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A&O: ‘Exceptional’ US growth pushes partner profits close to £2 million

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Revenues also up

Allen & Overy (A&O) has become the first member of the magic circle to go public with its 2022 financial results, with the firm enjoying a 10% uplift in revenues thanks to “exceptional” growth in the US.

The firm today confirmed revenue is up £170 million to £1.94 billion, while profit before tax increased 9% to £900 million for the year ended 30 April 2022. Profit per equity partner (PEP) hit £1.95 million, marking a 3% increase on the previous year.

A&O — which over the past year to so has opened hubs in San Francisco, Silicon Valley, Boston and Los Angeles — said more than 50% of its revenue growth came from activity across the pond.

Commenting on the results, global managing partner Gareth Price said: “Last year we demonstrated the power of our international platform to meet the sophisticated needs of our clients in an increasingly complex landscape for global businesses. Our clients are facing major new challenges and we have invested to broaden our capabilities to support them as well as expand our expertise in key markets to maintain our industry-leading local depth connected by global reach.”

The 2022 Legal Cheek Firms Most List

He added:

“The global economy continues to be impacted by high inflation and the business environment for our services has been softening in recent months. We expect these conditions to persist in the coming months but we remain confident that our diversified business provides resilience and positions us well for the more challenging conditions ahead.”

The firms latest set of financial results come just two weeks after it told junior lawyers they would be missing out on pay rises — for now — due to what the firm described as “challenging” economic conditions. The Legal Cheek Firms Most List 2022 shows newly qualified (NQ) associates currently earn a base salary of £107,500.

54 Comments

Anon

10% is hardly exceptional in an inflationary environment where fees also go up. If anything with the extra U.S revenue its a bit disappointing.

(12)(27)

Anon

You’ve missed the obvious point which is that revenues and profits up but salaries frozen. Try using some critical thinking next time.

(61)(1)

Anon

Agreed. £2m PEP is tragic. Makes sense why they’re freezing associate pay.

(18)(6)

Whoa, Nelly!

You can’t read. The “exceptional” attached to the US expansion, not the overall 10% revenue uplift. Geezzzz.

(5)(1)

Flo

A… & O… let’s go!

(5)(0)

Titanic FBD

Lol how out of touch are A&O? Read the room, you won’t have any lawyers left at this rate.

(97)(4)

Huff

Allen & Over It

(49)(1)

An observer

Oh this is going to be good.

(38)(1)

A&NO

Incredible! Partner profits are up to 2 million… Oh you wanted market rate NQ salaries? nah piss off sorry :/

wait a second… why are my lawyers leaving the firm? what about my prestige?

(88)(2)

Scorned A&O NQ

10% uplift, yet cant match HSF for NQ salaries….

(53)(1)

Questioner

Out of curiosity, how does HSF compare to A&O / other MCs now? I don’t mean the salary, which A&O is (understandably) getting crap for atm, but more in general quality of work / exit opportunities etc.

Obviously HSF is SC, not MC, but is the difference really tangible between them?

(4)(1)

Schadenfreude

Well, take a look at the Chambers ratings on ESG for a start. HSF is whipping A&O’s arse.

(3)(3)

A&Oops

But somehow still cant afford payrises for their junior and mid level associates….

(44)(1)

A bird

Cheep cheep

(37)(1)

Lol

All this and no NQ rises. Sad.

(25)(1)

Anon

Not just NQ … all associate salaries frozen. 10% cut in real terms due to inflation.

(42)(2)

Anon

This nonsense about a “real terms pay cut” needs to be dispelled. In May 2021, NQs earned £95,000. They now earn £107,500. That’s a bigger increase than the rate of inflation over that period.

(8)(11)

Anon

Imagine working for these tone-deaf idiots.

(42)(1)

Disgruntled associate

The US expansion is the biggest joke of the century. With this many new partners for a brand new practice I’d expect a 2000% growth instead a negligible 50% growth. London and other overseas branches are funding this bollocks by imposing a pay freeze on hardworking associates and support staff – how iniquitous.

We’re losing associates and market share to our MC, SC and US rivals, yet nothing is being done to address the existential crisis.

