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A pot of nearly £26m used to finance Clifford Chance’s partnership restructuring has at last run out, eight years after it was made available.
The firm said it spent the reserves on “exceptional costs”, including the overhaul of the partnership in the downturn, during which it slashed partner numbers, capping the cuts at 15 per cent of members.
The £25.7m sum surfaced as a result of a change to the firm’s accounting policy at the end of the 2002-03 financial year. The firm’s annual LLP accounts for 2010-11 show that the amount was ’released’ during that financial year.
In a statement a firm spokesperson said: “Following the introduction of new accounting rules, the firm changed its accounting policy at the end of [the 2002-03 financial year]. This created a one-off gain that was credited to a reserve.
“Over the intervening period, this reserve has been used to help fund certain exceptional costs, for example the restructuring of the firm’s partnership.
“At the time of the restructuring, we explained that our reserves would be deployed in this way. This reserve has now all been spent.”
The firm has also negotiated new borrowing facilities in advance of the existing facilities expiring next summer. It has a £252m undrawn borrowing facility, with £200m expiring in August 2012 and £52m in July.
The spokesperson added: “The firm’s robust financial position has enabled us to successfully negotiate new borrowing facilities. These will run until 2016.”
Revenue at Clifford Chance increased to £1.22bn in 2010-11 from £1.2bn in the previous financial year. Staff and related costs rose marginally, from £535m in 2009-10 to £537m in 2010-11, while other operating costs were cut by 8.4 per cent, from £327.2m to £299.8m.
Net profit rose by 14.2 per cent, from £334.4m to £381.9m, giving the firm an average profit per equity partner figure of £1.01m.