Allen & Overy (A&O) has managed a robust performance despite its heavy exposure to the battered banking sector with the firm achieving a 7% increase in revenue.

The firm today (10 July) announced that fee income for 2008-09 hit £1.091bn, against £1.016bn the previous year. Profits per equity partner (PEP) fell 9% to £1m, according to the firm's own measure, against £1.122m the previous year.

However, profitability was affected by an exceptional £46m cost for the firm's wide-scale restructuring, which saw A&O reduce partner, associate and support staff headcount by around 9%. The firm paid out £26.4m to departing partners, with the remaining £19.6m going on severance packages for lawyers and support staff.

The firm said that the average number of continuing full equity partners in 2009 was 335, against 362 in 2008. The total average partnership in 2009 is 490, up from 474 the previous year.

The drop in profits means the top of A&O's lockstep now stands at £1.345m down from £1.645m in 2007-08. Those at the bottom of the lockstep now receive £538,000 compared with £658,000 the previous year.

The firm's profit before exceptional charges and deductions for partners without full equity rights was £430.9m, against £447.2m the previous year. The £1m figure for PEP is based on total profits after all restructuring costs and payments to salaried partners have been deducted divided by the average number of full equity partners remaining with the firm after the restructuring.

If calculated on the basis of the 372 full equity partners the firm averaged over the 2008-09 year – a measure some firms prefer – PEP would fall to £974,000.

In common with most top City firms, A&O's revenue in sterling terms received a boost from the relative strength of the euro and the dollar. A&O billed more than half of its revenues abroad for the second year in a row, suggesting real term revenue was broadly static with 2008.

The results will be seen as a robust performance in the toughest commercial market facing law firms for a generation and puts A&O in a similar position to Freshfields Bruckhaus Deringer and Linklaters, who last week announced their results.

In contrast Clifford Chance saw a 37% fall in PEP while revenue contracted by 5%.

Managing partner Wim Dejonghe told Legal Week that the firm identified litigation, restructuring, finance and infrastructure as the busiest areas during the financial year. As expected the firm's real estate and corporate practices suffered from the slump in commercial activity.

Dejonghe added: "These have been solid results. It has been a difficult environment, slightly flattered by the exchange rate, but this demonstrates the strength of our network. We had a very strong first half of the year.

"Our approach is to make the firm fit for the future. We want to be fair and upfront and have aimed to only do this [restructuring] once."