Linklaters LLPs shed light on profits dip during last financial year
Accounts point to impact of increased taxes and rising staff costs on profitability
December 17, 2018 at 12:24 PM
3 minute read
Linklaters has filed its limited liability partnership (LLP) accounts for 2017-18, shedding more light on the firm's financial performance during the last financial year.
While turnover increased by 6% from £1.429m to £1.515m, the firm saw profit per equity partner fall for the first time since 2009-10, a dip the firm attributed to increased investment in areas such as IT and international expansion.
The accounts show that the amount for division among members dropped 4% to £437.7m, in part due to a higher tax bill and increased operational costs.
Linklaters paid £3.4m in UK corporation tax during the year, on a par with 2016-17, but the firm's non-UK tax bill almost doubled from £16.3m to £30.8m. The firm declined to comment on the reason for the increase.
Operational costs increased by more than 9% (a rise of almost £90m), more than a third of which was due to rising staff costs on the back of increases in lawyer headcount and support staff.
The average number of lawyers at the firm rose 1% from 2,457 to 2,487, while business staff headcount rose 2% from 2,149 to 2,190, with total salaries up more than 4% from £615.2m to £642.3m as a result.
Average partner numbers fell from 312 to 310, with total profits allocated to members staying consistent at £423.1m.
Linklaters' management – which comprises senior partner Charles Jacobs and the 12 members of the firm's executive committee – received a £21.6m share of the profits, an increase on the equivalent 2016-17 figure of £20.8m. The rise was down to the addition of chief marketing officer Frank Mellish to the executive committee during the year.
According to Linklaters, the firm saw particular growth in continental Europe and Asia. At the beginning of the financial year, it announced it would make its long-awaited China move, as 20 of its lawyers broke off to set up a 'best friends' firm in the Shanghai Free Trade Zone. The firm was also granted a temporary extension to practise in Singapore until 2020.
In Europe, the firm launched its fifth German office in Hamburg and made major lateral coups with the hire of Italian corporate partner Roberto Casati from Cleary Gottlieb Steen & Hamilton and Frankfurt banking partner Neil Weiand from Allen & Overy.
Linklaters said 2017-18 was the first year of its firmwide 'strategy refresh', aspects of which were unveiled at its partnership meeting in April 2017, when the firm announced a shake-up of how it assesses partner performance.
Legal Week also revealed last month that the firm had introduced controversial new 'departure lounge' clauses into its partnership agreements, to restrict large teams moving to acquisitive US rivals.
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