SHEARMAN & Sterling experienced something of an evolution in 2005. Although it continued to be plagued by ongoing rumours of discontent within its partnership, the New York-headquartered firm succeeded in turning around 2004’s disappointing results to post a 13 per cent increase in global revenue to hit $835m (£458.8m).

A dramatic slashing of the firm’s headcount, meanwhile, helped push PEP up by a whopping 20 per cent, from £632,000 to £761,000. PEP in its London office failed to rise, but the City office remains significantly more profitable than New York at £950,000. The firm’s London managing partner Kenneth MacRitchie said there had been “a return to the string of huge US M&A deals” towards the end of the year and that the eventually strong year was “all the more surprising” because it had started slowly.

While many firms grew in size off the booming corporate and M&A market, Shearman took the tough decision to cut back its headcount from 963 lawyers in 2004 to 910 in 2005. This reduction was largely in New York, following the appointment of Rohan Weerasinghe as senior partner in June 2005. The move helped smooth tensions between that office and the European arm over perceived underperforming partners in New York.

In total Shearman has 19 offices, only six of which are in the US. Other locations include Abu Dhabi, São Paolo and Toronto.

The London office remains the firm’s leading light in terms of profit, with UK PEP some 20 per cent higher than the firm’s global average.

The firm is also gearing up to expand in Asia. Shearman already has presences in Beijing, Tokyo, Singapore and Hong Kong. However, it is now targeting a Q4 2006 or Q1 2007 opening in Shanghai.