But Partner Earnings Remain In The Millions
The top 15 US law firms operating in London saw their collective profits fall below £1 billion in the 2022/23 financial year, according to new research by legal accountancy and advisory firm Hazlewoods.
Their profits decreased by 3 percent from £1.01 billion in 2021/22 to £985 million in 2022/23. In contrast, the top 15 UK-based law firms experienced a slight 1 percent profit increase during the same period, rising from £5.22 billion to £5.27 billion.
The dip in profits for the US firms in London is due to a significant global downturn in mergers and acquisitions (M&A) activity, a key area of focus for the big law US law firms specializing in private equity, M&A, and capital markets work.
Globally, M&A deal value fell by 23 percent in 2023, from $2.7 trillion to $2 trillion, compared to the previous year.
“US law firms in London have seen their profits impacted by the slowdown in M&A deals. Their concentration on the most lucrative work makes them vulnerable during downturns but also positions them for significant profitability during economic upswings,” commented Ian Johnson, Partner at Hazlewoods.
However, there are signs of recovery in sectors like private equity-backed deals in early 2024, which could lead to a rebound in profits for the US firms based in London along with the other top London law firms.
Despite the challenges, the major law firms – both US-based and London-based, have been competing for newly qualified lawyers by buying into a major pay war that has driven up law firm salaries in The City.
The average profit per equity partner at the top 15 US law firms in London remained higher than their UK rivals in 2022/23, standing at £1.3 million versus £1.05 million for UK firms.
We have previously written about the huge pay rates paid out to some London legal stars with major lateral moves attracting investment bank-level pay deals.
