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Allen & Overy suffers ‘data incident’ as ransomware group LockBit claims responsibility

Allen & Overy has confirmed that it has suffered a ‘data incident’. Posts from X user and self-described ‘threat intelligence platform for cybersecurity’ @FalconFeedsio on Wednesday 8 November suggested that cybercriminal group LockBit had targeted the firm, with a threat to release ‘all available data’ by 28 November.

‘We have experienced a data incident impacting a small number of storage servers’, said an A&O spokesperson. ‘Investigations to date have confirmed that data in our core systems, including our email and document management system, has not been affected.

‘The firm continues to operate normally with some disruption arising from steps taken to contain the incident.’

The firm claims that the incident is under control: ‘Our technical response team, working alongside an independent cybersecurity adviser, took immediate action to isolate and contain the incident. Detailed cyber forensic work continues to investigate and remediate the incident.

‘As a matter of priority, we are assessing exactly what data has been impacted, and we are informing affected clients. We appreciate that this is an important matter for our clients, and we take this very seriously. Keeping our clients’ data safe, secure, and confidential is an absolute priority.’

A&O declined to comment further. The firm did not respond to requests to confirm LockBit’s involvement.

In June, GCHQ’s National Cyber Security Centre (NCSC) issued a joint advisory alongside agencies from the United States, Australia, Canada, France, Germany, and New Zealand stating that LockBit was ‘almost certainly the most deployed ransomware strain in the UK and that it continues to present the highest ransomware threat to UK organisations.’

LockBit hit Royal Mail with a ransomware attack in January and leaked Royal Mail’s data on 23 February after Royal Mail refused to pay both an initial ransom demand of £66m and a subsequent demand for £47m. The cybercriminal group also announced that it had hit Boeing in late October. Boeing confirmed the cyberattack in early November and was re-added to LockBit’s list of victims on 7 November after disappearing from the list on 30 October, according to FalconFeeds.

The SRA in June 2022 issued a risk outlook report entitled ‘Information security and cybercrime in a new normal’. In the report, it noted that ‘increased dependence on IT’ since the Covid-19 pandemic ‘creates more opportunities for cybercriminals.’

A&O is not the first major firm to suffer from a data breach. DLA Piper was shut down by a cyberattack in 2017. And in June, ransomware group CL0P posted the names of Kirkland & Ellis, K&L Gates, and Proskauer Rose to its leak site, although none of the firms responded to requests for comment.

BCLP, meanwhile, discovered it had been hacked in late February, in a breach that exposed the personal data of more than 50,000 current and former employees of client Mondelēz International. In June, a class action suit was filed against BCLP in the Northern District of Illinois. The case remains ongoing. BCLP did not respond to requests for comment.

‘These [data breaches] are causing a tremendous amount of harm’, said Thomas Zimmerman, an attorney at Chicago-based Zimmerman Law Offices, which is bringing the class action against BCLP. ‘Clients I represent who have had data stolen have dealt with loans being opened up in their names, their credit score hijacked, mortgages opened up in their names for homes. And they’re stuck with it, you can’t change a social security number like you can open a new bank account, people suffer the consequences for years.’

There has never been a data breach group action litigated in an English court. The prospects for bringing such a claim are complicated by the fact that opt-out claims can currently only be brought in England at the Competition Appeals Tribunal (CAT). And many in the market are sceptical that a data breach claim could be adequately formulated as a competition claim.

The A&O data breach was first reported in the Financial Times.

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This story first appeared on Legal Business.

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Social media influencers: Social circles

Back in the spring, Legal Business asked whether a professional social media presence is now a ‘must-have’ for the modern lawyer, in a feature which also acknowledged that ‘what is trending one week can be quickly forgotten the next’.

And while the post-Covid return to the office has since gathered pace, lawyers’ love for LinkedIn shows no sign of slowing up. Autumn is of course the season when the platform comes alive with the hum of humbled and delighted lawyers posting their Legal 500 endorsements, a process which is now more compulsory than ever (not least due to the requirement to make your charitable #humblebrag donation to Save The Children – get involved if you haven’t done so yet).

