Baker McKenzie revenue nudges up amid global uncertainty
Baker McKenzie sees revenue climb 2% as PEP stays broadly static at $1.3m
August 02, 2017 at 04:43 AM
4 minute read
Baker McKenzie saw revenue climb to a record high of $2.67bn (£2.02bn) in 2016-17 – nudging up just over 2% on last year's figure, with average profits per equity partner (PEP) staying broadly static at $1.3m (£984,000).
Billable hours increased by 3%, as the firm said that on a constant currency basis its revenue climbed 5%, highlighting the appreciation of the dollar against many currencies. On the same constant currency basis, PEP edged up 1.2% compared with 0.2% in dollar terms.
The results, while positive, faced a tough comparison with a robust 2015-16, when revenue climbed 8% against a 13% rise in PEP.
Announcing its 2017 results, Bakers said that on a constant currency basis revenue had soared by 50% during the past decade, against a 20% hike in profits.
London-based chair Paul Rawlinson noted that geopolitical uncertainty, including the impact of Brexit on Europe, held back revenue growth during the most recent financial year.
He added that profit growth did not keep pace with revenue growth as it was affected by increases in salary costs – particularly in the US, where associate payscales jumped.
The firm also invested in a large number of lateral hires, with transactional hires in London, New York and China making up a quarter of the firm's 59 new partner recruits worldwide.
It also made investments in technology and innovation, announcing in June a collaboration space in Toronto designed for the firm's lawyers to meet with clients and other tech companies, including IBM Canada, to rethink how they service clients.
"The competitive pressures in the US have fuelled some additional costs," said Rawlinson. "It shows that you need to be growing revenues to stand still (on profits). We'd like to think those pressures are across all firms but in [the US] market, obviously, it's a very high-end, highly competitive market for talent."
Bakers' partnership ranks grew to nearly 1,600 during the year, with the firm also promoting 80 lawyers to partner worldwide. Forty percent of these newly promoted partners were women.
All three of the firm's regions – the Americas; Europe, Middle East and Africa; and Asia-Pacific – saw revenue growth of 4% or more on a constant currency basis. For the second straight year, the firm's revenue-by-region breakdown was 37% in both the Americas and Europe, Middle East and Africa, while 26% of revenue came from Asia-Pacific.
Three countries saw double-digit growth in revenue: Thailand, Turkey and Argentina.
Rawlinson said the relatively even distribution of revenue across the regions serves as a hedge to downturns in certain geographies, but also shows how clients come to the firm for its international expertise across the globe.
He said the firm is focused on growing in the major financial centres in each region: New York, London and China's Shanghai and Beijing.
"I don't think any one of those regions we want to be particularly dominant, but in each region we need the strong markets to be stronger, which will have a disproportionately positive impact in sending work out across the whole piece," Rawlinson said.
He added that the technology, media and telecoms practice saw the highest revenue growth.
"If you asked me at the start of the year, I would have taken a pretty flat result," Rawlinson said of the year. "So to come up 5% [in constant currency], in the context of the year we've had with the turmoil that's been going on, we're pretty pleased. And we think it sets us up nicely for next year."
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