The City of London
Eagerly awaited results see UK magic circle duo hail robust performances in face of Covid-19 despite dips in PEP
Allen & Overy’s (A&O’s) annual revenue has overtaken Linklaters’ after it recorded a 4% increase to £1.69bn putting it just ahead of its magic circle rival which managed a 0.7% uptick to £1.64bn.
The results for the year ended on 30 April — which were both released today — show the firms recording declines in profit per equity partner (PEP), although again A&O took the honours with its PEP declining by just 1.7% to 1.63m while Linklaters’ PEP fell by 5.1% to £1.61m.
However, Linklaters reported its pre-tax profit at £727m, ahead of the figure of £690m unveiled by A&O.
The results have been eagerly awaited, providing an indication both of the impact of ongoing uncertainty over Brexit on UK firms’ performance during the second half of 2019 but especially because the results reflect the impact of Covid-19, which swept across Asia and into Europe in the first quarter of the year.
Both firms were upbeat about their performances.
A&O global managing partner Gareth Price said: “These are strong results, with revenue growth in all our global practices, proving the success of the broad-based strategy we have followed over the last decade. The combination of the widest international network of our peers, genuine local insight and a market-leading position in use of technology and alternative client services is increasingly compelling to our global client base.”
Gideon Moore, Linklaters’ firmwide managing partner, said of his firm’s performance: “Covid-19 came at the tail end of what was a strong year for us at Linklaters. Notwithstanding the change in circumstances arising as a result of Covid-19, we have been able to continue to support our people and our clients. Our long-term strategy remains unchanged: investing in our globally diverse talent base and growing our practices sustainably to best serve our clients.”
Linklaters said the markets in Asia were ‘returning slowly but steadily back to near normal’ and it was confident about its prospects there in the coming months while ‘most of continental Europe performed very well’ and the UK and Middle East had showed a ‘strong performance’.
In terms of practice groups, it said its results were driven by ‘some substantial M&A mandates, crisis management and strong growth in private M&A, debt, leverage finance, project finance, core commercial disputes, equities, derivatives and structured products’.
A&O’s revenue growth was achieved against the backdrop of its failed merger talks with O’Melveny & Myers, which broke down last September, and a leadership election which saw senior partner Wim Dejonghe beat off a challenge by banking co-head Philip Bowden this February.
The firm said it had performed strongly across all the regions, with ‘standout revenue growth in the US and across Europe’ while every practice area increased its revenue amid ‘notable’ performances from litigation and real estate.
It added that revenue at its Advanced Delivery & Solutions arm grew by 15%, ‘demonstrating the growing importance of innovation in legal services to clients’.
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