Herbert Smith Freehills

Last year was a transformative one for Herbert Smith, but you would not guess that from looking at its financial results. Turnover nudged up 3 per cent, from £465m to £480m, while average profit per equity partner fell 7 per cent, from £900,000 to £840,000. Net profit also fell 7 per cent, from £117.9m to £109.7m. But then, the figures tell only half the story.

In 2011–12, Herbert Smith appeared to finally shake off its stifling conservatism and address its position in the rapidly shifting global legal market. In June partners voted for a full financial merger with Australia’s Freehills which went ahead in October. Less than three months later, Herbert Smith hired a team of six litigators from Chadbourne & Parke ahead of a New York launch.

New York has been on the minds of Herbert Smith’s litigators for some time, but some corporate partners were hostile to the idea over fears they would lose referrals. Getting the launch over the line is either a sign of unity at the firm or of the corporate department’s waning influence in the bear market. That global head of corporate James Palmer is expected to return to fee earning following the merger with Freehills suggests the latter plays at least some part.

In the year ahead, Herbert Smith will look to capitalise on its new international reach, but sources close to the firm question whether it will be able to achieve its ultimate aim — recognition as a peer of the magic circle.