Freshfields Partner Profits Fall 6.9% as Law Firms Brace for a Slower Year
Freshfields Bruckhaus Deringer LLP’s profits per equity partner fell 6.9 percent to 1.3 million pounds ($2.1 million) as the highest-grossing U.K. law firms braced for “uncertainty’’ amid the European sovereign debt crisis.
Freshfields revenue fell slightly to 1.14 billion pounds, the firm said in a statement today. Another London firm, Linklaters LLP, said revenue increased 1.4 percent to 1.2 billion pounds.
Simon Davies, the managing partner of Linklaters, said in an interview that some deal work may slow over concerns about sovereign debt issues. European finance ministers earlier this month authorized an 8.7 billion-euro ($12 billion) loan payout to Greece in an attempt to avert the region’s first sovereign default.
“The sovereign debt crisis we’re seeing is likely to create turbulence in terms of creating uncertainty that will challenge deal flow,” Davies said.
Freshfields’ London-based rivals including Linklaters and Clifford Chance LLP saw equity partner profits rise to 1.23 million pounds and 1 million pounds respectively. Allen & Overy LLP’s figures stayed unchanged at 1.1 million pounds. Equity partners share in a firm’s profits.
The firms, known collectively as the Magic Circle, benefitted from advising companies and underwriters on the largest initial public offerings, and from an increase in deal work in emerging markets including China, Brazil, India and Africa. Slaughter and May, which doesn’t publish its financial accounts, is the fifth Magic Circle law firm.
Freshfields advised BP Plc on defending against potential takeovers as a result of the oil spill in the Gulf of Mexico, and U.K. subprime lender Cattles Plc on its 3 billion pound restructuring. The firm is also the lead adviser to the London 2012 Olympic Games.
“We are hopeful that business will pick up this year,” Freshfields’ managing partner Ted Burke said in an interview. “There are sufficient potential for economic disruptions that we cross our fingers a bit.”
Linklaters had a “significantly stronger” second half of the year, with revenues increasing by 9 percent from the first half, driven by emerging markets, Davies said. In mature markets, the firm saw a decrease in distressed work, and a tapering off of advice in the administration of Lehman Brothers International (Europe), he said.
“We’ve more than made up for that fall,” Davies said. The firm advised the commodity trader Glencore International Plc in the world’s biggest IPO this year.
Clifford Chance opened offices this year in Qatar and Istanbul while Allen & Overy started practices in Jakarta and Australia. Clifford Chance advised the underwriters of both the Glencore and Prada SpA initial public offerings, while Allen & Overy advised SABMiller Plc (SAB) on its A$9.5 billion ($10.2 billion) bid for Foster’s Group Ltd. (FGL)
Linklaters said yesterday it is opening an office in Abu Dhabi.
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