CC partner profits plummet by 37% while revenue falls 5%

Clifford Chance (CC) has seen its profits per equity partner (PEP) slashed by 37%, dropping from £1.156m to £733,000.

The firm today (1 July) became the first from the magic circle to announce preliminary results, reporting a 5% dip in turnover against the plunge in PEP. Revenues for 2008-09 amounted to £1.262m, down from £1.329m in 2007-08, with the weaker pound softening the drop.

The average US dollar to sterling exchange rate for 2008-09 was $1.68, compared with $2.01 the previous year. The currency fluctuation against the dollar and the euro means like-for-like revenues are likely to have been more than 10% down.

Geographically, London and the Middle East accounted for around 39% of turnover, down from some 42% last year. Continental and Eastern Europe brought in around 41% of revenues, while the US brought in 11% compared with 12%-13% in 2007-08. Asia brought in the remaining revenues.

Broken down by practice, corporate finance and litigation were the strongest performers.

News of the drop in PEP follows a difficult year for the magic circle firm, which made support staff and lawyer redundancies as well as carrying out a restructuring of its partnership.

The costs of the headcount reduction outside of the partnership are included in this year's results, although the firm declined to comment on the precise figure.

In London alone the firm announced that it was laying off around 80 lawyers, with up to 115 business support staff affected. There have also been significant cuts in the US.

The partnership restructuring, which is expected to result in a 15% drop in overall partner count in April 2010 compared with this year, did not affect the results. Managing partner David Childs said it would largely come from the firm's reserves and was not expected to make a significant difference to next year's results either.

Childs told Legal Week: "The last 12 months were very difficult for many of our clients so we obviously suffered too. For us the most difficult issue was making painful reductions in headcount and the partnership. I am quite optimistic this financial year will be better. The last year was very, very hard and I do not think any of us have lived through a period of such turbulence and worry, so to now see signs that things are improving is good."

CC's staff numbers have shrunk significantly during the last year. Total headcount including partners stood at 6,700 at the end of the 2008-09 financial year, down from 7,300 at the same point last year.

For more coverage of CC's results, see The Am Law Daily.

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