Freshfields Bruckhaus Deringer’s highest-paid partner took home £2.5m last year, down 14 per cent from 2011/12, the firm’s LLP accounts have shown.
The drop comes on the back of an audited fall in net profit of 5 per cent, from £329.1m in 2011/12 to £312.3m last year (28 January 2013). The amount due to the highest-paid partner includes payments in relation to their retirement from the firm, according to the accounts.
However despite the profit drop, Freshfields reported a substantial increase in cash in the bank at year-end. The net cash balance rose from £35.5m the previous year to £55m at the end of 2012/13 – a rise of 55 per cent.
The hike came after two years of falling cash balances. At the end of 2009/10 Freshfields reported net cash of £153.1m, but this dropped to £89m in 2010/11 and then further the following year.
Freshfields’ accounts also showed that the provision for annuities payable to current partners on their retirement and to retired partners increased “significantly” last year, from £929.7m on 1 May 2012 to £1.07bn at 30 April 2013. The annuities are conditional on the existence of future profits and are capped each year at a maximum of 10 per cent of Freshfields’ profit, with the provision expected to be utilised over a period of 50 years.
The accounts said: “The increase has arisen almost entirely as a consequence of the decrease in the rate used to discount the future obligations to a current year-end value. The discount rate fell during the year from 4.6 per cent at 30 April 2012 to 3.8 per cent at 30 April 2013.”
Of the provision, £520.4m is a provision for retired members, £440m for current members, and £110m for non-members of the LLP.
Freshfields’ defined benefit pension scheme, which was closed on 30 June 2010, reported a net deficit of £16.3m at year-end last year, compared to a £5.4m deficit the previous year.
The LLP accounts showed a 4.5 per cent rise in revenue last year, from £1.18bn to £1.23bn. The increase is smaller than that reported by the firm in July (5 July 2013) but the revenue figure is slightly higher than the unaudited results of £1.21bn.
Staff costs rose by some 4.6 per cent, from £529.6m in 2011/12 to £554m last year, while staff numbers went up by 1.9 per cent, from 4,476 lawyers and staff to 4,561. However the average number of LLP members dropped from 350 in 2011/12 to 332 last year.