The global hedge
In the 2016-17 financial year, Allen & Overy grew revenue by 16% and profit per equity partner (“PEP”) by 26%. It’s now the second-largest in the magic circle by turnover and just behind Freshfields and Linklaters in PEP.
But this isn’t just about one good year. Indeed, many of Allen & Overy’s rivals have posted good results one year, only to fall behind the next. No, Allen & Overy’s story revolves around something else: the firm’s aggressive international expansion.
To understand, we need to go back to a time when the world wasn’t so global: the early 2000s. That was a time when Allen & Overy was the smallest magic circle firm in revenue and PEP.
Although it was smaller than the others, Allen & Overy pursued international growth at a rate that surprised many of its rivals. Between the 2005/6 and 2014/15 financial years, the firm opened 22 offices, many of which were opened shortly after the financial crisis – a time when other law firms scaled back their international presence.
Allen & Overy was the first magic circle firm to open in Australia, South Africa, Myanmar and Canada. It was also the first to enter Africa after launching in Morocco in 2011. The firm’s investment in Australia proved to be an effective platform to serve the Asia-Pacific region, a move that was soon followed by a number of US and UK firms. The firm supported the rest of its network by a series of best friend relationships, such as its five-year referral agreement with Indian law firm Trilegal.
But key to all of this is the fact that Allen & Overy didn’t expand for the sake of it. It was always led by client demand and growth opportunities. Between 2005/6 and 2014/15 the firm had the highest growth in revenue, net profits and profit per equity partner among the magic circle. This helped it work on many of the biggest deals. Take Africa for example. The firm advised on Africa’s largest-ever project financing and one the largest acquisitions in South Africa. And in 2013, Allen & Overy became the only law firm to complete a deal in every country in Africa – according to its annual review.