A bumper leveraged buyout (LBO) market and the continuing dominance of private equity provided plenty for work for finance teams and headhunters last year. Clifford Chance's global banking team, led by Mark Campbell, had a record year with global banking revenue shooting up by 9 per cent to £243m, generating an impressive 40 per cent profit margin.

London remains the powerhouse of the banking group, accounting for £120m (49 per cent) of banking revenue, a 12 per cent rise on last year. However, this performance was intriguingly not reflected in its profit per unit (PPU) figure. Banking's PPU at £11,000 was actually lower than PPU in corporate (£13,500) due to the large number of senior partners in banking.

London's outstanding performance is also partly attributable to its commanding position in sponsor-facing finance mandates from the likes of Permira and CVC, where Clifford Chance drafted the private equity houses' term sheets. The prominence of this highly remunerative work was underlined by borrower finance star Mark Stewart becoming London head of banking.

Continental Europe generates £82m of banking turnover, a third of which was from Germany. Asia and the US generated £22m apiece.

The biggest gainer was acquisition finance and global lending, which brought in fees of £98m, up 30 per cent on the previous year. Roles included advising the financiers of Ferrovial's bid for BAA, acting for private equity group EQT on its e1bn (£546.4m)-plus acquisition of Kabel BW and steering DP World through its borrower financing on the takeover of P&O.

But it was not all about borrowers, as Clifford Chance has also become Barclays' favourite law firm, underlined by a joint pro bono effort announced this year.

Projects teams up and down the City have had a tough time, but turnover at Clifford Chance remained steady at around £42m, partly as a result of it reconfiguring a couple of years ago into an industry-facing energy practice. However, its Middle East practice took a knock when Dubai partner Ewan Cameron left to join Linklaters' start-up in the region.

The lack of juicy restructuring mandates dragged down the insolvency group's turnover to approximately £20m, a fall of almost 50 per cent. The previous year's defection of the Margo Schonholz-led US insolvency team to Kaye Scholer has also impacted on the practice. The ending of projects such as British Energy and the lack of big deals to replace them mean Mark Hyde and his team look set to suffer another tough year.

While the banking team had a stellar year, David Dunnigan's capital markets team put in a weaker performance last year, with turnover falling by 5 per cent to £113m. The jewel in the capital markets crown is the securitisation practice led by Kevin Ingram, which remains top of the pile. It made efforts to capture a bigger slice of the Middle East market by transferring partner Debashis Dey to Dubai.

All eyes were on Allen & Overy's (A&O) banking team this year, led by partners Mike Duncan and Chris Rushton. The once mighty department was further plagued by exits and growing competition from both its magic circle rivals and US firms. The exits included Clive Wells to Skadden Arps Slate Meagher & Flom, veteran Tony Keal, who took KKR as a client to Simpson Thacher & Bartlett, and leveraged finance partner Stephen Gillespie, who jumped ship to Kirkland & Ellis.

The banking group managed to post a turnover increase of 13 per cent to around £213m, but is still suffering structural problems. Its lack of any sort of sponsor practice, with the exception of Robin Harvey's relationship with PAI Partners, has contributed to its decline in visibility, while its relationship with Barclays is not what it was.

A&O is making a belated push into sponsor finance work with Harvey and new private equity hire Derek Baird, from Lovells, but there does not appear to be too much buy-in within the banking department itself, which is fundamentally lender-focused. Those bank relationships brought it a role on some of the year's biggest deals, such as advising Barclays Capital and Deutsche Bank on the senior bank financing and equity financing on Dubai Ports. Islamic finance remains a strong suit, however.

The projects team was put in a spin when, rather than axe partners and keep one model, points were instead docked from certain partners within the group - an unprecedented move within a firm wedded to a lockstep. There has also been pressure on the firm's international capital markets team as banks continue to plunder A&O's associate pool for their in-house teams. The international capital markets (ICM) group remains the number-one firm in debt capital markets and continues to win high-profile mandates, such as that for the UK Government's landmark 50-year inflation-linked bond.

