A&O’s PEP pips a million as currency exchange boosts revenues to a billion

Weak sterling has helped generate a seven per cent increase in global turnover at Allen & Overy (A&O), which brought in £1.091bn for the 2008-09 financial year.

Wim Dejonghe

Wim Dejonghe

Over 50 per cent of A&O’s turnover comes from outside the UK and two-thirds of transactions involve offices in two or more countries. As a result of sterling’s depreciation and growth in offices in the Middle East and Western Europe the firm maintains its position as the UK’s fourth largest firm by turnover.

Global managing partner Wim Dejonghe said: “The main driver of turnover growth is currency exchange. The large Western European operation has helped, [as has] the flight to quality. [This shows that] the global strategy is quite sustainable.

He added that the firm’s finance capability had been a blessing during the financial crisis. “We have a substantial exposure to the finance industry. After Lehman we had 570 requests from 340 clients to determine their position, [which all resulted in instructions].”

Profit per equity partner (PEP) has fallen from £1,122m in 2007-08 to £1m, but A&O’s profit figure is still higher than at Clifford Chance. The former magic circle leader saw PEP fall from £1,150m to £733,000 after a disappointing year (1 July 2009).

The equity spread at A&O ranges from £538,000 to £1,345m, compared with £658,000 to £1,645m during 2007-08. The profit margin has fallen from 44 per cent to 40 per cent.

A&O carried out a major restructuring which saw the loss of 450 jobs, half of which were in the UK, leaving it with a total of 5,000 members of staff (TheLawyer.com, 29 April 2009) . This cost the firm £46m, all of which was absorbed in the 2008-09 financial year.

At the same time A&O has made investments with new offices in Munich, Singapore and Sao Paulo and the addition of 20 new partners (1 May 2009).