Freshfields Bruckhaus Deringer has seen a return to form in 2015/16, posting a 6.6 per cent rise in global revenue to £1.33bn.
Average profit per equity partner (PEP) was up 7.6 per cent to £1.47m while net profit rose 7.5 per cent to £617m.
The financial results see Freshfields recover from a slower year previously when revenue grew by just 1 per cent to £1.245bn, while net profit dropped 1 per cent to £574m.
Freshfields’ PEP is now above Linklaters’ once more after Linklaters overtook it in 2014/15 when its PEP jumped to £1.42m. Linklaters is yet to report its 2015/16 financial results.
Freshfields is the third magic circle firm to post its results, marking an overall strong year for the group so far. Clifford Chance saw global net profit grow by almost 10 per cent to £494m, while revenue climbed 2.6 per cent to £1.39m. Clifford Chance’s PEP now stands at £1.23m, a 10 per cent increase on the previous year.
Meanwhile Allen & Overy’s global revenue increased 2.3 per cent last year to £1.31bn while PEP stayed largely the same at £1.2m.
On a currency-adjusted basis, Freshfields said last year’s revenue was up 3.8 per cent to £1.29bn with net profit rising 4.3 per cent to £599.4m, and PEP up 4.4 per cent to £1.429m.
The firm’s growth continues a steady upwards incline over the last four years following three years of sharp contraction. Like most of its magic circle peers, Freshfields’ revenue fell sharply between 2008/09 and 2011/12, from £1.29bn to £1.14bn – a slide of 11.5 per cent. However the firm has been steadily pushing up revenue since posting an uptick of 7.2 per cent to £1.22bn in 2012/13.
Freshfields has been making a number of pushes towards greater global efficiency in the last financial year following the election of new co-managing and senior partners Edward Braham, Chris Pugh and Stephan Eilers, who officially took over in January.
Eilers attributed growth to a continued push in high value M&A, particularly China outbound work into Europe, growth in Freshfields’ finance and regulatory/EU practices, and the launch of its Manchester base last year.
The firm launched its Manchester legal services and back office support hub last summer, signing a £2.7m lease on a permanent home in Salford. The centre is expected to grow to a headcount of 800-staff over the next two years, a target Eilers said was “on track”.
Eilers said Manchester “was still an investment” last year and has generated revenue in the “low two-digit million pounds”. He added the centre will “be closer to breaking even” in the current financial year.
“Manchester is essentially a start-up operation that had changed the spirit of the firm a little bit as well,” Eilers said. Freshfields is now set to open a second global legal services centre in Vancouver before the end of the year.
The firm is also understood to be reducing the number of partners it makes up globally each year, consolidating its smaller practice groups such as IP into the wider umbrellas of corporate and litigation, and moving a number of partners onto a “second tier” lockstep ladder to free up points for star performers and lateral hires.
“Manchester is taking hold of our efficiency issues,” Eilers said.
Regarding Britain’s decision to leave the EU, Eilers said the referendum “has not been a fall over the cliff” for Freshfields.
He added: “Even the transactional markets have held up pretty nicely.
“On a strategy basis we’ll continue US growth, continue the Manchester centre’s efficiency growth, continue China outbound, and continue to be on the side of the client in the Brexit crash.
“We are not so shocked or influenced by the Brexit decision,” Eilers continued. “Everything is a challenge but times of challenge are normally not so bad for lawyers who are active in these areas.
“I’m pretty optimistic London will keep the European hub financial status, but in what kind of regime we really don’t know.”