However, at the same time, social media evangelists are also coming to terms with the slow demise of the site formerly known as Twitter, following its questionable rebrand as ‘X’ and Elon Musk’s trollish tinkering with a platform many once viewed as the social media site of choice for forward-thinking lawyers.

With many now falling out of love with that platform, the legal community which once coalesced around Twitter has splintered away, and while LinkedIn has become the default for many, it is perhaps harder than ever before to know where to look online for valuable legal content and community.

So with that in mind, we went back to canvass opinion from some of the people we featured in our earlier article, to ask who they follow online, with the intention of compiling a list of ‘recommended by the recommended’.

Those individuals, who feature in the following pages, are drawn from all corners of the legal profession, from solicitor-apprentices to the new president of the Law Society, and showcase a wide range of approaches to social media success, from podcasts to video, TikToks and technical content delivered with just the right amount of personality.

We’re also shining a spotlight on five lawyers who have made a professional success of social media:

James Bremen, the chair of Quinn Emanuel’s construction and engineering practice, whose LinkedIn ‘explainer’ videos have attracted thousands of views, and were credited for keeping one general counsel sane during the pandemic.

Emma Lilley, UK and Ireland head of legal at HR and payroll company SD Worx, who used her Instagram profile to successfully lobby for the Law Society to hold its first-ever regional admissions ceremony.

Former DWF and DAC Beachcroft barrister Sahar Farooqi, who has built a huge following online which has helped him attract instructions and get involved with mentoring the next generation of lawyers.

Chrissie Wolfe, who has leveraged her social media presence to build a thriving consultancy business since leaving Irwin Mitchell.

Former barristers’ clerk Jeremy Hopkins, whose successful early adoption of Twitter led to media interest, job opportunities and helped him to build one of the most varied CVs in law.

We’re aware that there are plenty of stories of lawyers making a success of social media, so if you have a tale to tell, please get in touch – we’d love to hear more.

This story first appeared on Legal Business.

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Applications, applications, applications

It’s that time again. 

If you’re applying for winter, spring or summer vacation schemes this year, now’s the time to start. Most firms have opened their application windows and are eagerly awaiting your applications. 

Here at Future Lawyers, we definitely recommend applying for vacation schemes; they’re the best way to find out about a law firm, and for them to find out about you. 

You’ll still be under pressure to perform; but you’ll also have the opportunity to prove yourself over the course of one or two weeks, rather than in a stress-inducing hour-long interview. 

Most vacation scheme applications close at the end of January (though deadlines vary so do check). In any case, we recommend starting your research now, especially if you’re planning on doing a few.  

This is where The Legal 500 Future Lawyers vacation scheme deadline table comes in.  

In one handy table, you can see all firms’ deadlines in one place, helping you to keep on top of your research, and making sure you never miss a crucial closing date. 

Have a look for yourself.

Happy applying! 

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It’s a ‘yes’ from them – A&O and Shearman partners vote through landmark $3.5bn transatlantic deal

Allen & Overy (A&O) and Shearman & Sterling are set to go ahead with their transatlantic merger, after partners at both firms voted overwhelmingly in favour of the union, with support from more than 99% of votes cast at each firm.

The pair is expected to combine as A&O Shearman from May 2024 at the latest – creating ‘the first fully integrated global elite law firm’, with nearly 4,000 lawyers across 48 offices and 29 countries.

With combined revenue of roughly $3.5bn, the merged firm will sit comfortably within the top five of the LB global 100 – behind Kirkland & Ellis, Latham & Watkins and DLA Piper.

Partner voting on the combination kicked off on 28 September, and was scheduled to run until 13 October, with the firms needing to secure the approval of 75% of partners to get the deal over the line.

Announcing the move, A&O senior partner Wim Dejonghe (pictured) said: ‘This is a historic moment for both firms and our profession. We are delighted that our partners have voted so resoundingly in favour of this merger, which is a transformational step for the legal industry. We have long admired Shearman & Sterling for its outstanding reputation, talent, and client base, and we are confident that together we will create a truly exceptional global firm that will serve our clients’ needs in an increasingly complex and dynamic world.’

