Freshfields Bruckhaus Deringer
16 September 2008
- UK 200 Position: 3 <...
Firm: Freshfields Bruckhaus Deringer
Profit per equity partner: £1,484K
Earnings per partner: £1,430K
Equity spread: £655K-£1,638K
Net profit: £595m
Profit margin: 51 per cent
Revenue per fee-earner: £431K
Revenue per lawyer: £539K
Revenue per partner: £2,791K
Revenue per equity partner: £2.94m
Total number of fee-earners: 2,735
Total number of qualified partners: 2,187
Total number of partners: 422
Total number of equity partners: 401
Total number of female partners: 53
Total number of female equity partners: 51
Total number of staff: 5,145
Leverage ratio (equity partners/fee-earners): 1:4.5
Freshfields Bruckhaus Deringer had an outstanding 2007-08, turnover rising 19.5 per cent while average profit per equity partner (PEP) rocketed a massive 39 per cent. This put the firm right at the front of the magic circle in PEP terms, with the rise bringing its average figure to £1.5m. In turnover terms it remained the UK’s third largest firm on revenues of £1.18bn.
The figures confirm that the tough times for the firm are well and truly in the past, with the partnership now reaping the benefits of an 18-month restructuring programme launched in 2006.
While the firm was suffering at the end of the 2003-04 financial year, with turnover and PEP both falling, after 100 or so partners left the equity, both voluntarily and via a partner cull, profitability has improved dramatically.
At the end of the 2003-04 financial year the firm had 502 equity partners sharing £351m. This year, the first in which the firm had non-equity partners in its ranks, 401 equity partners shared net profits of £595m.
As the firm bore the full £55m cost of the restructuring in the 2006-07 financial year, 2007-08 was the first year in which the full effects of the restructuring could be felt.
Despite its rocky patch between 2003 and 2005, Freshfields’ performance over a wider five-year view is also strong. Since the end of the 2002-03 financial year, when the firm’s turnover stood at £800m and its PEP was £700,000, revenues have risen by 47 per cent while PEP has jumped an incredible 105 per cent.
The 2007-08 year had a major part to play in this performance. While the firm does not officially break down the contributions made by individual offices and practice areas, China, Moscow and the Middle East are understood to have been particular drivers of growth.
While Germany and France also had a strong year, the firm’s US practice bore the brunt of the impact caused by the global slowdown. This is in contrast to last year, when the firm’s US lawyers outstripped their London counterparts in revenue per lawyer terms, bringing in a healthy $1m (£500,000) each. Despite the blow to the office, arbitration and infrastructure finance remain strong in the US.
Corporate continues to be a major area of focus for the firm, which made the best of a torrid time for corporate activity by winning roles on a raft of eye-catching deals.
Among these, partner Will Lawes advised underwriting banks Citi and UBS on Bradford & Bingley’s £400m rights issue and also acted along with partners Simon Witty and Sarah Murphy to advise the underwriters on Royal Bank of Scotland’s £12bn rights issue.
The firm also played a key role in the Northern Rock saga, advising the beleagured bank in the run up to its nationalisation. The corporate practice in Germany scored some high-profile deals too, winning a role advising German national rail operator Deutsche Bahn on its planned partial privatisation and IPO on the Frankfurt Stock Exchange.
The icing on the cake, for London corporate partners at least, came when M&A star Barry O’Brien was voted back into the partnership after two years in a consultancy role.
The move came as Freshfields broke with tradition to become the last magic firm to scrap an all-equity partnership. The firm now has 21 salaried partners.
For those in the equity group, it will take 12 years to reach the top of the firm’s lockstep. Partners enter the equity tier on 20 points, which in 2007-08 translated to a profit share of £655,000, reaching 50 points at plateau. Top-of-equity partners in the last financial year pocketed £1.64m.
The value of one lockstep point increased by 49 per cent over the year, up from £22,000 to £32,760.
2006-07: Corporate 6, tax 3, finance 1, IP 1
2005-06: Corporate 7, finance 6, competition 2, dispute resolution 2, employment 2, tax 2
2004-05: Corporate 6, dispute resolution 3, finance 3, employment 2, tax 2
2006: Restructuring/insolvency 1
2005: Corporate 1
2004: Corporate 3, competition 1, dispute resolution 1, employment 1, finance 1
Intake as percentage of partnership: 2.5
New female partners as percentage of intake: 0
Firms recruited from: Davis Polk & Wardwell
Equity structure: 483 equity partners (fixed-share partners will not be introduced until the 2007-08 fiscal year)
Practice area(s) most heavily promoted: Corporate, tax, finance
*Figures supplied relate to the calendar year
The last year has been one of restructuring for Freshfields Bruckhaus Deringer, which has seen the approval of the introduction of a salaried partnership tier as the firm seeks to overhaul its equity structure.
By the end of 2006-07 a total of 100 equity partners will have been axed over the course of 18 months. Out of those, around 25 are still with the firm as consultants.
As a result partner departures in 2006 stacked up at 44, compared with a three-year average between 2003 and 2005 of 19. This was largely due to 30 partners choosing to leave in October 2006 to take advantage of the firm’s old pension system before changes were introduced.
With that general picture of retrenchment, the firm made up only 11 associates to the partnership in 2006-07, nearly half the amount of the previous year, and made just one lateral hire in London. True to tradition, corporate was most heavily promoted, accounting for 54.5 per cent. IP got its first promotion in four years, but real estate has been passed over since 2003. Despite the firm’s protestations that projects is still an integral part of its offering, no PFI or PPP partners were made up in 2006-07.
But 2006-07 was the first year that New York overtook London for partner promotions with three to London’s two, an indication perhaps of just how seriously the firm takes the US market.
- Telephone: 0207 427 3194
- Fax: 0207 108 3194
- No. of Trainees: 199
- No. of Trainee Vacancies: 100
- Training contract application deadline: 31-Jul-08
- Individual interview: Yes
- Panel interview: No
- Assessment day: No
- Psychometric test: No
- Written exercise: Yes
- No. of Seats: 4 - 7
- Opportunities Abroad: Yes
- Vacation Schemes
- No. placements: 80
- Summer vacation scheme application deadline: 18-Jan-08
- GDL/CPE Intake: Approx 35%
- GDL/CPE funding
- Fees: Yes
- Maintenance: £6,250
- LPC funding
- Fees: Yes
- Maintenance: £7,250
- Start: £39,000
- Qualification: £66,000
- Season ticket loan: Yes
- Healthcare: Yes
- Pension scheme: Yes
- Life assurance: Yes
- Bonus scheme: No
- Gym membership (inhouse): Yes
- Subsidised lunch: Yes
- Free taxis after hours: Yes