Current head of securitisation David Krischer is expected to take over as ICM chief now that Boyan Wells has been voted onto A&O's management board. It remains to be seen whether Krischer's people management skills will match his technical expertise.

A&O faces a challenge to remain in second place in the finance table next year, with Linklaters poised to take its position if its falters again.

Of the magic circle firms, Linklaters put in the biggest turnover increase to bring it within touching distance of A&O. The global practice, led by Giles White, shot up by 24 per cent to £318m, while London grew by 21 per cent to £174m. Capital markets, led by Nick Eastwell, continues to be the largest driver of the group. It accounts for around 50 per cent of income, or £159m, with banking generating £111m, or 35 per cent, and projects accounting for £48m. Linklaters was also the only firm where finance practice revenues per partner broke through the £2m barrier.

Although it has a smaller and younger acquisition finance team than its competitors, Linklaters is making good inroads into the banks. Partner Gideon Moore advised Barclays Capital, Credit Suisse First Boston, Deutsche Bank, JPMorgan and Royal Bank of Scotland (RBS) on the financing of the Apax-led consortium's bid for Danish telecoms company TDC, a deal that was one of Europe's largest-ever LBOs.

Thanks to London partner Nigel Pridmore, Linklaters has also been at the vanguard of the explosion in hybrid bonds, with deals for Allianz and Vinci Construction.

Asia and the Gulf have been firmly in the firm's sights this year. In Hong Kong it took derivatives specialist Chin-Chong Liew and his team from A&O, while it made a belated push into Dubai and the Islamic finance market with former A&O partner Luma Saqqaf. Saqqaf won the firm the sponsor mandate on the $200m (£114.29m) sukuk from Tabreed, the first rated and London-listed Islamic bond.

But not everything was rosy. Linklaters, in common with other firms, has had to grapple with the problems affecting the projects market. The falling profitability of the projects group caused global head Bruce White to conduct an overview of the practice, which resulted in the firm saying goodbye to some of the partners at the top of the lockstep.

It was a better year for Freshfields Bruckhaus Deringer and a good start for new chief Perry Noble as its revenue bounced back to £164m, a rise of 11 per cent, having fallen to £148m in 2004-05. London accounted for some £83m of the finance turnover.

Freshfields' restructuring group can hold its head up high thanks to its work on the Le Meridien deal, led by David Ereira, which is thought to have netted the firm £12m in fees.

Despite the best efforts of rising stars Brian Gray and Chris Howard, its banking group cannot match rivals for volume of acquisition finance mandates, but its long-term involvement in Debenhams yielded a £2.05bn refinancing of all third-party and shareholder debt.

A structural rejig saw the asset finance and structured finance groups merged into one, prompting rumours that there would be a shift away from asset finance - unsurprising considering that it lost its key position on the Export Credit Agency panel last year.

Lovells' finance practice put in a stronger showing than last year, with fee income for the group rising by 4 per cent to £104m. London generated the bulk of this with £67m (64 per cent). However, it has been a tough year for David Hudd's team, especially in the structured finance arena, where it has suffered a series of departures.

In Germany the firm lost the bulk of its securitisation expertise when the team upped sticks to launch Sidley Austin's Frankfurt outfit. It is still struggling to win any hefty acquisition finance mandates. Its projects practice remains strong in the PFI/PPP arena, but lacks international presence.

Stephen Parish took over from Jeffrey Barratt as finance chief at Norton Rose this year and has an enormous task on his hands, as shown by the revenue, which fell by 4.5 per cent to £73.5m. London accounted for £51m (69 per cent).

The firm is still trying to recover from the departure of its leveraged finance group to A&O and securitisation teams to Baker & McKenzie in 2004 and 2005, but remains far from its goal.