Shearman senior partner Adam Hakki added: ‘Our partners have recognized and welcomed this unparalleled opportunity to combine our individual market leadership and brands to serve clients as an integrated global law firm, preeminent in all our markets. A&O Shearman will be a firm unlike any other in the world, built to achieve exceptional outcomes for our clients through an intentional focus on quality, excellence, and collaboration. We are creating a new industry leader, with truly global capabilities, and we are excited for what is to come.’

The firms announced they were in merger discussions in May this year and the deal had been widely expected to go ahead, with management at both firms embarking on a series of roadshows around the world over the summer to shore up support.

The combination marks the first transatlantic merger involving a Magic Circle firm since Clifford Chance’s ill-fated union with Rogers & Wells in 2000 and comes after A&O held unsuccessful talks with O’Melveny & Myers in 2019.

Shearman, meanwhile, was engaged in talks with Hogan Lovells as recently as this year, with the pair announcing the end of discussions in March. The firm has struggled to keep pace with New York rivals in recent years. With its traditional banking client-base, it has not made the same push into private equity as its rivals, something management at the combined firm is keen to rectify.

Shearman has also been hit by partner exits around the world, including finance partners Philip Stopford and Korey Fevzi, who left in March this year to launch the English-law offering at Cravath, Swaine & Moore in London. The firm named respected litigator Adam Hakki as the senior partner successor to David Beveridge the same month.

Market reaction to the deal has been largely positive. Jomati founder Tony Williams, who was previously managing partner at CC before its US merger, commented: ‘A&O was lucky. The previous discussions with O’Melveny made partners understand how difficult getting a US deal is. The partners were more amenable to compromise on issues that, if not for that experience, might have been sticking points.’

Another commentator noted: ‘It’s been handled extremely well. Both firms have had failed merger attempts recently. Both sides understood the importance of managing communications – even simple things like who gets informed in what order. Communications strategy is crucial and has been really well handled. The whole thing was presented as a proper corporate deal.’

The deal will heap pressure on the remaining magic circle firms to come up with credible offerings of their own in the US. There has not been a significant UK/US merger since 2018, when BCLP was created. This deal came after Eversheds Sutherland was formed in 2017, while Norton Rose Fulbright happened in 2013 and Hogan Lovells in 2010.

As Williams commented: ‘It’s transformative in one key respect: it is a fundamental shift in what the top UK firms have been able to achieve in the United States.’

‘You’ve now got one more 64,000lb gorilla, with a unique capability that doesn’t really exist elsewhere’ adds a former UK firm head. ‘A&O Shearman now has a capability that the other Magic Circle firms don’t have. These things don’t change overnight – no one will be out of business all of a sudden. But over time, over around 10 years, it could be transformative. It’s like a snowball. It gathers momentum. It’s really a challenge for the [rest of the] Magic Circle.’

Maurice Allen, founder of legal consultancy LTN & Partners, argued that in addition to the direct benefits from the merger itself, the merged firm will also be a more attractive proposition for other lawyers, potentially making it easier to further build on the corporate side: ‘It’s a big leg up for clients and for recruitment. There’s no doubt A&O is more attractive now.

‘For people sitting in London, either at a US firm where they’re not enjoying life, or at a UK firm where they feel they aren’t reacting to the challenge of the US firms, A&O Shearman starts to look very attractive.’

This story first appeared on Legal Business.

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Latham, Macfarlanes and TLT up for the top prize as shortlists unveiled for Legal Business Awards 2023

Latham & Watkins, Macfarlanes and TLT are among the firms competing to be named Law Firm of the Year at this year’s Legal Business Awards.

Also shortlisted in the flagship category for the awards, which will take place at Grosvenor House Hotel on 19 September, are Bird & Bird, Squire Patton Boggs and Stewarts.

The full shortlists, revealed below, will see high-calibre law firms, in-house teams and individuals competing across 30 categories at the 26th Legal Business Awards.

The finalists for the coveted In-House Team of the Year award are HSBC, Vodafone, SSE, Compass Group and Twitch.