(56)(2)

Ex A&O

Agreed. One of the reasons I left is because I was sick of seeing money being spent with gay abandon on second-rate (at best) US partners and associates while any pay rise for us was accompanied by public grumbling from the partners.

Congratulations to the firm’s PR department for spinning the very mediocre US results as a huge success. I would love to see how profitable the US partners actually are on a standalone basis.

(54)(1)

Sad

It’s incredibly frustrating to see. Based on my work in the US, I see a lot from these firms and the vast majority of partners picked up by A&O have been underwhelming (almost) nobodies. So, it would make sense that the growth isn’t as “exceptional” as the firm’s PR department would like it to seem!

(10)(0)

Future Trainee

Can’t believe it: does this mean that students grumbling about NQ pay rates on a forum doesn’t result in the business going under? What about the mass exodus to Kirkland?

(7)(28)

Anon

What are you on about, these are revenues for the last financial year before they even announced the pay freeze. The effects of departures now won’t be seen until they report next year’s results.

(30)(6)

Anonymous

The grumbles have been happening for years!

“The MC will die because of U.S. firms” etc. etc.

(6)(7)

Anon

Now it’s different. There are large 5 figure disparities between MC firms

(18)(0)

Tim

Yeah you’re right – so in 2012/3 when U.S. firms started paying £100,000 and MC firms were paying £58,000-60,000, that wasn’t a difference at all.

(7)(3)

Anonymous

Since last month I’ve been taking interviews with a number of firms and I’m astonished by how simple it is to switch and to make more money (even our MC rivals are willing to pay £15-30k more plus a £5k sign-on, let alone elite US offering £60k+ more).

(45)(0)

Trainee

Fake news.

(1)(40)

Trusted advisor

This has to be correct insofar as more senior associates are concerned. No chance for a trainee/NQ to be offered an extra £15-30k for the switch to another MC. I should add that offshore is also a fantastic option: excellent take home ££ together with genuine work life balance and no politics.

(9)(0)

Schadenfreude

I’ve left with a £50K base rise plus sign-on. For an allegedly lower-ranked firm. And I’m not alone.

This management strategy is an absolute joke. That’s what you get when you let your BD department run your strategy for you.

(6)(1)

Anon

Associate: Can I have a pay rise please? Even B&M is paying more to associates.
Partner: The economic condition has been utterly challenging and we can’t afford it. Be a good boy and keep going – we can revisit this in due course.

(26)(1)

Anon

Intrigued by A&O’s strategy with recent announcements. Can’t say the end game of recent mixed messaging is obvious. Freeze associate pay (in extreme inflationary environment) while simultaneously trumpeting partner profit gains? Good luck with that.

(46)(2)

A&O Trainee

Who said A&O juniors are leaving? Incorrect. Majority are staying.

(7)(23)

Anon

Many associates between 2-6 PQE are considering to move. You are too green to understand the why.

(53)(2)

Anon

Please. Go back to Comms and stop pretending to be a trainee.

(5)(0)

anon

Er, you’re allegedly a trainee (and definitely not someone from PR/HR). How would you know what the junior associates are doing?

(1)(0)

Anon

What you people don’t understand is that the partners deserve an increase when revenues are up because they are the ones that bring in the work. Those associates complaining about their pay could leave if they want to – but they won’t, because they know they wouldn’t enjoy it as much. Another point that I haven’t seen mentioned is that the quality of work at the MC is infinitely better than at the SC and US firms. Much more interesting with far more impressive and sophisticated clients.

(6)(53)

Anonymous

You’ve been sold a dream by Grad Rec kid. More IMpresSive and SopHisticated clients… Why even bother parroting such tripe.

Just not the case in reality-all SC and US firms do big ticket work for big banks, PE funds, and huge corporate clients. Don’t be salty just because A&O (perhaps your future firm…) is being as tight as a ducks you know what.

If HSF can pay 120k, A&O can.

(66)(0)

Nelly Furtado

Agree with everyone on here that the A&O strategy is weird – the recent press on NQ only salaries is both damaging and misleading (as bunching is a much bigger issue in the silver circle and below), but A&O haven’t said anything to give employees any confidence that management gives a rats about paying in line with other MC firms, nor have they said that they think NQ salaries are too high but mid-senior level associate pay should be materially increased (which would be viewed favourable internally).

