Global giant's chair says 2020 results are 'reasonable' given impact of Covid-19 on fourth quarter
Baker McKenzie’s chair, Milton Cheng, says the firm remains “resilient and confident” after recording a 12% decline in profit-per-partner against flat revenue for its fiscal year, ending 30 June.
In what Cheng described as a “reasonable set of results” given the economic headwinds and logistical challenges posed by Covid-19, the firm recorded flat revenue of $2.9bn in its US dollar reporting currency, although this translated to a 1.2% increase in constant currency terms.
Profit of $903m was down from the $1bn recorded last year by the global giant.
The firm said the decline in profits was a reflection of “significant investments we made in new technology, infrastructure and laterals and other talent, as well as the negative impact of FX”.
As evidence of its investment, it said it had secured a record 68 lateral partner hires over the last 12 months and pointed to the launch earlier this month of its new technology arm, Reinvent.
The firm, which generates the bulk of its revenue outside the US, also highlighted a sharp 12% decline in Latin America revenue due to the weaknesses of that region’s currencies against the dollar, despite a 2% increase in constant currency terms.
Bakers' results also reflect the full impact of the Covid-19 economic paralysis that hit western economies in the spring and early summer. Its US rivals have calendar fiscal years while those in the UK have a 30 April year-end.
"I am proud of how our Firm has stepped up this past year to record a reasonable set of results, given the economic and logistical headwinds we have faced since January and the softening of demand we saw in the final quarter of FY20,” said Cheng. “It is a strong demonstration of our collective resilience.”
In constant currency terms, the firm said all of its regions grew – by 1% in Asia Pacific and North America, and 2% in EMEA and Latin America. Singled out as markets that saw high single, or double-digit growth, were: Thailand, Singapore, South Korea, Netherlands, Belgium, Sweden, Luxembourg, Hungary, Egypt, South Korea, Kazakhstan and Morocco.
The firm cited as notably strong practice areas: tax, projects, antitrust and competition, and private equity; while industry sectors that recorded significant growth included healthcare and life Sciences, technology, media and telecommunications, and financial institutions.
It added that in the first quarter of its 2021 financial year, revenues and profitability were up in all four of its regions,
In April, Bakers said US lawyers and business professional earning more than $100,000 would have their salaries cut by 15% from 1 May, adding that the measures were designed to avoid lay offs and that equity partners were experiencing 'the largest compensation impacts'. These measures are due to end at the end of the year.
In January, the firm topped the Acritas 2020 Global Elite Law Firm Brand Index for the ninth year in a row.
The Am Law 100 law firms recorded a collective 5% increase in revenue for 2019, according to Law.com, with profits also up by 5%.
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