City giants Slaughter and May, Freshfields Bruckhaus Deringer and Herbert Smith Freehills are among the firms fighting it out to be named Corporate Team of the Year, while in the Commercial Litigation category, Quinn Emanuel, Simmons & Simmons, and CMS are among those in contention.

Meanwhile, our ESG Programme of the Year award sees a host of major law firms and chambers up against each other, including DLA Piper, Keystone Law, and New Square Chambers.

This year sees a number of new categories introduced, including Barrister of the Year, Energy/Infrastructure Team of the Year, In-House/Law Firm Collaboration of the Year, Life Sciences Team of the Year, and Marketing Initiative of the Year.

The winners, which will be unveiled at the gala ceremony hosted by actor, writer, and producer Sally Phillips, are decided by an independent judging panel of senior in-house counsel.

This year’s panel comprises: Nicola Putland, GC – Data, Digital & Delivery at Lloyds Banking Group; Ruwan De Soyza, group GC and company secretary at Xplor; Alessandro Galtieri, deputy GC at Colt; Dan Guildford, GC, The Financial Times; Matthew Wilson, GC, Fremantle; Terra Potter, GC EMEA/AP, Hexcel; Clare Wardle, GC, Coca-Cola Enterprise Partners; Rosie Teo, GC & chief compliance officer, Salary Finance; Angus McBride, EVP and GC at News UK; Natalie Salunke, GC, Zilch; Lara Oyesanya, Group GC and Company Secretary, Zepz; Joy Van Cooten, Associate GC- EMEA & APAC, ACI Worldwide; Rupa Patel, GC, Awaze; Merley Okine, GC, Ebiquity; Vivienne Inmonger, Head of Legal, Risk and Compliance, McGee; Nigel Paterson, GC at Dixons Carphone; Nayeem Syed, senior legal director technology procurement at London Stock Exchange Group; and Samantha Thompson, consultant and former head of legal global M&A, Anglo American.

Major winners last year included Shoosmiths, which was named Law Firm of the Year and Travers Smith, which won two awards.

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This article first appeared on Legal Business.

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‘If Zoom is doing it, everybody probably needs to be’: Growing number of US law firms mandate four-days-in-office week

Lawyers adhering to a minimum of four days in the  office a week policy  is gaining traction among US firms, with Vinson & Elkins now joining the trend, while UK firms appear less inclined to follow suit just yet.

Vinson & Elkins announced on 9 August that it will adopt a four-day in-office schedule from 11 September, allowing the choice of remote work on either Monday or Friday, marking a change from their previous three-day hybrid policy introduced in March last year.

According to an internal memo viewed by Legal Business, the firm said it aimed to strike a balance between in-person interaction and remote work post-pandemic. However, with an increasing number of firms shifting towards a four-day model, Vinson & Elkins is concerned that remote work may hinder connectivity, yet the firm continues to endorse remote work when the need arises.

One partner at a US firm notes: ‘Zoom recently announced they’re going to bring back their people back to the office, so if Zoom is doing it,  everybody probably needs to be if their business model depends on interaction.’

In a similar vein, Ropes & Gray joined the trend a week ago, while Weil announced its four-day office policy in July, following Davis Polk’s announcement a month earlier.

Ropes & Gray will require its lawyers to come into the office from Monday to Thursday with Friday being an optional remote working day, beginning on 6 November.

‘We are making this change because success in this highly competitive marketplace requires us to invest in what makes Ropes & Gray extraordinary—our culture, teamwork in furtherance of excellence for clients and our steadfast commitment to developing the best lawyers in the world,’ according to a firmwide memo sent by chair Julie Jones and managing partner David Djaha.

‘These strengths, which define and differentiate us, can only be realised to their fullest extent through in-person collaboration, learning and mentoring. Simply put, we need more people together, more often, more consistently.’

Mirroring this approach, Weil said it will require all US lawyers to come into the office four days a week, starting on 5 September, and Davis Polk will enforce a mandatory Monday to Thursday schedule for US lawyers following US Labor Day in September.

Skadden was one of the first adopters, announcing its four-days in the office model back in May, which will also take effect following US Labor Day. Skadden lawyers are expected to be in the office from Monday to Thursday, indicating a shift from their previous policy of three days of in-office attendance from Tuesday to Thursday.

