Mind the gap: financial results reveal magic circle split

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  • Although a very interesting article, you certainly have not made your case for there being such a gap between Freshfields/Linklaters and A&O/Clifford Chance.

    I will agree that there appears to be a wide gap between Freshfields/Linklaters and CC, but such a divide is not that apparent with A&O. (Unless, of course, you only use your newfound interest in equity v. non-equity partners as the dividing force. But even then, your numbers are impacted by A&O's lock-step structure, which forces partners to serve in non-equity positions for the first two-years.)

    In all the other financial categories, the differences between A&O and the supposed new higher end of the Magic Circle echelon is less than 10% (PEP, REP, RPL, and profit-margin). Given that the past two-years have shown the incredible swings that law firms are subject to in all three categories, changes that The Lawyer, has written about at great length, I simply cannot see how your judgments hold up.

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  • There is clearly a divide. A&O, in addition to having a significant salaried partner tier, has a much lower revenue per partner than Freshfields or Linklaters.

    I can't believe more has not been made of the fact A&O has opened offices in the past year, thus headcount also grew. Without this, the firm would have slipped below the crucial £1bn mark.

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  • Although I don't agree with all of Threadneedles comments, Nicky's appear to miss the mark as well.
    It is a stretch to say that revenue per partner is "much lower" as the difference between the firms is between 4 and 10 per cent. (With Linklaters having a 6% between it and Freshfields.)
    Also it is my understanding that the new offices A&O opened were not included in this year's revenue count. Clarification on this matter would be appreciated.

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  • One can argue about the significanceof the numbers all day (even though they are plain to see), but to those of us that work across the table from these firms it has always been clear that work-product from CC in particular, but also A&O, is of much lower quality than that which exits the doors at Fleet Street and Silk Street. To anyone working in the profession, there is a clear order (for quality of work): (1) Freshfields, (2) Linklaters, (3) A&O and (distant 4) Clifford Chance. This of course ignores the other quality UK and US firms in London. Many of the US firms would be number 1 in all sorts of lists, and clearly S&M would be number 1 in certain areas of corporate practice.

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  • I find it very odd that firms comment on themselves while pretending to be ordinary readers. It is pretty transparent to all of us what is going on and does not reflect well on the firms concerned at all.

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