Clifford Chance rules out merger as revenues top £2bn for first time

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Clifford Chance, one of the UK’s so-called magic circle law firms, has ruled out a merger as it recorded its first-ever year with revenues of more than £2bn.

The global law firm said it would instead pursue a strategy of “steady and confident growth” in its US business.

Charles Adams, the firm’s global managing partner, made the comments as the London-based law firm unveiled its annual results on Wednesday. By contrast, Allen & Overy, an arch-rival, announced plans for a $3.4bn merger with the US law firm Shearman & Sterling in May. Partners in both firms are due to vote on the transaction later this year.

Asked whether the firm would pursue a similar merger, Adams said no.

“The strategy Clifford Chance is pursuing is a strategy of steady and confident growth around the sectors where we can make a difference globally,” Adams said.

Clifford Chance would not rule anything out in pursuit of its strategy, Adams added.

But, he said: “I can safely say that right now, no, we are not pursuing a deal and are still confident that the right strategy for Clifford Chance is the one that we’re pursuing.”

Adams pointed to the firm’s opening last month of a new office in Houston, Texas, aimed at serving the area’s energy industry as an example of its strategy.

Clifford Chance is the second of the magic circle to announce its annual results, after Allen & Overy reported its figures last week, also reporting revenues of more than £2bn for the first time.

Like Allen & Overy, Clifford Chance unveiled broadly flat profits on increased revenue, demonstrating the narrowing of profit margins for many big firms prompted in part by a war for junior talent and a slowdown in mergers and acquisitions work.

Clifford Chance’s revenues were £2.06bn, up 5 per cent on the £1.97bn for the year to April 30 last year. The profit attributable to the firm’s partners for the past year was £781mn, down marginally from £783mn the previous year. Profit per equity partner was £2mn, very marginally down from £2.04mn the previous year.

The firm had 623 partners on May 1, compared with 601 a year before.

Like many other big law firms, Clifford Chance has suffered from a slowdown in the number of corporate takeovers, which normally provide large amounts of firms’ business.

Adams said the downturn had hit some competitors more than Clifford Chance, adding that his firm had received more than £100mn more in revenue from corporate clients in the year to April 30 than in the year before.

Healthcare, life sciences and energy were among the sectors where the firm performed strongly, he said.

Adams also defended the firm’s willingness to pay higher salaries to newly qualified lawyers after US-headquartered firms with London outposts sought to recruit newly qualified professionals with increased pay.

Clifford Chance last year raised annual pay for newly qualified lawyers in London by 16 per cent to £125,000.

The firm wanted to continue to meet the needs of clients worldwide, Adams said.

“For a portion of our clients in some of our markets, we’ve got to continue to be competitive by being able to match the salaries of the US firms,” he said.