Other US firms have been less clear about potential changes down the line. Legal Business understands that Kirkland & Ellis currently adopts a three-day office attendance policy, requiring lawyers in the office from Tuesday through Thursday, however the firm declined to comment on the matter.

Aymen Mahmood, partner and co-head of finance, restructuring and special situations at McDermott Will & Emery, said: ‘Firms are seeking to encourage their people to be in the office for a host of reasons, including providing the best possible training opportunities for associates, maximising best practices for firm culture and indeed increasing the likelihood that opportunistic business openings can be quickly addressed among partners.’

But interestingly, the Magic Circle firms are taking a different route. Freshfields maintains its policy of lawyers spending three days in the office a week, while Slaughter and May and Allen & Overy grant the flexibility of remote work up to 40% of the time. Similarly, Clifford Chance and Linklaters maintain a hybrid-working approach, requiring lawyers to be in the office at least 50% of the time.

Another partner at a US firm noted: ‘Magic Circle firms have always been more formal in terms of expectations from their associates. Probably what is going on is that UK firms say you need to be in three days a week, but everyone is in much more than that anyway.’

‘It’s just generally dictated by the expectations that the firm has set, the feedback of their people and the type of business it is. Certain businesses lend themselves to more remote working than others. Each business is weighing up the question: “How does attendance at the office assist our business relative to our value set, employees and the client work we have or aspire to have?”,’ said an executive at a UK firm.

Outside of the Magic Circle, other UK firms seem to be standing by a three-day week policy too. Taylor Wessing announced its hybrid remote-working policy in 2020. ‘We have reiterated that approach and it hasn’t been altered,’ says managing partner Shane Gleghorn. Using the word mandate is adopting a slightly declarative tone that doesn’t really match reality because most firms have been expecting attendance at their offices for some time. And to a large degree, they’re reinforcing the message that has pertained for a considerable period of time.’

Other firms, such as LB100 firm Fladgate, maintain a three-day-a-week office policy, albeit with more flexibility.

Managing partner Grant Gordon said: ‘It’s a recommendation though, we’re not hard and fast on it. But we’d like to see our partners and our associates and our other support staff teams in for three days. If someone comes in two days a week, but next week comes in four days, no one going is going to jump up and down and say, “are we taking a register?”. We’re happy with that for the time being.

‘I don’t know what will happen going forward, but we’re showing good growth and good productivity three days a week. If our people are happy and they’re finding ways to achieve a work-life balance and if this provides the architecture for both happier lawyers, and for more fulfilled lawyers because they can attend to everything they need to, then that’s what we’re doing.’

Over the coming months, it will be interesting to see which other firms jump on the bandwagon, and whether UK-centric firms adopt a stricter stance. Nevertheless, one executive at a UK firm said that the distinction between these firms may not be as clear cut. ‘The difficulty is that there’s so many differences between approaches which are driven by the type of culture and business that that you are, so I’m not sure it divides neatly between the US and UK, international or European firms.’

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This article first appeared on Legal Business.

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‘The strategy delivers’: Freshfields sees 8% revenue rise but PEP growth stalls

Freshfields Bruckhaus Deringer has announced its 2022/23 financial results, marking a seventh consecutive year of revenue growth for the firm.

Its revenue has increased by 8% to £1.84bn from £1.7bn in the previous financial year, a similar increase to last year’s 10% rise. Freshfields is the last of the four international magic circle firms to reveal its results. However, unlike Allen & Overy and Clifford Chance, Freshfields is yet to break the £2bn barrier. In its recently released financials, A&O’s revenue increased by 8% from £1.94bn to £2.1bn, while CC achieved a revenue increase of 5% from £1.969bn to £2.062bn.

Freshfields’ profit per equity partner (PEP) has remained flat with a 1% increase to £2.09m from £2.07m last year, in contrast to last year’s solid 8% growth.

The firm has made significant investments in its workforce and operational model, including embedding cloud-based software Salesforce, making 26 new lateral appointments and 30 internal partner promotions, and launching a shared business services centre in Slovakia.

