The City’s legal market is running white hot, if figures coming out of its leading lights are anything to go by.
Freshfields Bruckhaus Deringer became the latest Magic Circle firm to reveal its annual financials on 30 July. With a 5% jump in both revenues and profit per partner, it joined its peers in reporting some healthy results.
The positive results will be greeted warmly by the City’s legal community. Amid the chaos of the pandemic, the big five London legal firms were left with some very tough choices on their hands. Did they have the financial firepower in the tank to stave off aggressive US competitors, which were starting to pay staggering end-of-year bonuses of up to $100,000? Or was it better to keep their powder dry and see how the crisis played out?
Eventually, they decided to step up. Freshfields, along with its peer Clifford Chance, felt it was in a strong enough financial position in March this year to dole out one-off bonuses of up to $64,000 for its US juniors in recognition of the “extraordinary times” they had been through during the coronavirus crisis.
Slaughter and May, already viewed as a particularly lucrative City employer, also bowed to the pressure from pay hikes stateside, feeling the time was right to up junior pay in the UK to £100,000.
While Allen & Overy and Clifford Chance also both revealed record profit per equity partner figures in recent weeks, at £1.9m and £1.85m respectively, it is not just the Magic Circle that is thriving.
Mid-tier firm Ashurst broke the £1m profit per equity partner barrier for the first time since 2008, and packages for newly qualified solicitors at Macfarlanes also breached the six-figure mark as firms across the City’s legal marketplace benefitted from a surge in deals activity brought on by the pandemic.
The uptick in work has come at a welcome moment for the Magic Circle. Many commentators had noted that times were looking a bit leaner, with many in the mid-tier mulling mergers as a way to turbocharge revenues.
But some at the top of the corporate law tree were already on a high; many had cited heightened global regulatory issues such as Brexit and a changing political environment under Donald Trump as a reason the Magic Circle hit a previous pay high in 2019.
Now, a surge in IPOs is also acting as a tailwind for their legal advisers. While Deliveroo’s IPO was ill-fated, Freshfields will still have been glad to bag such high-profile work, along with mandates on other large transactions including the market debut of Dr Martens, the footwear brand.
Linklaters will be the next Magic Circle firm to post figures some time in the coming weeks. The market will be hoping it keeps pace and continues to beat a positive note forward.
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