Baker McKenzie reports flat profits as revenue rises 5.5% to $3.3bn
Net income level at $1.24bn after record jump in FY21; global giant points to rise in costs as Covid-19 impact fades
Baker McKenzie has expressed satisfaction with its latest set of financial results after achieving a 5.5% increase in revenue against flat profits for the year ended 30 June.
Net income remained steady at $1.24bn having risen by 36.7% in the previous financial year, while revenue growth slowed from the 7.8% achieved in 20/21 to 5.5%, pushing the firm's turnover to a new record of $3.3bn.
The firm pointed out that its latest set of results had followed a record jump in profits in 2021 and that it had maintained its profits despite a partial cost rebound as it returned to a more normalised way of working post pandemic. It said it had invested in new talent, technology and repurposing premises for the post-Covid era during its financial year.
Profit-per-equity partner, however, did increase, by 9% to $2m.
Across the world the firm had a particularly strong showing in North America, where revenue increased 12.1%, while Asia Pacific revenues were up 3.3%, EMEA higher by 3.4% and Latin America up by 4.1%.
In terms of practice area, private equity had a standout year, growing by 25.7%, while M&A and antitrust & competition grew 9.2% and 10.2% respectively. Bakers said real estate was also a very active space, with many organisations looking to negotiate less, but higher quality, work space.
Global chair, Milton Cheng, said: "We have built on the success of the previous year to achieve record revenues once again, while continuing to invest strategically for the future.”
He added: "Baker McKenzie's global reach and breadth of expertise position us well to help clients right through the economic cycle. With our size and scale, we have the ability to make targeted investments to adjust quickly to our clients' needs and underlying market trends, helping businesses to move from uncertainty to opportunity."
In terms of industry focus, Bakers said it continued to see expansion in the healthcare & life sciences and technology sectors, which grew 9.6% and 8.8% respectively. In the face of rising energy prices and the need to generate new capacity, the energy, mining and infrastructure (EMI) sector also become a major driver of activity, growing 10.8%.
The firm promoted 75 to partner during FY22 – making up 52 across its international network in the summer in a round dominated by Asia-Pacific and M&A and 23 in North America in a round in January that skewed towards the firm’s tax practice.
The firm also added 41 partners through lateral hires over the course of the year, including former Manhattan district attorney Cyrus Vance, who joined in January as chair of its global cybersecurity practice, part of a drive by the firm to build its US team.
The firm topped Thomson Reuters’ Global Elite Law Firm Brand Index for the 12th consecutive year, surpassing second placed DLA Piper by more than 56 index points and underscoring the strong brand recognition it has among buyers of legal services.
Like a slew of firms, however, Bakers announced the spinning out of its Moscow arm in March, while it revamped its Johannesburg leadership team in May after implementing a ‘three-step plan’ to address management issues at the office.
The challenges of managing one of the most extensive global networks of any firm were also underlined last month when it established an interim management team in Dubai as it negotiated a split with the high-profile head of its Gulf arm following controversy over his anti-gay views.
The firm’s unusual year-end of 30 June sets it apart both from its US and UK rivals. The timing of its year-end made it particularly exposed to the initial negative impact of the Covid-19 pandemic in 2020 but meant that last year it yielded the full benefits of a sharp rise in deal activity in the second half of 2020, combined with lockdown-enforced cost savings. That helps explain its record jump in profitability last year.
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