Linklaters’ half-year revenue fell by almost 10%, a decline which managing partner Simon Davies said reflected the lack of M&A deals.
Half-year revenues as of 31 October fell by 9.5%, going from last year’s figure of £653m to £591m this year. “Our results are in line with our expectations and reflect the continuing challenging environment for our clients and, in particular, the subdued level of global M&A activity,” said Davies in a statement.
According to Thomson Reuters, however, the firm is leading the worldwide league table rankings in the year to date – having worked on 413 deals with a combined value of US$6.9bn.
It is unknown whether the downturn was also experienced in its seven Asian offices – when contacted the firm declined to provide a breakdown of revenues generated from its six Asian or its two Gulf offices. Davies said the firm is positive about the markets in the Middle East and Brazil, Russia, India and China. “While we do not expect a rapid recovery in the market, we have seen an upturn in our activity levels on the second half of last year, particularly in the BRIC and the Middle East markets …”
The firm would need to produce £707m in revenues in the next half of the year in order to break even to match its 07/08 revenues of £1.2bn announced earlier in July.
The revenue decline follows a similar drop from fellow magic circle firm Allen & Overy, who announced earlier this month that its first half revenues fell 7% to £511m.
According to a survey by PricewaterhouseCoopers (PwC) earlier this month, profits at the UK’s 100 highest-grossing firms fell by 30%. The report also showed that despite the increasing importance of international operations for some of these firms, profits from their international operations – including those in the Middle East and Asia – also dropped by around 10%.
PwC partner Alistair Rose said that UK firms will face ‘structural changes’ in 2010. “The catalyst of the recession has led firms to focus on becoming more efficient, reducing cost by structural change, as well as significant cuts in both fee earner and support staff headcount. The recession has put some operating models under severe stress and survival in the current form for some firms may prove a challenge if market conditions do not rapidly improve.”
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