Clifford Chance saw global net profit grow by almost 10 per cent last year following an increased push towards efficiency in real estate and business services under managing partner Matthew Layton.
Average profit per equity partner (PEP) was up 10 per cent to £1.23m, a 23 per cent jump in PEP over the last three years. Revenue climbed 2.6 per cent to a record high for the firm of £1.386bn, while profit now sits at £494m.
The results follow a disappointing year in 2014/15 when global turnover dipped slightly to £1.35bn. Net profit and PEP also dropped that year to £450m and £1.12m respectively.
Clifford Chance is the second magic circle firm to report its financial results after Allen & Overy posted static PEP of £1.2m alongside a 2.3 per cent increase in revenue to £1.31bn.
By region Clifford Chance posted 13 per cent growth in its Americas business last year; a 9 per cent growth across Asia Pacific; a 7 per cent increase in turnover in the Middle East; a 2 per cent growth in the UK; and 4 per cent growth in continental Europe.
Layton attributed global growth to an uptick in high value cross-border mandates, particularly in its corporate transactional practice. More than 75 per cent of the firm’s top 50 clients now instruct it across at least 20 worldwide offices, while 96 per cent of top 25 clients use all of the firm’s practice areas.
Headline instructions in the last year include advising Anheuser-Busch InBev shareholders in relation to its bid for SAB Miller; advising Italy’s national postal service Poste Italiene on its IPO; advising EDF on proposals to invest £6bn in the Hinkley Point nuclear power project; and advising the Bank of China on its $3.55bn bond issuance.
In disputes, Clifford Chance represented Citi on its successful defence against Terra Firma’s £1.5bn lawsuit over EMI and represented Barclays on a number of Libor claims over the last 12 months.
A focus on improving efficiency in business services that saw Clifford Chance rehouse its 400-staff support function in a new Canary Wharf property last year also boosted its bottom line. Layton said the firm had “managed its cost base very effectively”, leading to a 1 per cent drop in costs last year despite an increase to lawyers’ salaries.
Layton said: “The practice areas all performed strongly, particularly with a strong transactional performance for much of last year. Finance and corporate were particularly strong, real estate continued to perform well, and the disputes, investigatory and regulatory teams also did well.
“I found the balance of strong performance across the geographies and practice areas very pleasing,” he added.
Growth in its Americas offices means the continent now contributes 13 per cent of global revenue at £175m. Layton said Clifford Chance currently has 73 partners in the US and will have “nearly 300 lawyers” by this autumn. Recent hires include federal prosecutor Dan Silver in March, Simpson Thacher & Bartlett arbitration counsel Janet Whittaker in June, and Dentons real estate partner Eddie Frastai in July.
The UK still contributes the greatest proportion of revenue at £489m or 35 per cent, while continental Europe contributes 33 per cent, or £452m. The European results are similar to the accounts in 2014/15 when revenue on the continent inched up by 1 per cent while the UK grew by 2 per cent.
Meanwhile Asia Pacific now contributes 16 per cent of global turnover at £224m. Layton said revenues in Asia had more than doubled in the last five years.
The firm is understood to have abandoned plans to find a Chinese merger partner earlier this year after failed talks with a handful of the country’s top-tier firms. Layton said the firm was now pursuing “continued organic development” in the country.
In Europe, Clifford Chance has seen some instability in its German offices in recent years following nine partners leaving across its three offices in the country in 2014 amid a “strategic review” of its operations.
Exits have notably slowed in the last financial year and Clifford Chance has begun building up the region, recently hiring Düsseldorf corporate head Anselm Raddatz from Freshfields Bruckhaus Deringer.
The firm made considerable changes in Paris and London in 2015/16, including moving its Paris offices to a more cost-efficient location and subletting almost half of its Canary Wharf headquarters to Deutsche Bank, leading to around £7m of savings.
Layton has also been driving forward the firm’s focus on innovation in client delivery and technology last year, with the focus group headed up by Bas Boris Visser. Layton said Clifford Chance would “continue to invest” in innovation and “the use of technology is accelerating” at the firm, “bringing in additional skills to the team that are complementary to high-level legal skills.”
He added the combination of the firm’s “continuous improvement” programme with its investment in new technologies was a “key feature of strategy”.
Earlier this week Clifford Chance signed a deal with artificial intelligence provider Kira. It is the second magic circle firm to do such a deal after Linklaters partnered with Ravn earlier this year.
Planning for the future, Layton said: “Clients are now, more than ever, confronted with complex challenges that defy neat classifications and are in need of solutions and guidance that draws on a comprehensive understanding of the relevant issues from Brussels to Beijing.
“While I don’t expect the period ahead to be easy, I am confident that our firm has the capability, quality, platform and commitment to achieve our vision of being the global law firm of choice for our clients.”
The Lawyer interviewed Layton about his “culture of change” at Clifford Chance earlier this year. Read the full profile here.