Hang on Wall Street, London’s finest are back on track

This week’s eagerly awaited financial results from Clifford Chance (CC), which you can read all about here, are the final, conclusive proof that London’s original global firm is back with a vengeance.

Revenues are up 16% to hit £1.194bn - making CC the world’s first $2bn law firm - and average partner profits have risen 25% to cross the £1m mark, a highly significant achievement for a firm that only three years ago was badly lagging its peer group.

CC’s underlying performance looks even more flattering as it is the only UK firm with substantial exposure to the weak dollar; the firm estimates that underlying revenue growth, stripping out the exchange rate, is more like 18%.

Just as significant are developments in the business. Sure, its M&A practice has been lucky in terms of shifts in the deal market - the rise and rise of private equity, revival in continental deal activity - but CC’s long-time corporate ambitions are now starting to look achievable.

Likewise, signs that the firm’s once-derided US practice has turned the corner are a massive boost. Having for years been battered by partner departures, a painful merger and the relentless sniping of New York’s legal establishment, CC is finally - and rightly - being taken seriously stateside.

With the ability to cut deals above its central lockstep, meaning CC can now offer top US recruits deals around $3m (£1.5m) a year, the firm at last has the opportunity to really make its mark in the US.

It is fortuitous timing as CC puts the finishing touches on its new five to seven-year strategy. Obvious goals will include making sure the firm fulfills its promise in key markets like China, Russia and India, as well as filling the gaps in its M&A offering so that the reality actually matches those sky-high deal rankings.

Any dark clouds? Well, the robust leadership and cost-cutting skills of David Childs have clearly paid dividends over the last three years but there is a danger of the firm veering from its previous extreme of rebellious inertia towards centrally-managed obsession, a stance that didn’t work out particularly well for the firm last time.

Nevertheless, CC deserves its moment in the sun. Handing CC Legal Week’s 2006 International firm of the Year Award, it was noted that Linklaters and Freshfields then still seemed the surer bet for global domination. But on current showing, it is the restructuring Freshfields, whose own provisional results were announced today, that will be feeling a touch of pressure to keep up with its arch City rivals.

alex.novarese@legalweek.com