Major UK law firms suffer drop-off in 2009 Global 100 results

UK trio fall out of the global 100 as group’s profits fall by 8%

The UK’s leading law firms have fallen back in the league of the world’s largest legal practices, according to new research, with three City-based firms falling out of this year’s Global 100.

The ranking – a joint project between The American Lawyer and Legal Week – found total revenues at the world’s 100 highest-billing law firms inched up 1.7% from the previous year, from $78.53bn to $79.92bn. Average fee income for a Global 100 practice was $799.2m, up from $785.3m in 2008.

However, the research confirms that the recession has had an impact on firms’ profits and productivity, with average profit per equity partner (PEP) falling 8% from $1.51m in 2008 to $1.39m. Revenue per lawyer fell by 2% to an average of $825,450, compared to $843,350 the previous year.

The UK’s magic circle generally bucked the trend to remain the largest law firms, with Linklaters taking the position of the world’s largest practice in revenue terms with income of $2.4bn. Previously top-ranked Clifford Chance fell to third place while Freshfields Bruckhaus Deringer moved up the rankings to secure second place.

Freshfields co-senior partner Konstantin Mettenheimer (pictured) commented: “We have been quick to strengthen the new areas that really matter, including restructuring and insolvency, and more recently financial regulation, investigations, legislation and bank supervision. We also had many clients, longstanding and new ones, which turned to us at their most difficult time.”

Outside the magic circle, UK firms generally fell down the tables in part due to the falling pound and April financial year-ends, which gave them more exposure than US rivals to the recession that began last summer. Only 14 UK-based firms made the table this year compared to 17 in 2008 with SJ Berwin, Addleshaw Goddard and Berwin Leighton Paisner all falling out of the table.

Instead, law firms based outside of the US and UK made headway, with Australia’s Mallesons Stephen Jaques the highest billing in this class, ranking at number 74.

Continental European firms also improved their position, with Madrid-based Garrigues leaping to 77 from 99, and Benelux firm Loyens & Loeff up from 91 to 83. France’s Gide Loyrette Nouel and Iberian leader Cuatrecasas Goncalves Pereira both entered the charts, at number 95 and 100 respectively.

Garrigues co-managing partner Fernando Vives commented: “Continental firms are more stable, both in profits and results. Being closer to their clients allows them, in times of economic crisis, to grow more than their competitors.”

US-based firms remained the world’s most lucrative, with Wall Street’s Wachtell Lipton Rosen & Katz topping profit rankings with PEP of $4.01m. US litigation-specialist Quinn Emanuel Urquhart Oliver & Hedges moved up to second place with PEP of $3.33m.

Only three UK firms made it into the top 10 by profitability this year with Slaughter and May at number four, Freshfields at five and Linklaters at number 10.

All figures are calculated using an average sterling/dollar exchange rate for 2008 of £1:$1.845.

Full coverage and the table of results are available to Legal Week subscribers. Email david.hopewell@incisivemedia.com for information on law firm subscriptions.