In Europe the firm has taken steps to boost its acquisition finance capabilities with new hires, but has failed to replicate that in the City. In addition to London, Paris, Frankfurt and Amsterdam, Singapore and Hong Kong are investment priorities.

It is well placed to take advantage of the boom in Islamic finance products thanks to Neil Miller and his team, and the firm maintains a top-tier projects practice thanks to deals such as the listing and refinancing of Drax and the Rabigh in Saudi Arabia.

Simmons & Simmons had a strong year, with turnover rising by 16 per cent to £61.3m, although its revenue per partner (RPP) fell by 17.3 per cent to £876,000 after a recruitment spree. Its recent round of promotions saw 20 partners added to the team.

During the year Simmons sought to redress the balance of its banking group to its capital markets team by pledging to double the size of its banking capability over the next few years. Financial institutions chief Jeremy Hoyland and then banking head David Dickinson promptly set about scouring the market for lateral hires. In London the hires included Adam Cooper from Shearman & Sterling and Mark Moody from White & Case, while in Hong Kong it snatched Herbert Smith's Asia banking head Jonathan Moult.

For now capital markets remains its strongest arm. The firm won a competitive pitch to advise Bear Stearns on its European structured capital markets business and it acted for Barclays Bank on Gracechurch Corporate Loans Series 2005-1, the largest fully funded collateralised debt obligation (CDO) in the capital markets.

The impact of DLA Piper's global expansion has been most acutely felt in its finance group, where turnover has rocketed by 105 per cent to £54.96m. The number of partners has also increased by 70 per cent to 75, but this has affected negatively the group's RPP, which comes in at £732,000. The immediate impact of the firm's lateral hires catapulted the finance group, led by Michael Burton, into the top 10 firms in the City. DLA Piper continues to pitch its stall firmly at the mid-market through deals such as advising Bank of Scotland Integrated Finance on the secondary buyout of Vue Cinemas.

Ashurst's practice goes from strength to strength. It enjoyed one of the biggest fee income hikes on the table, up by 21 per cent to £53.5m, with London generating £32.1m (60 per cent).

The leveraged finance team, led by Nigel Ward, enjoyed one of its best years thanks to mandates from the likes of Citigroup and Goldman Sachs on Telefónica's agreed £17.7bn takeover of O2. Structured finance, especially the CDO market, has proved a successful revenue stream for the firm. The importance of its international offices was reflected in recent finance hires such as A&O projects specialist Franco Vigliano in Italy and a team of restructuring lawyers from the Frankfurt and London offices of Haarmann Hemmelrath.

It was a mixed year for Denton Wilde Sapte (DWS). The widely reported Dubai Ports sukuk won plaudits and is viewed as a genuine coup for the Islamic finance practice. However, the finance department was hit by the departures of leveraged finance pair Ian Yeo and Chris Fanner to Herbert Smith.

Along with Islamic finance, projects is a key area of the firm's work, but both are based in the firm's respected Middle East offering. The much-plundered London practice remains a problem and Matthew Jones, head of banking and finance, will need to raise both its profile and its deals volume.

Herbert Smith's plans to grow its finance department significantly and place it in the top five have been well documented, but its position at the bottom of the table shows how far it has to go. Finance chief Jason Fox has made a good start on the task, with firmwide finance growing by 12 per cent to £25.2m.

There has also been real progress in London, where finance revenue shot up by 20 per cent to £20.9m, exceeding its self-imposed target of £19m.

Acquisition finance has been a focus for Fox and his team this year and the investment paid off. The firm surprised the market when it won the mandate to act for Goldman Sachs, RBS and UBS on the £4.2bn financing of PSA's bid for P&O. The firm will expect to win more chunky leveraged finance deals now that partner Malcolm Hitching has been joined by Chris Fanner and Ian Yeo from DWS.

Projects, traditionally always the powerhouse of the practice, continued to perform well and was bolstered by Alexander Currie and Andrew Newbery, who joined the firm earlier this year from Linklaters and Norton Rose respectively.