Still, even with the recent increases at HSF and Bakers, a 4-6 PQE lawyer at A&O will earn more than at those shops (particularly after the introduction of the new “super” bonus scheme on top of the original scheme for big billers) in busy transactional teams – so maybe that’s the ploy? Pay the lev fin / projects / general banking / corporate / PE teams more because they compete against the US firms, but do so through the bonus? Then you don’t need to pay your pensions team above market rates. Again though, the comms are weird, because they aren’t publishing or advocating for their base rates up the PQE chain (which rate favourably against the Bakers, DLAs, CMSs, Ashursts, etc of this world).

(11)(2)

Anon

Their base rates up the PQE chain aren’t as good as you think they are. Several people at 5+ have left for decent increases in base.

(4)(0)

A&O NQ

Does anyone know where the best dumpsters are in the City?

(13)(0)

Anonymous

One Bishops Square London I heard…

(26)(0)

Samaritan

Kirkland would hire any junior from A&O. Just sayin’

(25)(3)

John Doe

Kirkland would hire anyone with a pulse, that’s the pre-requisite.

(6)(0)

Anon

Not always, John…

(1)(0)

Saul

Wouldnt be surprised if ‘Kirkland “revving my lambo” NQ’ was acc hired by Kirkland

(1)(0)

Joining the Conversation

Is there any chatter within A&O that the salary decision is to be reversed or will the partnership double-down?

One would assume it will happen but not on the inside track.

(6)(0)

Annoyed A&O Employee

Nope! Nothing at all

(8)(0)

Anon

They will double-down. Some partners are very worried about attrition, but others think that associates are too entitled and don’t understand how good they have it. After all, the work keeps working in the door, so they can’t possibly be doing anything wrong. Oh wait…

(4)(0)

A&O loyalist

Just like any law firm A&O is a for-profit institution. That means the firm need to minimise costs in order to maximise profits.

Albeit the marginally lower salary compared to our top rivals there can never be ANY doubt that A&O are one of the few market leading, full service law firms that provide the best training. Other firms may be paying a wee more but you have to sacrifice your development and future.

If you are upset about the pay, the door is right there. Thousands of outstanding candidates queuing to fill the vacancies. Good riddance.

(5)(27)

From A&O to Cravath Scale US

A&O did provide me with excellent training. But get out once you qualify.

The firm’s strategic direction is all over the place – they’re chucking money away in the US for 3rd rate partners. The money is not good enough for the hours and stress you have, both compared to US and MC firms. The post-tax difference is sizeable against US firms especially when you take bonuses into account. Oh, and just tell me it’s ‘marginal’ when you apply for a mortgage and the lender lets you borrow 5.5x your pre-tax salary. That’s right, all things being equal, an Akin NQ can borrow £390k more than an A&O NQ.

Don’t believe the Grad Rec nonsense about qUaLItY oF wOrK. You really think the likes of Kirkland, Latham, STB and Skadden aren’t working on top notch deals and usually opposite the MC firms?

It’s not the 90s anymore. The MC dominance is slowly but surely ending. They’re still top firms but the US firms are getting further entrenched in London, billing higher rates and paying higher rates. Stop being complacent and smell the coffee

(21)(0)

Ex A&O

This. Great post. The MC has lost its shine. It will attract keen Oxbridge trainees, but even they will increasingly look to the US and SC firms now. It’s hard to see what A&O’s USP is supposed to be now.

(6)(1)

A&O Skeptic

Are you suggesting that HSF, FF, and CC, as firms that pay “a wee bit more”, are not market leading, full service law firms which provide the best training? Or that by joining these firms you’re sacrificing your development and future? Because if so, then you are categorically incorrect, as these are all well respected firms with established training programmes and top quality work.

I could maybe agree with you if you’re comparing the training and development at some Cravath-scale American firms to that at A&O, but the pay discrepancy is much larger than “a wee bit more” across all PQE levels.

(13)(1)

Freshfields NQ

*AMUSED HONKING*

(11)(0)

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