CC profits plummet as rival firms hold steady

Allen & Overy (A&O) and Freshfields Bruckhaus Deringer have emerged as the two most consistent performers in the magic circle, and Linklaters the most erratic, as profit levels look set to fall back to 1999-2000 levels.

According to preliminary figures obtained by The Lawyer, A&O, Clifford Chance and Freshfields are all set to post a drop in profits this year – with Clifford Chance particularly hard hit. However, A&O’s and Freshfields’ figures have followed a steady curve over the past five years (see graph).

Clifford Chance sources are predicting that average profits will drop to around £643,000. The top of equity is expected to be £720,000, compared with last year’s record high of £813,000 – a drop of 11 per cent, making Clifford Chance plateau partners the least well-paid of the magic circle.

Plateau partners at A&O, Freshfields and Linklaters are expected to be on £1m, £860,000 and £910,000 respectively.

As first revealed on www.thelawyer.com/lawyer news (May 14), Linklaters reported average profits of £691,000, which represents a 6 per cent rise from last year’s £650,000. However, the increased profits figures have raised eyebrows in the City, given that at the half year point insiders were predicting flat profits at best.

Managing partner Tony Angel told The Lawyer: “At that point our practice heads were telling us that the Q2 forecast wasn’t very high, and at that point we told staff there wasn’t going to be a bonus.”

Angel said that Linklaters’ second six months were boosted by a strong showing in finance and that the improved figures resulted in bonus payments being made to staff after all.

Linklaters sources confirmed that the firm had been careful not to open up the equity too far this year and that it has increased the number of associate partners: out of 490 partners, 80 are now non-equity, and are based mainly in overseas offices. Source: The LawyerSource: The Lawyer