Some of the City’s biggest players, including Freshfields Bruckhaus Deringer, confirmed that the rising value of the euro had gifted them seven-figure uplifts from their Continental offices.
Those firms with the largest European networks have seen the highest gain over a year that has seen the value of the euro jumping by 15%, compared with sterling.
The currency fluctuation means that E100 of billings for the 2006-07 financial year was worth around £68, whereas the same revenue figure for 2007-08 equates to approximately £78.
Freshfields, which this week reported a revenue hike of 19.5% — taking turnover to £1.178bn — estimates that currency fluctuations alone helped boost its figures by around 4%. The firm’s large German practice is likely to have played a significant role, given the strength of the German economy over the last financial year.
Clifford Chance (CC), which last week reported revenue rises of 11%, taking turnover to £1.329bn, is thought to have seen its turnover in
Other firms with significant exposure in mainland
CC finance director Stephen Purse told Legal Week: “The euro has significantly strengthened. Firms with a large amount of work billed in euros will have seen a benefit this year. However, you have to take the smooth with the rough because the situation can change when the exchange rates alter.”
Norton Rose chief operating officer Kevin Mortell said: “Any currency generated in euro-land has increased turnover when calculated in pounds. However, businesses with significant dollar exposure — including some parts of
However, the impact will not have necessarily been positive for European partners whose drawings are calculated in sterling, who have effectively seen their pay cut over the year.
BDO Stoy Hayward head of professional services Nick Carter-Pegg said: “Partners overseas, typically paid in euros and translated from sterling at today’s rate, would see a cut — despite their billings effectively being worth more.”
The negative impact on the drawings of European partners is leading a number of City firms to investigate options to hedge or mitigate the currency impact. Ashurst and Simmons & Simmons already have euro hedging provisions in place, while Herbert Smith, Norton Rose and Lovells said they are all reviewing how to better manage currency issues.
