Linklaters has moved a step closer to overtaking Clifford Chance (CC) as the world’s largest law firm, with the City giant announcing an increase in revenues of 20% to hit £1.121bn.
The firm also saw its average profits per equity partner (PEP) reach levels so far only achieved by top Wall Street rivals - rising 22% over the 2006-07 year to hit an average of £1.294m.
The growth in PEP puts Linklaters well ahead of key City rivals that have so far announced their 2006-07 results and means that the 93 partners at the top of its 10-year lockstep will take home £1.618m this year. Entry-level equity partners will earn £647,000.
The firm operates a weighting system in some jurisdictions but has increased the number of partners entitled to a full share of the profits to 280, against 259 last year. However, overall partner numbers, including salaried partners, declined slightly during the year, standing at 509 this year compared to 522 in July 2006.
The results look certain to seal the legacy of outgoing managing partner Tony Angel, who will officially stand down on 31 December to be replaced by Simon Davies. Angel was a key architect of a restructuring of the firm’s partnership five years ago that focused on bolstering headline profits. He also personally ushered in more rigorous performance measurement techniques.
Angel told Legal Week: “You would be hard pushed to find a part of our practice that hasn’t produced a stellar result. There has been a lot of cross-border M&A, the capital markets and banking practices have done really well and we have grown in private equity. Our turnover has tripled in New York in the last three years.”
Commenting on the firm’s expansion, Angel added: “It is not our ambition to be the biggest firm but we do want to be market leaders. If you want to attract and retain the best people and make the investments we need to make, then a high level of profits will help you to do that.”
Over the last three financial years, Linklaters has seen its overall profits more than double to a current figure of £490m, with average PEP increasing from £674,000 over the same period.
The result also underlines what has been a breakthrough financial year for London’s three top law firms, with CC and Freshfields Bruckhaus Deringer this year also achieving PEP of more than £1m on the back of busy deal markets.
Angel said the firm would now focus on expanding its US practice, especially growing its small New York corporate practice. The firm is also committed to building up its smaller European offices in the Netherlands and Italy – the legacy of splits from alliance firms – and substantially growing its Asian network.
One former Linklaters partner commented: “I’m not hugely surprised as at the top end of the market one ought to be doing well. That said, I’m sure Tony will be very pleased to be going out on a high – it will be a hard act for Davies to follow.”
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