Revenue rises 1% at Freshfields to £1.232bn, PEP up to £1.48m

Freshfields Bruckhaus Deringer has pushed up revenue by 1 per cent at the 2013/14 year end to £1.232bn, while average profit per equity partner (PEP) increased by 6 per cent from £1.398m to £1.48m.

Net profit has also climbed upward by 5 per cent from £548m to £578m for 2013/14 (5 July 2013).

When foreign exchange impacts are taken into account revenue is up by 4 per cent across the firm.

It signals a return to growth for the magic circle firm, which has seen two years of consecutive growth following a three years of contraction (see table 1).

Like its magic circle peers Freshfields’ revenue fell sharply between 2008/09 and 2009/10 from £1.287bn in 2008/09 to £1.139bn in 2011/12, a slide of 11.5 per cent.  Net profit dropped by 11.3 per cent during the same period, from a high of £603m in 2008/09 to £535m in 2011/12.

It was a disappointing turn for the firm, which had stormed to a PEP high of £1.484m in 2007/08 (2 June 2008).

During the last 12 months Freshfields’ growth has been driven by an uptick in transactional volumes in Asia and the US. The US dispute resolution practice has also seen revenues rise.

Freshfields has looked for strategic growth across Asia and the US post-2008, a move that appears to be reaping rewards.

The firm re-launched in Singapore in 2012, five years after withdrawing from the city state and managing partner David Aitman said the firm had seen strong growth in that office and Japan (12 September 2012).

Growth also picked up dramatically in the US market in the first half of 2014 after a slow start to the financial year. The firm kicked off the year by advising US-listed engineering company Foster Wheeler in a $3.2bn (£1.9bn) acquisition of British rival Amec.

However, the firm said it was the US dispute resolution practice that had produced an outstanding year. It added US arbitrator Noiana Marigo to its New York practice in the most recent promotions round and in the previous financial year made up 14 partners internally. Those included global investigations partner Kimberly Zelnick. The firm also hired seven new laterals including former US Department of Justice criminal division head Matthew Friedrich in Washington DC, who joined at the beginning of 2013/14 (10 April 2013).

Libor-related work driven by the banks handed the magic circle firm hefty mandates as well as work on the Forex trading investigation. Freshfields has relationships with major banks including Deutsche Bank, which has handed it large chunks of work on the back of Libor claims in the US and UK (30 October 2013).

In Europe corporate, finance and real estate all benefitted from increased investor interest in Spanish and German assets.

The magic circle firm plans to build up its corporate team outside Europe over the next 12 months. The firm merged its IT and IP teams into its corporate group last year in a bid to better target sector not practice area driven work (19 March 2013). Cologne-based global IP and IT head Matthias Koch continues to head the practice, which functions as a sub-group rather than standalone global department.

The Middle East has been a key area of growth through infrastructure, energy and natural resources work. The firm’s work in the pharma sector has also proved profitable, having taking on headline roles in Pfizer’s bid for AstraZeneca in April (28 April 2014) as well as the joint venture between GSK and Novartis earlier this year (22 April 2014).

The firm’s equity partner total dropped again over the last financial year from 392 to 390 after plummeting from 412 to 392 during the 2012/13 year. Fixed-share partners (FSP) now count for under 10 per cent of the 426-strong partnership.

Freshfields: a decade in numbers

Freshfields Bruckhaus Deringer
  Turnover (£m) % change Profit (£m)  % change PEP (£k) % change
2013/14 1,232 0.9 578 5.5 1,480 5.8
2012/13 1,221 7.2 548 2.4 1,398 13.8
2011/12 1,139 -0.9 535 1.7 1,229 -6
2010/11 1,140 0.08 544 -7.6 1,308 -7
2009/10 1,141 -11.3 589 -2.3 1,406 -2.6
2008/09 1,287 9.3 603 1.3 1,443 -2.8
2007/08 1,178 19.5 595 21.4 1,484 43.5
2006/07 986 11.8 490 13.2 1,034 24.6
2005/06 882 13.1 433 22.2 830 18.6
2004/05 780 -0.6 354.2 1.2 700 3.7