Freshfields' profits remain stable as Magic Circle firm pushes ahead with US expansion
Firm sees slight increase in revenue to £1.5bn, but PEP dips
Annual profits at Magic Circle law firm Freshfields Bruckhaus Deringer were virtually identical to last year as the firm released its 2020 results, the last of the major City law firms to do so.
Net profit was reported at £685m, a touch under the £688m recorded in 2019. Revenue, meantime, was up 3% to £1.5bn. Profit per equity partner (PEP), a key metric for law firm reporting, was £1.82m, down from £1.84m; the firm had earlier announced plans to delay bonuses and distributions as a result of the pandemic.
The figures place Freshfields alongside Allen & Overy and Linklaters in reporting its financial performance, with A&O’s PEP slipping just under 2% to £1.63m, along a firm-wide revenue rise of 4% to £1.69bn. Linklaters’ revenue edged 0.7% higher to £1.64bn, with PEP sliding 5% to £1.61m.
Clifford Chance, which also reported its results this week, was the only firm to show increases in both profit and PEP, with revenues of £1.8bn, and PEP up 5% to £1.69m. Slaughter & May, meantime, is famously circumspect about its financial results.
Commenting, Stephan Eilers, Freshfields’ managing partner, acknowledged the results showed progress, despite a “challenging economic climate”, but argued the firm’s long term strategy would deliver “an even stronger platform for the future”, as it forged ahead with US expansion plans.
Alan Mason, who is Freshfields’ global client partner, noted the firm’s work with technology and life science businesses accelerated due to the Covid-19 pandemic. He said the US expansion would help such companies achieve their ambitions.
He concluded: “Top-tier US talent is critical to our ability to handle our clients’ most important domestic and cross-border issues while setting our advice in its global context.”
Freshfields cited success in a series of key corporate deals, including in the insurance, financial services and fintech sectors, as well as the automotive sector. The firm said its benchmark finance practice achieved double-digit growth, in large part due to sponsor-led transactions.
In common with other firms, it noted a “transformational investment in technology that enabled the firm to seamlessly transition to remote-working during the Covid-19 lockdown.”
Dispute resolution and the firm’s strong antitrust team also played a part. The firm has represented German carmaker Volkswagen in the long-running diesel emissions litigation, and associated class actions and regulatory settlements in Europe, the UK and the US. Meantime, its merger control practice was praised for victories in US and EU antitrust litigation, a key lynchpin to the firm’s well-established corporate nous.
US hires were also mentioned, with the firm’s New York expansion in 2019 referenced alongside its seven-partner Silicon Valley hires and two further US disputes hires.
That included Mary Eaton, who joined in New York from Willkie Farr & Gallagher to head up the firm’s new securities class action litigation practice, and antitrust lawyer Julie Elmer, who joined the firm’s Washington DC office from the US Department of Justice.
The firm made four US promotions in its 2020 partner round; however, there have also been exits from the US practice, suggesting that for the US expansion to work, stronger figures and stable teams will both be important.