#47 The Legal Profession This Week - Two US Firms have Posted New All Time Highs in Revenue​

By Dheepa​

Two US firms have posted new all time highs in revenue this week.

Latham & Watkins have become the first firm to pass the $5bn mark with a total global revenue of $5.5bn. This is a significant increase from $4.3bn in 2020. Profits per equity partner have also risen to an average of $5.7 million.

Fellow US rivals, Covington & Burling also hit a record high revenue of $1.5bn. The firm’s flat all equity partnership model means partners will receive an equally significant hike in profits, from $1.9 million to $2.3 million. The firm’s London office reportedly accounts for 9% of that total revenue at $153 million. Similarly, the London offices of Latham account for 11% of total revenue at an estimated $675 million (The Lawyer).

Record high revenues at US firms are often followed by similar increases in associate salaries. For example, Latham raised its NQ rate to $205,000 earlier this year while Covington & Burling announced a recent raise from £128,000 to £151,000 for its London NQs.

Meanwhile, UK based firms continue to hold out on matching US firm NQ rates despite achieving comparable record results. In 2021, both Freshfields Bruckhaus Deringer and Allen & Overy reported strong 5% increases in revenue while Linklaters recorded a 2% increase. The latter two firms hiked profit per equity partner by about 10% to reflect this growth. Partners continue to enjoy the lion’s share of profits at law firms particularly at UK firms where NQ’s only earn a fraction of top earner’s salaries (Law.com).

Some firms are attempting to bridge the gap by offering additional bonuses based on hitting target hours. Dentons announced that NQ’s could earn up to £107,640 upon charging at least 1700 hours. Travers Smith has implemented a similar structure with NQs being able to earn up to £127,000. Only time will tell if this will be enough to appease incoming junior lawyers.

‘Business as usual’ – the notable deals and cases which went ahead this week:

Kirkland & Ellis is advising private equity firm EQT on its £17.7bn purchase of Baring Private Equity Asia. The transaction is a rare example of a private equity house acquiring a rival in the same space.

Separately, Kirkland is also acting for Sycamore Partners, a New York based private equity firm on its purchase of British high street retailer, Ted Baker. Freshfields Bruckhaus Deringer is advising Ted Baker.


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