Global managing partner Rick van Aerssen told Legal Business: ‘We are happy with the strategy and the strategy delivers. We will continue on with our global growth strategy.’

‘With the waters being choppier, we think macro trends typically play to a firm like ours, where we have broad offerings and are at the complex end of the market. Where it matters most, we see people increasingly turn to us,’ he added. ‘That is true in terms of products but also where international interconnections are concerned. Take the US – we want to grow our US business, but we can also offer something to our US clients that a lot of US firms can’t offer in Asia and Europe. That is a growth driver for a firm like ours.’

Key mandates from the last financial year include advising UBS Group on its acquisition of Credit Suisse Group and advising Volkswagen and its subsidiaries on its global emissions litigation. The firm was also lead counsel defending Google in the Google digital advertising antitrust litigation and advised the independent directors of Qualtrics on the $12.5bn sale of the company.

The firm also published its second diversity and inclusion annual review. Key highlights include 48% of new partners joining the global partnership being women and doubling the number of black associates at the firm over the last two years. It has also achieved their 5% LGBTQ+ global partnership target three years ahead of schedule.

In its statement, the firm was keen to highlight its US growth ambitions, noting that over the last three years it has delivered advisory services to 70% of the 1,000 largest US corporates in the US and/or globally. It also noted that it has made 14 lateral partner appointments in the US over the last year.

Although unable to give a figure for how much of the global revenue the US offices contributed, Aerssen said: ‘It’s not growth in one area at the cost of one area, we believe in growing the business as such because there are many pockets where we think we can win work.

‘At any given time, we are looking at opportunities to grow the business, we’ve made 14 lateral partner hires in the last year in the US. We’ve always been clear that that is a key pillar of our growth strategy. We want to grow more in the US and internationally, but we don’t have a target number because it’s also a question of opportunity. What this shows is that ultimately the quality of the business is driven by the quality of our lateral hires, we’ve been very fortunate with our lateral hires that we have had such a high quality come into the firm.’

However, the US is not the only Freshfields office looking to grow. ‘London is a key market and still a growth market,’ Aerssen concluded.

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This article first appeared on Legal Business

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‘Holding ourselves accountable’: Slaughter and May tackles social mobility challenge with 2033 targets

Slaughter and May has stuck its head above the parapet on the thorny issue of social mobility, outlining ambitious targets for 2033, in what will be seen as a bold move at the elite end of the profession.

Over the next decade the firm aims to increase its representation of individuals from a lower socio-economic background (LSEB) by 25% across its total workforce population from a baseline of 18.8%. Broken down across fee earners and business services professionals, Slaughters intends to increase its lawyer population from such backgrounds to 15% from a baseline of 10% and its business services population to 40% from a baseline of 34.7%. These targets measure a person’s socio-economic background by using parental occupation at the age of 14 as a metric.

Slaughters partnered with the not-for-profit, social equality consultancy the Bridge Group to carry out a workforce analysis on setting its targets. The Bridge Group found that progression, retention and performance of lawyers from a lower social background at the firm was the same as lawyers from other socio-economic backgrounds. It also found that in the firm’s business services roles the LSEB population stood at 34.7%. The national census figure for LSEB individuals is 39%. These findings were used to inform the firm’s action plan, which places a particular emphasis on widening access throughout its early stage recruitment processes.

The action plan has three strands. Firstly, Slaughters aims to increase the number of LSEB individuals it hires through graduate and business services recruitment. Steps will include targeted recruitment activity aimed at engaging students who might not participate in its traditional recruitment processes, as well as providing apprenticeships as an alternative route into the firm.

Secondly, the firm plans to increase its work on widening access to the profession. Over the next five years, Slaughters will extend its scholarship scheme and introduce a new financial bursary scheme for 17–18-year-olds.

Thirdly, the firm will double down on its workforce data relating to social mobility. It will encourage employees to disclose diversity data, with a target of 90% disclosure. The firm will also voluntarily publish social mobility related pay gaps through its annual pay gap reporting.

