Clifford Chance kicks off Magic Circle reporting season with subdued performance
Clifford Chance became the first Magic Circle law firm to report its 2018-19 financial results today, announcing modest gains in revenue and profit.
The firm said revenue for the year to 30 April grew 4.3 per cent to £1.693bn.
Partnership profit rose two per cent to £637m and profit per equity partner (Pep) grew one per cent to £1.62m.
Last year the firm boosted revenue five per cent and Pep 16 per cent.
Read more: Clifford Chance signals confidence with largest promotions round since the financial crisis
Managing partner Matthew Layton told City PM that the results “consolidate the strong growth over the past four years”.
Layton said the firm had seen some “some headwinds in the last quarter” of the financial year.
“It’s not surprising when you look around the world: China-US trade tensions, slowing growth rates in China and the Eurozone, continued Brexit uncertainty in the run up to, and post 29 March, and in January the US shutdown. Talking to clients that impacted their confidence and appetite for investment,” he said
Layton said the first two months of the 2019-20 financial year “have been strong for us,” but warned that there “continues to be a huge amount of uncertainty and volatility in the geopolitical picture”.
Read more: Magic Circle law firms launch gig economy-style offerings in uncertain legal market
Earlier this month the firm followed rival Freshfields Bruckhaus Deringer’s lead in upping pay for its newly qualified lawyers to above £100,000.
Freshfields’ pay hike followed a round of pay increases at US law firms last summer that raised salaries for first year lawyers at top Wall Street firms to $190,000 (£150,000).
Layton said: “We saw big increases in early summer 2018 in the US market and its natural they would have some ripple effects in other markets as we saw this year in London.”
Layton said the pay rises could have an impact on the firm’s profits next year.
“Obviously it has an impact on our cost base here in London.”
He said the firm would aim to work as efficiently as possible to mitigate the impact.
“We are continually looking at efficiencies in the way we operate, we have a global team and global resources invested in technological solutions in terms of our delivery model, and we have two low cost capabilities in the firm, one in Newcastle and one in Delhi,” he said.
Freshfields is set to report its results tomorrow and Linklaters and Allen & Overy will report next week.