Law Society. The minimum requirements they had to meet to be included on the list were
to ensure equal benefits to
same-sex couples, encourage employee network groups
and promote a zero-tolerance
policy on homophobia in the workplace. Many have also started to compile diversity statistics.
Adrian Barlow, head of property at Pinsents, predicted an increase in firms credited by Stonewall. Whats important to us is inclusiveness, he said. If someone is valued, then theyre comfortable with who they are and that makes them more confident at their job. Well said.