More than half of Allen & Overy’s (A&O) revenue now comes from overseas, as the firm continues its international drive with the launch of an office in Indonesia.
The magic circle firm’s income from outside the UK accounted for 60 per cent of the £1.05bn total in 2009-10, as opposed to 50 per cent of the £1.09bn it made during the previous year.
According to global managing partner Wim Dejonghe, this is evidence that the firm’s global strategy is working. “[We’re definitely seeing] more growth in emerging markets, but we won’t stop investing in mature markets,” he added.
The firm announced last Thursday (TheLawyer.com, 1 July 2010) that it has formed an association with one-partner firm Daniel Ginting Law Firm in the Indonesian capital Jakarta to focus on project finance, capital markets and Islamic finance.
The jurisdiction has previously been serviced by Singapore and the Netherlands. The operation begins with an eight-member team, although Dejonghe said there were plans to grow beyond that number.
Dejonghe described Indonesia as “part of the [Asia-Pacific] puzzle”. This comes after the firm launched in Qatar in February, with an office led by real estate partner Robert Porter, and in Australia during the same month through the hire of 17 partners, 14 of whom joined from Clayton Utz. The latter office is intended to target investment flows to and from East Asia.
While A&O was alone among the magic circle in not targeting massive European expansion at the beginning of the last decade, it is the only one of its peer group currently focusing on the Asia-Pacific region in such a big way. According to a report earlier this year in The Lawyer (15 February 2010), the firm had 64 partners in the region, compared with 56 for Clifford Chance, 47 for Linklaters and 33 for Freshfields Bruckhaus Deringer.
When A&O launched in Australia, Freshfields senior partner Konstantin Mettenheimer told The Lawyer that he was dissuaded from opening there because the domestic market is small and already well-serviced, and that it was “difficult to position Australia as a gateway to Asia due to the distance and differing time zones.” (The Lawyer, 15 February 2010.)
However, since then A&O has added one further partner to its Australian practice - Mallesons Stephen Jaques’ partner and competition specialist Dave Poddar. It has also been in hiring mode elsewhere in the business, bringing on board three German laterals – Daniel Busse and Christian Eichner from Lovells, and Kai Schaffelhuber from Dewey & LeBoeuf.
Despite these moves, an extensive restructuring programme undertaken during the 2008-09 financial year means that overall the firm has 39 fewer partners globally now than a year ago and 17 fewer equity partners.
Dejonghe said the decisions taken meant the business was more profitable than in 2009. “Eighteen months ago we looked carefully into all the markets in which we operated and had to make careful choices about where we would put investment and resources. In the top end of the market our position is probably strengthened.”
The firm reported profit before taxation of £428.8m in 2009-10, reflecting a margin of 41 per cent on its turnover of £1.05bn. During the previous year profit of £430.9m gave a margin of 39 per cent.
As a result the firm’s equity partners will take home on average 10 per cent more for 2009-10 than they did for 2008-09.