07:54, June 29 285 0

2017-06-29 07:54:09
Linklaters PEP hits £1.5m for the first time as turnover rises by 10 per cent

Linklaters is the first magic circle firm to announce its financial results for 2016/17, posting a 7.8 per cent hike in profit per equity partner (PEP) that allowed it to surpass the £1.5m mark for the first time.

The firm’s turnover also increased by almost 10 per cent, taking the firm from £1.31bn in 2015/16 to £1.43m.

Like most other firms, Linklaters has benefited from changes in currency; at constant currency the turnover increase stands at a more modest 1.7 per cent.

Pre-tax profit came in at £664.4m, factoring in a 8.6 increase arising from currency fluctuations. At constant currency it would have remained flat on last year’s £611.9m.

Meanwhile, profit per partner increased by 7.9 per cent from £1.36m last year to £1.47 this year. The average number of partners increased slightly from 451.9 in the financial year 2016 to 454.3 in 2017.

The average number of equity partners also increased from 435.7 to 440.6 (full time equivalent).

Linklaters’ firmwide managing partner Gideon Moore was keen to stress the primacy of the constant currency figures. “I’d almost ignore the fluctuations in currency and look at the figures on a constant currency basis,” he said. “If at the beginning of the year offered me a 1.7 per cent increase in a year in which Brexit happened and Donald Trump was elected as US President, I would be very happy.”

Moore added that while there was a slight slowdown in M&A work in the immediate aftermath of the vote to leave the European Union, Brexit has had less of an impact than perhaps expected, with Asia and the continent remaining buffered from the impact. Moore also said the firm’s contingency planning and continuity work so it through the fraught period.

“There was a slight slowdown in M&A work in continental Europe post-Brexit but the flipside of that was that there were a couple of deals that went through owing to the disruption in the market and the perception that assets could be bought cheaply in the UK.

No-one yet knows the practical consequences of Brexit but overall its effect has been relatively neutral.”

Traditionally corporate has been the firm’s best-performing practice, but Moore said that this year the regulatory, dispute resolution and competition practices had had a “very busy” year. “One of the reasons we were able to maintain our momentum was because the whole team at Linklaters was performing well across the piste,” Moore added.

Moore said that the offices in the US – New York and Washington DC – deserved a “special mention” for their high performances, adding that it was a “tough environment in the states”.

Meanwhile, Europe, Asia, Italy, Spain and the UK offices all performed well. The firm invested in Indonesia and Singapore, making partners in private equity and employment and incentives. Gaps in Singapore – seen as a viable alternative to greater China – were plugged by lawyers being moved from Hong Kong to that region.

However, Linklaters said it had no immediate plans to expand, saying: “As part of our strategy refresh we had a look at where we had offices and their size and shape, and I formed a view that I was delighted with them. The fact that we have offices around Europe in a Brexit-type environment in a real strength. The key is to keep close to clients around this space and move to places where we can support them.”

The next financial year will see Moore roll out the global implementation of Linklaters’ firmwide strategy refresh, which was announced earlier this year: doubling down on the firm’s investment in clients, people and technology. 

This includes further incentives for partners across the firm to collaborate and share work, and provide more innovative solutions for clients.To achieve the last goal, the firm formed an innovation committee in charge of helping to develop entrepreneurial plans within the firm.

In April, the firm announced that it had opted to ditch individual partner targets in a bid to boost team performance as part of a global strategy refresh.

Moore said it was “too early to say” as to whether partners could expect the impressive PEP figure of this year to take a knock next year as a result.

“I do think there is an underlying acknowledgement that it is more important to have a structure and approach that will best serve out clients in the long term rather than to extract as much juice in the short term.

“While we want to make sure that we are as profitable as possible, it is equally important that we are profitable in long term. A central tenet of strategy refresh is to make sure Team Linklaters delivers across the piste – firm first, practice second and individual third.”