Linklaters’ PEP outguns magic circle

Linklaters has arrested several years of indifferent financial results and is reporting a massive 22 per cent rise in profits this year.

According to an internal announcement last week, the firm’s average profit per equity partner (PEP) is up 22 per cent to £818,000 from £674,000. Partners at the top of equity will receive more than £1m compared with last year’s figure of £864,000. However, the PEP figure is understood to be prior to any exceptional charges.

Turnover was up 10 per cent to £793m after a particularly strong second half of the year, powered mainly by the resurgent corporate department. Linklaters’ figures mean that the firm has outperformed its budget by 12 per cent, which will trigger a profit-related pay scheme for all of the firm’s staff.

The bonuses, which are separate from work-related associate bonuses and which are paid to both fee-earning and non-fee-earning staff, are thought to amount to an average of £1,700 per person.

The financials are still subject to an end-of-year adjustment. However, one Linklaters source claimed that the final figures (which include valuing work in progress, making provisions for bad debts and calculating bonus accruals) would mean that the current PEP figure is on the conservative sideLinklaters’ performance looks set to outstrip those of its magic circle competitors on current projections. Allen & Overy is expecting average PEP to rise some 10 per cent to £670,000, while Clifford Chance is predicting a 12 per cent rise in PEP to £630,000 and Freshfields Bruckhaus Deringer is expecting a 5 per cent rise to £708,000.