Commenting on the targets, Andrew Jolly, corporate partner and chair of Slaughters’ social mobility working group, said: ‘Our detailed work with the Bridge Group shows that when LSEB lawyers come to Slaughter and May their progression is strong and they are just as likely as their peers from other socio-economic backgrounds to succeed in the firm. The targets and actions we have announced focus on ensuring this continues to be the case as well as making the firm an attractive place to work for people from a wide range of backgrounds.’

Deborah Finkler (pictured), managing partner at Slaughters, added: ‘Tracking the socio-economic make up of our workforce over a long period of time means that we have confidence in the data we are using to set these public targets and measure our progress. This focus and transparency means we can hold ourselves accountable and sends a clear message about our intentions to enhance and maintain a diverse workforce.’

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This article first appeared on Legal Business

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Linklaters sees 2% profit decline as revenue falls short of the £2bn milestone

With financial reporting season in full swing, Linklaters is the latest Magic Circle firm to drop its financial results, reporting a 7% revenue increase from £1.8bn to £1.9bn, seeing it fall just short of the $2bn turnover barrier passed by both Allen & Overy and Clifford Chance recently.

Pre-tax profit is down by 2% to £854m from last year’s £872m, translating to a 5% decline in PEP from £1.87m to £1.78m.

Linklaters managing partner Paul Lewis said in a statement: ‘We’re pleased to have delivered a strong financial performance, despite a challenging high-inflation environment and ongoing geopolitical instability.’

He added: ‘Entering the new financial year we have seen a strong deal flow, particularly across energy & infrastructure, high-end M&A and from financial sponsors, notwithstanding the wider slowing of the global M&A market. The challenging economic environment has led to an increase in restructuring and insolvency matters and we have also seen an uptick in regulatory and criminal investigations as well as a rise in class actions, particularly in the tech sector.’

Linklaters reports that it has seen ‘significant growth’ in revenue from high-end M&A with top mandates that include advising Carrier Global Corporation on its acquisition of Viessmann Climate Solutions and HSBC on the sale of its Canadian banking business to Royal Bank of Canada.

Similarly, the firm also gives credit to the performance of its energy sector, with a particular focus on energy transition mandates that made up the majority of energy-related work over the last financial year. Whilst it is public knowledge that Links has struggled to make an impression on the US market, the addition of its energy and infrastructure team in the US has resulted in some mid-tier US mandates, including advising Actis on its new $500m Japanese renewables platform.

Beyond financials, the firm also reported that it had elected 41 new partners and 53 counsel in its latest promotion round, while meeting its 40% global gender diversity target for female partner promotions, and its 15% target for under-represented minority ethnic partners in new partner elections annually in the UK and US.

In the legal tech arena, the firm also reported that CreateIQ, its document automation and contract management platform, ‘grew at a rate of nearly 100% during FY2023 with over 100 digitised templates added, attracting over 300 institutions including major banks, asset managers, insurers and governments. ReportiQ, the firm’s next-generation due diligence reporting platform, ‘has now been used by Linklaters lawyers across 17 offices and external counsel in 21 countries to generate reports on €18bn worth of deals’.

Links is the third member of the Magic Circle to publish its financial results so far, with both A&O and Clifford Chance officially breaking the £2bn barrier. A&O’s revenue grew by 8% from £1.94bn to £2.1bn, while CC recorded a revenue increase of 5% from £1.969bn to £2.062bn.

With Freshfields the last of the four UK elite international firms to post its results, the picture so far is clearly one of modest revenue increases matched by a decline in profitability this year, as firms across the globe driven by transactional work struggle with the downturn in deals.

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This article first appeared on Legal Business

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‘Outcome still satisfactory’: revenue, profit and PEP drop at Macfarlanes as Mishcon continues growth

Macfarlanes has posted results that show declines in turnover, profit, and PEP for the past financial year. Turnover dropped 2% to £296.6m, while operating profit fell 6% to £151.4m. The decline in PEP was steepest: a fall of 16% took it to £2.1m.

The results mean an end to a  12-year streak of growth that saw its PEP surge past its rivals, with last year’s £2.49m placing it behind just Slaughter and May and Stewarts in the list of firms with the fastest-growing PEP in our 2022 LB100.

