Linklaters’ LLP accounts since 2006/07 illustrate the flattening impact of the post-crash years on the magic circle firm’s financials. The firm recently announced its 2012/13 global turnover figure of £1.195bn – still 7 per cent off its 2008/09 peak of £1.296bn.
Linklaters enjoyed a particularly buoyant year in 2007/08, with global revenue up by 15 per cent, from £1.12bn to £1.293bn, and net profit increasing by more than 10 per cent, from £380m to £421m.
Despite the financial crisis the firm’s 2008/09 financial results held steady as its turnover rose by 0.2 per cent, to £1.296bn, making it the highest-earning UK firm that year. Its role acting for the administrator of Lehman Brothers was considered one of the instructions of the decade. The firm engaged several hundred fee-earners and reportedly billed more than £1m a week at the height of the mandate.
However, net profit for 2008/09 declined by 11.6 per cent, to £372m, lower than 2006/07’s £380m. The reason was the cost of restructuring under its so-called New World strategy. Linklaters had to pay an estimated £50m to axed partners alone and there was additional cost for payoffs to the 400 lawyers and support staff who were made redundant.
Linklaters’ position at the top of the revenue pops only lasted for one year. In 2009/10 the firm saw turnover plunge by 8 per cent, to £1.182bn, with it relinquishing the number one spot to Clifford Chance.
The chief drivers behind the falling turnover were continuing lack of activity in the mainstream M&A markets and the firm’s focus on its corporate and commercial arms. While regional turnovers across the Americas, Asia, Continental Europe, the UK and the Middle East all declined to various degrees in 2009/10, Asia saw the steepest drop among these regions – down by 13.3 per cent, from £142m in 2008/09 to £123m. The decline coincided with former Asia head Shao Zili’s move to JP Morgan less than a year into the job.
Profitability in 2009/10 also slipped further, with net profit down by 6 per cent, to £350m.
The firm saw a small percentage rise in both revenue and average profit per equity partner (PEP) for 2010/11 and 2011/12. As of 30 June 2012 revenue stood at £1.204bn, up by 0.5 per cent from £1.197bn in 2010/11 while PEP was £1.24m,
3 per cent up from £1.2m the previous year.
Amid static financials Linklaters has seen considerable change in its partnership structure and international strategy.
At the 2012 partnership conference the firm has decided to cease its all-equity push in favour of swelling its salaried partner ranks. In addition, it has adopted a fresh strategy of entering into non-financially integrated joint ventures in emerging markets. In 2012 it finalised two exclusive alliances, one with Australian firm Allens and one with South Africa’s Webber Wentzel.
Friends and influence
- 1998: formed Linklaters & Alliance with four European firms but this was later dissolved, with some of the alliance firms merging into Linklaters and others deciding to remain independent.
- 2000: joint venture with Singapore’s Allen & Gledhill. This was terminated in early 2012.
- 2001: entered co-operation agreement with Brazilian firm Lefosse Advogados. The agreement ended in early 2012.
- 2007: entered into best friends agreement with Indian firm Talwar Thakore & Associates.
- 2012: formed alliance with Australia’s Allens.
- 2013: formed alliance with South Africa’s Webber Wentzel.
Top five recent deals
- Acted for Kazakhmys on its bid to take Eurasian Natural Resources Corp private, fielding London corporate partners Charlie Jacobs and Nick Rumsby
- Advised Vodafone on its takeover of Kabel Deutschland, featuring corporate partners Iain Fenn in London, Klaus Hoenig in Düsseldorf and Stephan Oppenhoff in Frankfurt
- Advised Glencore on its mega-merger with Xstrata, led by London corporate partner Charlie Jacobs
- Advised Lloyds on offloading 632 branches to the Co-op, led by London corporate partners Jeremy Parr and Matthew Bland
- Advised Chinese Bright Food on its Weetabix takeover, fielding corporate partners Teresa Ma in Shanghai and Clodagh Hayes in London