ALL THINGS considered, the UK magic circle has emerged relatively unscathed from the 2008 financial year, though some firms have weathered the storm better than others.
But figures in The Lawyer UK 200 Annual Report 2008 show that revenue growth from outside the UK propped up less impressive growth from within the UK in at least three of the top four UK firms. Most notable was Clifford Chance, which achieved a considerable 19 per cent revenue growth from outside the UK, compared with just 2 per cent growth from within the UK.
The other three leaders fared somewhat better, with Freshfields Bruckhaus Deringer recording 20 per cent growth within the UK, Linklaters achieving 10 per cent and Allen & Overy reaching 9 per cent. Like Clifford Chance, all three also benefited from their solid presence outside the UK, achieving significant non-UK revenue growth of around 20 per cent each.
Though Clifford Chance pulled in the highest revenue overall — a sizeable £1329 million ($2922 million) — this is largely the result of strong performance outside the UK, which accounted for £781 million of total revenue.
Meanwhile Linklaters, the second-largest overall revenue earner at £1293 million, maintained and widened its lead over Clifford Chance in terms of revenue derived from within the UK (£600 million for Linklaters, £548 million for Clifford Chance).
According to The Lawyer, Linklaters, Freshfields and Allen & Overy have also outperformed Clifford Chance in terms of earnings per partner and revenue per fee earner. Each Clifford Chance partner bought in, on average, £900,000 compared with Freshfields on £1.430 million, Linklaters with £1.121 million and Allen & Overy with £1.031 million.
Just outside the magic circle, The Lawyer’s results show, it was more of a mixed bag. Some firms appeared to have been untouched by the crunch — namely Herbert Smith, which saw a massive 26 per cent revenue growth and Ashurst, which achieved 17 per cent growth. Both these firms have a strong and rapidly expanding presence in Europe and emerging markets, which made them less vulnerable to the flailing UK market.
Other more UK-dependent firms didn’t pull up so well. Travers Smith, for one, recorded just 3 per cent revenue growth, with earnings per partner down 8 per cent on last year. MacFarlanes, too, saw just 7 per cent revenue growth and recorded no improvement in earnings per partner.
According to The Lawyer, both of these firms, which have no international presence and are both very corporate-focused, probably would have achieved zero revenue growth had it not been for a booming start to the year.
The Lawyer also identified as potential merger targets some smaller, up-and-coming firms that stormed through 2008. Stewarts Law, which ranked 152 in terms of total revenue, is a niche litigation firm which saw a whopping 54 per cent jump in revenue over the last year. Another stellar performer was boutique media and entertainment firm Wiggin, which saw its revenue grow by 46 per cent.