Partner pay nears £2mn at Linklaters

Top partners at Linklaters have taken home nearly £2mn each after the “magic circle” law firm notched up record earnings from a pick-up in dealmaking, and reaped the rewards of investment in the US.

Equity partners at the London-headquartered firm, who share in the profits, took home £1.9mn on average in the year to the end of April, an increase of 8 per cent on the previous year. That followed a 10.3 per cent jump in annual pre-tax profits to a record £942mn, driven by a strong performance from its US and UK offices.

Linklaters, which is the first of the magic circle group of elite UK-headquartered firms to report annual results, also surpassed £2bn in revenue for the first time, following a 10 per cent increase in turnover to £2.1bn.

Its rivals Clifford Chance and Allen & Overy — now A&O Shearman following a merger this year — both surpassed the £2bn revenue barrier for the first time last year, when Clifford Chance reported profits per equity partner of £2mn and Allen & Overy’s equity partners took home £1.82mn on average. Both are expected to report their latest results in the coming weeks.

Linklaters said its revenues were boosted by its US network, which posted its “best ever results”, following an investment push, resulting in a 24 per cent increase in revenue in the region. The firm, like many of its peers, has been investing heavily in America in recent years in an effort to gain a meaningful foothold in the world’s largest legal market.

In January, the firm hired a team of lawyers led by veteran dealmaker George Casey from legacy New York firm Shearman & Sterling ahead of its merger with A&O, and the group is currently advising Volkswagen on a $5bn investment and joint venture with California electric-vehicle manufacturer Rivian.

“We’ve been very clear, we want to be bigger in the US,” Paul Lewis, Linklaters’ managing partner told the Financial Times. “We want to grow across the board [in the US] but we wanted to make sure we had that corporate heart.”

The firm also benefited from a pick-up in global dealmaking in the first half of the year, working on mandates including advising miner Anglo American on its failed £39bn merger with BHP and UK homebuilder Barratt on its £2.5bn deal with Redrow.

It has also advised high-profile corporate clients in the UK such as Endeavour Mining — which instructed the firm on investigations into its former chief executive — and Thames Water.

The new reporting season comes as UK law firms battle a lacklustre market for listings, and growing competition from US-headquartered firms that are investing heavily in the City with outsized pay deals for new partners.

A war for junior talent has also forced up pay at top firms in London, adding to their costs. Linklaters increased salaries for newly qualified lawyers to £150,000 in May, after rival Freshfields Bruckhaus Deringer increased remuneration to the same level. A number of US firms with London outposts are offering their most junior lawyers starting salaries of £180,000.

Linklaters’ results come after profits among most of the magic circle flatlined last year, in spite of higher revenues, as rising costs including salaries and a slowdown in deals hit their bottom lines. Linklaters’ profits were also impacted in the 12 months to April 2023 by exceptional costs linked to the exit of its Moscow office.