‘The 2022/23 financial year proved a more challenging year for our firm due to difficult market conditions although the outcome was still satisfactory,’ said senior partner Sebastian Prichard Jones in a statement.

‘After the exceptional impact of the pandemic, which had a positive effect on our financial performance, in a number of respects this was a year of consolidation. This included an increase in our equity partnership by 10%, which had what we anticipate to be a short-term impact on our PEP figure. This is an investment we were pleased to make. After taking a pause for breath in 2022/23, we remain in a strong position and are confident we will move forward again this year.’

The increase in equity partner numbers offsets the drop in PEP somewhat. And the reference to a difficult 2022 after an exceptional 2021 is well taken: there are few firms who have made similar claims as they announce their latest sets of financial results, with Allen & Overy, Clifford Chance, and Ashurst all recording dips in PEP. Macfarlanes is not the only firm to record a dip in turnover over the past financial year, with Hogan Lovells posting a 7% decline in February.

The picture painted by Mishcon de Reya was more positive. The firm posted financial results that saw total revenue increase by 10% to £255m. While slower than last year’s 23% increase, this continues a positive trend that has seen the firm continue to grow despite setbacks including a Solicitors Regulation Authority (SRA) fine and a failed IPO.

Overall profit has increased  22% to £93m, though the firm notes that the increase in profit was a much more modest 6% if IPO costs were excluded from the previous year’s figures.

Mishcon reported overall profit as a lone metric for the first time this year, describing profit per equity partner (PEP) as ‘too narrow, short term and misleading as a metric for a business as diverse as the MDR Group, which now accommodates both a traditional law firm and many start-ups.’

Group chief financial officer Matt Hotson explained further: ‘Our goal is create long term value – for our clients, our people and the society in which we operate. PEP is not a metric which is helpful in this context nor is it useful for a business like ours with a diversified offering of legal and non-legal services.’

The completion of Mishcon’s merger with Taylor Vinters in January 2023 brought it to a total of more than 220 partners. The firm reported around 80 equity partners, which would place  PEP at £1.16m – up almost 11% on last year’s £1.05m, and above its previous high-water mark of £1.1m, set in 2017.

Mishcon showed another year of impressive growth in its consultancy and advisory work, reporting an 81% growth in non-legal revenue. The firm was keen to stress, though, that the overwhelming majority of its revenue still came from its core legal services. Performance across practice areas was ‘pretty even across the firm’, said managing partner James Libson. ‘Even though one may have expected real estate to slow down, it kept its momentum all the way through to year-end. Corporate suffered a little in Q4, but the rest were solid.

‘One sees dispute resolution do better, or at least act as a hedge, in recessionary times. But there’s been a real lag in that this time around, as so much protection has been put into the system. Still, we’re seeing an increase coming through, and we expect that to accelerate over the next year.’

The firm’s strategic focus will be on bedding in its merger. ‘The innovation and early-stage market in Oxford and Cambridge is very important to us’, said Libson. The firm will also continue to extend its Asian offering, including building out its Singapore office and continuing its association with Karas So  in Hong Kong. ‘At the moment it’s a litigation offering,’ said Libson. We’ve brought in three private client partners, one in family and two in tax. Our aim is for that office to reflect the balance of our overall Asia offering, which will focus on litigation, private client, and corporate restructuring for family-owned businesses.’

More broadly, Mishcon also intends to explore options to raise capital. ‘The IPO market remains pretty closed’, explained Hotson. ‘It’s not something we’re actively looking at right now. But we have a strategic view to increasing our access to capital. We would potentially do more deals like we did with Taylor Vinters, which sometimes need more capital to make work. And we need to invest in other things like tech as well.’

Hotson also pointed to the increased availability of litigation funding as an area of opportunity for the firm: ‘We have a medium-term need for increased capital. How we resolve that need is something we debate from time to time, though there’s not  a huge amount of urgency. It’s not constraining our ability to grow now.

‘We explored the IPO as an enabling strategy to allow us to deliver growth. The listed law firm market is a very limited market. Even the private equity law firm market is not very mature. But we think we’ll see more firms take capital in, because there are things they can do with that capital. We may well be one of those.’

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This article first appeared on Legal Business