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Top partners at Linklaters have been handed a record £2.2mn each for the past financial year following a surge in profitability in the “magic circle” firm’s US offices.
Equity partners at the London-headquartered law firm, who share in its profits, saw their pay jump by 15 per cent on average for the year to the end of April, after the firm’s pre-tax profits surpassed the £1bn barrier for the first time.
Linklaters, which is the first of London’s elite magic circle group of firms to report its results, posted a 14 per cent increase in pre-tax profits to £1.1bn, as it reaped the benefit of heavy investment in the US and a string of mandates on major deals. Profits across its two American offices rose 57 per cent year on year.
Linklaters managing partner Paul Lewis told the Financial Times that the firm’s profit per equity partner (PEP) result had been “hard won”, adding that the number of equity partners had remained stable at about 490.
UK law firm Macfarlanes also posted its results on Tuesday, with PEP hitting a record £3.1mn on the back of post-UK election upheaval that led to a boom in work for the firm’s tax and private client practices.
Under Lewis and senior partner Aedamar Comiskey, who were both recently re-elected, Linklaters has invested heavily in building out its US presence in an attempt to better compete in the world’s largest legal market.
It hired 13 new partners in America last year and now has 52 partners based there, out of a total 530. However, rivals have built out larger American practices, including A&O Shearman, which in March had 175 partners in the US spread across 10 offices, following its transatlantic merger last year.
Law firms in the US have recently come under pressure from President Donald Trump. But Linklaters, unlike its rival Freshfields, was not among a list of 20 firms with a large American presence targeted by the US Equal Employment Opportunity Commission over diversity-related employment practices.
The firm also did not sign an amicus brief supporting Perkins Coie in fighting an executive order from Trump that banned it from government business and properties. Freshfields was the only top 20 firm to put its name on the court filing.
Linklaters said major US mandates last year included advising Dow on a $6bn partnership with Macquarie Asset Management, and Rio Tinto on its $6.7bn acquisition of New York-listed Arcadium Lithium.
In January, the firm hired a team of New York litigators who act for large companies such as Johnson & Johnson. It also added a New York finance team from A&O Shearman in October, having poached veteran dealmaker George Casey from legacy Shearman & Sterling last year.
“We will see that [hiring] momentum carry on over the next year” in the US, Lewis said.
Linklaters also benefited from a number of large transactions outside the US, advising the underwriters on Chinese battery maker CATL’s $5.3bn Hong Kong listing and Rightmove on its £5.6bn bid defence against Rupert Murdoch’s Australian property listings group REA, all contributing to record revenues of £2.32bn.
Lewis declined to comment on whether the firm would raise pay for its newly qualified lawyers, following a fierce talent war that has driven up junior lawyer salaries and law firms’ costs. A spokesperson for the firm said: “We reward our people fairly and competitively and keep pay under review.”
Last year, Linklaters and its UK magic circle peers raised NQ pay by 20 per cent to £150,000 in a bid to compete with US firms that have been rapidly expanding in the UK capital and offering young lawyers base salaries of as much as £180,000.
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