UK top 50 firms achieve sixth year of revenue growth as partner profits stall


Despite the looming uncertainty of the European Union (EU) referendum and the resulting impact on deal markets, the UK’s 50 largest law firms achieved a sixth consecutive year of revenue growth in 2015-16, but translating this into bottom-line gains proved more difficult to achieve.

Together, the 50 firms brought in a total of £18.24bn, up from £17.45bn in 2014-15 – an increase of 4.5%. Only nine firms within the group saw revenue decline  – an improvement on the previous year when 12 firms saw fee income decrease, including five within the top 10.

Total lawyer numbers climbed to 48,176, with partner numbers nudging up 1.3% to 13,795. Driven in part by moves to bring more partners into the equity to meet recent HMRC tax changes, equity partner numbers soared 15%, with Taylor Wessing and Shoosmiths converting to all-equity partnerships during the period.

Top50 results 2015-16: FactboxWhile fee income increased in 2015-16, with average turnover standing at £364.8m, up from £356m last year, the research shows many firms struggled to convert this into bottom-line gains – a problem that is only likely to worsen in the wake of the UK vote to leave the EU.

Click here to view the full table of top 50 firm results

Hogan Lovells chief executive Steve Immelt comments: “We all know Brexit had a dramatic impact on the UK deal market. It’s hard to know what the post-Brexit environment will look like; we are seeing some resumption of transactional activity but I think people are now adjusting to the understanding that Brexit will have a dragging impact.”

PEP trouble

Fifteen firms within the group saw average profit per equity partner (PEP) fall during the year, 16 including Irwin Mitchell, which maintains it no longer uses PEP but posted a 25% plunge in net profit in the wake of its merger with Thomas Eggar. Including Irwin Mitchell, 10 firms saw double-digit drops in PEP, compared with two of the 12 firms that saw revenue fall in 2014-15 posting a double-digit decline that year.

Increases at 28 firms were not enough to cancel out the decline across the group overall, with average PEP falling marginally from £620,000 to £619,000.

While five firms saw double-digit partner profit rises – led by Addleshaw Goddard’s 38.9% hike – the average change in PEP was markedly down on last year’s 7.9% gain.

Besides Irwin Mitchell, BLM, Weightmans, Ashurst, Macfarlanes and Withers were the poorest performers from a PEP perspective, with all seeing drops of at least 16.9%.

Ashurst’s 19.3% tumble to £603,000 means average PEP at the firm is at its lowest point since 2004-05. The drop means the average partner at Ashurst now receives less than the top 50 average.

The magic circle put in an improved performance on 2014-15, with Freshfields Bruckhaus Deringer and Clifford Chance (CC) the strongest performers. CC remains the second largest UK firm by revenue, with Freshfields climbing from fifth place to third thanks to a 6.6% hike in turnover to £1.327bn.

Commenting on the results, CC managing partner Matthew Layton says: “This year, there are a number of important factors affecting our clients and particularly their appetite for transactional activity. While this uncertainty means we remain cautious for the months ahead, last year’s strong performance illustrates the value our clients place on our offer across practices and geographies, and the benefits of our continued focus on the firm’s strategic priorities.”

In contrast to last year, the larger firms suffered less impact from currency conversions, though firms reporting in euros – Osborne Clarke and Bird & Bird – did see revenue hit as a result of the exchange rate fluctuations.

Shipping and insurance firms once again struggled to find their way in the unsettled markets, with the group posting an average increase in revenue of 2.8% and four of the 11 firms seeing PEP fall.


After a flurry of mergers in recent years, the results highlight the extent to which the market is ripe for further consolidation. The eight largest firms within the top 50 brought in more than £10bn of the entire group’s revenue – more than three times the combined fee income of the firms in the bottom 25, which brought in £2.75bn between them.

Though several top 50 firms are currently in merger talks – most notably Olswang and CMS, and Addleshaws and Hunton & Williams in the US – the 2015-16 results reflect very little merger activity.

Shakespeare Martineau is the only new entrant to the group after the June 2015 merger of SGH Martineau and Shakespeares, while Irwin Mitchell’s results only include around four months of revenue from its merger partner Thomas Eggar.

Meanwhile, Wragge Lawrence Graham & Co tied-up with Canada’s Gowlings in February this year to create Gowling WLG, but only the UK firm’s results are included here.

Herbert Smith Freehills co-CEO Mark Rigotti says: “I think we will see more smaller firms merging to get the pace and scale they need to keep up with legislative change. As more firms merge, you will see more specialist firms sitting alongside them too.”

For the first time, the required revenue figure to make the top 50 has risen above the £70m mark, with a clutch of firms in the £60m-£70m range sitting just outside of the group, including last year’s 50th ranked firm, Browne Jacobson, and Scotland’s top two firms, Brodies and Burness Paull.

Looking ahead, there is consensus that the post-Brexit deal market is likely to make it harder for law firms to achieve growth. Though firms are already securing advisory work and the weaker pound has started to drive some M&A activity, there is less certainty about transactional activity levels going forward.

As Macfarlanes senior partner Charles Martin says: “This is a challenging market, with increasing client demand for quality and value. We feel well positioned to deliver that and firms that do so should perform satisfactorily or better. But firms that are looking to both grow revenue and increase profitability will find current market conditions challenging. This feels like a year for listening carefully to your clients and in response, looking closely at efficiency and business mix. Few will perform very strongly in these market conditions.”

Nabarro senior partner Ciaran Carvalho concludes: “Naturally, we have to be cautious at a time like this because no one knows how things will unfold. There will be a degree of caution rather than bravado, with people taking a bit longer over decision making.”

Click here to view the full table of top 50 firm results