The magic circle is struggling to keep revenues growing at a faster pace than costs, The Lawyer’s report into a cross section of firms’ LLP accounts show.
Out of the four magic circle firms, Clifford Chance and Linklaters posted turnover hikes in excess of cost-base rises. At Clifford Chance, turnover was up nearly by 7 per cent in 2011/12, from £1.219bn to £1.303bn, while costs at the firm rose by 4 per cent, from £837.1m to £870.2m. Similarly, Linklaters’ turnover was up by 6 per cent in 2011/12, while costs rose by 4 per cent.
Turnover at Allen & Overy was £1.18bn in 2011/12, up nearly 6 per cent from £1.12bn in 2010/11. This went hand-in-hand with a 6 per cent rise in operating costs in 2011/12. Nonetheless, profit for the financial year available for division among partners was £344.7m, up from £298m.
Freshfields Bruckhaus Deringer saw the biggest discrepancy between turnover and costs. Revenue was effectively flat in 2011/12 at £1.14bn, but between 2010/11 and 2011/12 staff costs rose by 10.2 per cent, from £480.4m to £529.6m. As a result profit was down by nearly 5 per cent, from £366.6m to £349m.
For more on what the LLP accounts say about the magic circle and a wider cross-section of firms, see The Lawyer’s feature here.