The UK magic circle saw growth hampered by the faltering euro in 2014-15, with Allen & Overy (A&O) the only firm with an international spread to see a marked revenue increase in the last financial year.

Combined turnover across the five elite firms rose by 1.9% to £5.6bn year-on-year, while average growth in turnover stood at 3%, pulled up by A&O and a strong performance by Slaughter and May's domestic-focussed practice.

Average profits per equity partner (PEP) stood at £1.47m, up an average of 3.1%. This compares to a dip of 2.2% in revenue on average across the Top 50 as a whole, while PEP as an average climbed 7.9%.

The magic circle's performance lagged their 2013-14 results, when the same firms saw PEP climb 7.7% and revenue rise 3.7% on average.

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Slaughter and May, with its UK-based partnership, felt the full benefit of more bouyant deal markets seeing the biggest revenue climb across the group.

A&O, meanwhile, overtook Linklaters to become the third-largest UK firm by revenue at £1.3bn. The firm, which recorded rises in revenue of 3.8% and PEP of 8% to £1.2m, says it has a natural hedge in its business which shielded it from much of the currency exposure experienced by other firms.

In contrast, the drop in the euro against the pound contributed to Linkaters and Freshfields Bruckhaus Deringer posting lacklustre revenue growth, while Clifford Chance (CC) saw a dip.

While retaining the highest income of the group by some margin, CC was the weakest performer in terms of growth, seeing revenue fall 0.7% to £1.4bn against a 1.8% dip in PEP to £1.1m.

Freshfields Burckhaus Deringer also experienced a fall in PEP, with a 7.5% decrease to £1.4m against static revenue growth.

matthew-laytonDespite CC's fall in PEP and revenue, managing partner Matthew Layton (pictured) says he is "cautiously optimistic" about the 2015-16 financial year, adding: "Just glancing at the headlines indicates how much uncertainty there is, but we are seeing some confidence with increased cross border transactions, and we know corporates continue to have strong balance sheets."

Based on announced figures, Linklaters outpaced Freshfields in terms of PEP climbing to second place in the group below Slaughters as the latter fell to third.

However, Freshfields posted a slightly higher net profit of £574m compared with Linklaters' £573m.

A&O's PEP increase meant it rose to fourth place, ousting CC into fifth this year.

However, Macfarlanes' PEP growth of almost 30% in 2014-15 bringing it to £1.6m means that the firm outpaces all the magic circle bar Slaughters looking at the Top 50 as a whole.

freshfieldsAcknowledging the impact of Euro currency fluctuations this financial year, Freshfields' managing partner. David Aitman (pictured), says the uncertainty in Europe has already hit a low point.

In March, the euro hit its lowest level against the US dollar for 12 years. 

"What does this mean longer term? My gut feeling is that the euro is unlikely to suffer much further damage," says Aitman. "Whether or not it will stage a reasonably rapid recovery is another question and some uncertainties are hanging around that."

Aitman adds that "a big recovery" in the euro is unlikely even if some of the uncertainties in Europe such as the Greek situation are clearer now.

Meanwhile, Slaughters' senior partner, Chris Saul, highlights ongoing uncertainty in relation to the UK's in-out EU referendum set to take place by the end of 2017: "Number one at a macro level is the uncertainty in the UK in relation to the EU referendum. Business is taking this in its stride at the moment, but it is just something that we all have in mind given the element of uncertainty and the fact that business is generally enthusiastic for Europe."

Total partner numbers at the magic circle were broadly flat this year at 2,088.

Meanwhile, revenue per lawyer (RPL) reached £657,900 compared with £631,400 in 2013-14.

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