Allen & Overy points to 'exceptional' US performance as revenue grows by 10%

Fee income nears £2bn landmark; but Magic Circle firm warns of challenging conditions ahead as market softens
Photograph of Gareth Price

Gareth Price

Allen & Overy (A&O) has posted a 10% increase in revenue to £1.94bn, attributing more than 50% of this growth to an ‘exceptional’ performance in the US where it has invested heavily.

The double digit rise in fee income has been achieved against a 3% rise in profit per equity partner (PEP) to £1.95m for the financial year ending 30 April, while its global profit before tax jumped by 9% to hit £900m. 

The modest increase in PEP is not nearly as eye-catching as last year’s 17% rise, PEP having fallen by 1.7% to £1.90m in 2020 (see table below). 

However, PEP is often an unreliable metric if taken in isolation and the firm can point to an eye-catching investment programme in the US.

Over the past 12 months, it has opened three new offices in Silicon ValleySan Francisco and Boston fuelled by 24 partner-level lateral hires concentrated in the energy transition, technology, life sciences and private capital fields. 

Standout deals in these practice areas included advising on fintech unicorn’s $1bn Series D funding round and Bridgepoint’s $7bn sale of materials testing company Element to investment giant Temasek. It also advised on Saudi Electricity’s landmark $500m united green financing facility, guaranteed by the Japan Bank for International Cooperation last summer. 

YearRevenue (£m)Percentage ChangePEP (£K)Percentage Change

A&O’s Advanced Delivery arm, meanwhile, also grew this year, by 14%. The firm unveiled plans in November for a second centre in Australia to complement its existing hub in Belfast and focus on offering clients low cost legal services. 

Global managing partner Gareth Price said: “Our clients are facing major new challenges and we have invested to broaden our capabilities to support them as well as expand our expertise in key markets to maintain our industry-leading local depth connected by global reach.”

However, he warned: “The global economy continues to be impacted by high inflation and the business environment for our services has been softening in recent months. We expect these conditions to persist in the coming months but we remain confident that our diversified business provides resilience and positions us well for the more challenging conditions ahead.”

A long-held ambition by A&O to grow in the US – which saw the firm hold protracted but ultimately fruitless merger talks with O'Melveny & Myers in 2018/9 – sparked into life when it opened in Los Angeles in early 2021 with the hire of a highly-rated six-partner US project finance and renewables team from Akin Gump Strauss Hauer & Feld.

A year earlier, however, Freshfields opened a Silicon Valley office after hiring five partners from four US rivals, while it has also notably hired two M&A partners in New York from Wall Street leader Cravath Swaine & Moore in the past year.

A&O is the first of the four UK Magic Circle firms with large international networks to post its numbers. Last year, it and Freshfields Bruckhaus Deringer led the pack in terms of revenue growth, with A&O extending its lead in revenue terms ahead of Linklaters, after it overtook its rival in 2020.

2021 PerformanceRev (£m)% ChangePEP (£k)% Change
Clifford Chance1,8281%1,850k9%
Allen & Overy1,7705%1,900k17%
Freshfields Bruckhaus Deringer1,5905%1,910k5%

Read the Global Legal Post UK law firm financial results tracker

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