All four magic circle firms now boast turnovers of more than £1bn, with Clifford Chance remaining the world’s largest firm in turnover terms with a revenue of £1.33bn. Linklaters remains in second place with a turnover of £1.29bn, while Freshfields Bruckhaus Deringer and A&O posted turnovers of £1.18bn and £1.02bn respectively.
The strong showing means the firms hold on to their positions as global leaders, heading the group of Sweet Sixteen firms that makes up the transatlantic elite (see table). This sees A&O and Freshfields overtake US firms Skadden Arps Slate Meagher & Flom and Latham & Watkins.
A&O senior partner David Morley said: “We can see the development and emergence of a global elite. It’s a convenient phrase for describing the four international magic circle firms plus Skadden and Latham.
“Those firms are all over £1bn in revenue and there’s a gap opening up in terms of scale. They all have wide geographic spreads – more so with London firms than with US firms – and all are focused on premium work.”
The dominance of the London magic circle is also marked by a strong showing in average profit per equity partner (PEP) figures, with Linklaters and Freshfields coming in just behind PEP leader Sullivan & Cromwell at £1.44m (see table). PEP at A&O and Clifford Chance is £1.12m and £1.15m respectively.
A major contributor to the firms’ rise on the global scene is the growing prominence of their international office networks.
Fee income from A&O’s global offices exceeded London fee income for the first time. Linklaters managing partner Simon Davies commented: “We’re reaping the benefit of historic investment in our global network.”
The jurisdictions that contributed most to growth were broadly the same across the four firms.
China, Moscow and the Middle East were strong performers for A&O and Freshfields. Clifford Chance managing partner David Childs and Davies both cited Asia, the Middle East and Central and Eastern Europe as important.
At Clifford Chance, Asia, Central and Eastern Europe and the Middle East contributed a combined 15 per cent to turnover, a 12.5 per cent rise on last year.
The management at all four firms expect contributions from overseas offices to continue to rise, something they believe will help mitigate the impact of the economic climate.
Childs said: “I’m confident the firm is well positioned for the less favourable market conditions that we’re likely to face.”
Freshfields chief executive Ted Burke warned against overoptimism and said expectations for the coming year will drop off.
“The current market challenges are affecting us all and we’ll continue to stay close to our clients as we navigate our way through the next period,” he said.
• For more on this, see the rolling blog Top of the PEPs on TheLawyer.com.