Clifford Chance has become the first of the elite “magic circle” law firms to hit the £2mn level for partner payouts following a 10 per cent rise in average take-home profits.
Equity partners at the London-based law firm took home average annual profit shares of £2.04mn in the year ended 30 April, breaking a new record for the group of four that work on the most prestigious deals.
Clifford Chance surpassed rival Allen & Overy, which revealed last week that its top echelon of partners pocketed average sums of £1.9mn, an increase of 3 per cent on the previous year.
Freshfields Bruckhaus Deringer and Linklaters have not yet reported annual results, but the former handed some £1.91mn in profit shares to its equity partners in the 2020/21 financial year while Linklaters partners took home £1.77mn on average in the same period.
Clifford Chance posted an 8 per cent increase in revenue to £1.97bn, driven in part by strong dealmaking during the latter half of 2021, when law firms were deluged with demand from corporate clients. The firm posted a 9 per cent increase in profits to £783mn.
However chief financial officer Patrick Glydon said the firm needed to “continue to grow our profit per equity partner to compete effectively”. Along with its rivals, Clifford Chance is trying to expand in markets such as the US, where elite law firm partners are paid sums surpassing $6mn on average
Clifford Chance managing partner Charles Adams said the firm had “adopted a very clear focus on . . . cost management” during the pandemic, adding that it had been diversifying its client base. Revenues have grown by 46 per cent since 2015 and profits have grown 74 per cent in the same period.
However Clifford Chance warned that it was bracing for tougher economic conditions. Adams said in a statement: “As we observe the evolving geopolitics in a number of regions, the appalling Russian military aggression in Ukraine, as well as the global economic headwinds linked with the impact of inflation and supply chain fragility, it is critical we remain agile and ready to embrace change as well as act when needed.”
Last week Allen & Overy reported a 10 per cent increase in revenue to £1.94bn and a 9 per cent rise in profit, to £900mn. US revenue was responsible for over 50 per cent of the firm’s growth, following investment in new offices in Boston, San Francisco, Silicon Valley and LA.
Managing partner Gareth Price also warned of slowing demand, however. He said he expected “high inflation” and a “softening” business environment “to persist in the coming months”.