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Publications: 15 July 2021

The year in review: Strong performance backed by cross-practice growth and leading global network

London: Allen & Overy (A&O) has announced its results for the year ended 30 April 2023. The global elite law firm reported an increase in revenue, although profits and Profit per Equity Partner (PEP) were impacted by challenging market conditions and a high inflationary environment.

In summary:

  • Client revenue up by GBP138 million (7%) to GBP2.1 billion (US2.5bn; EUR2.4bn)
  • Profit before tax remains at GBP892 million (USD1,076m; EUR1,032m)
  • Average profit per equity partner (PEP) is GBP1.82 million (USD2.20m; EUR2.11m)
  • Client revenue growth was driven by the opportunities arising from global macrotrends, including navigating the energy transition, technological transformation, and the private capital industry
  • Gareth Price, global managing partner, has resigned from the firm after 30 years
  • Hours invested in pro bono and community investment work have increased by 56% over the past two years
  • Advancing towards the new gender diversity targets - with women representing 42% of the latest round of partner promotions - and building an inclusive environment that embraces difference and promotes diversity of thought, while supporting clients to do the same
  • Proposed merger will create a unique global law firm offering the highest quality and depth of advice to support clients in navigating an increasingly complex legal, regulatory, and geopolitical environment

Commenting on the results, global senior partner, Wim Dejonghe, said: “Our diversified business continued to show client revenue growth over the past 12 months, despite intensifying headwinds. Like the rest of the sector, we were impacted by the global economic slowdown, inflationary pressure and geopolitical turmoil.

“Over the past year, we’ve focused on long-term growth with the addition of new partners around the world. We are well positioned to capitalise on the opportunities presented by the energy transition; technology transformation; and the private capital industry.

“Our proposed merger with Shearman & Sterling sets out an exciting future for both our people and our clients, with a uniquely strong combination of local depth, connected by global reach. Our clients are telling us that they are looking forward to the prospect of working with A&O Shearman. They recognise the value that our two firms coming together will deliver for them – an unrivalled ability to help them unlock growth opportunities and manage complex challenges with consistently high quality, wherever they are in the world.”

Key trends driving client demand

A&O’s involvement across the spectrum of energy transition industries has increased exponentially. The team of more than 250 energy transition specialists has advised on projects in over 35 jurisdictions, involving clients from diverse sectors such as power, shipping, aviation, automotive and manufacturing. The firm advised Summit Carbon Solutions on the development and financing of the USD5.3 billion integrated carbon capture, transportation and storage project and has recently closed the USD8.4bn financing of the NEOM green hydrogen project.

Private capital’s influence in the financial markets continues to be an important macroeconomic trend. The private credit and infrastructure sector teams have been particularly active, reflecting the strength of those asset classes in the past 12 months. They have been an important source of income, contributing to our private capital client revenue, which has increased by over 60% during the past two years. Notable matters include EQT Infrastructure’s EUR 3.4bn stake in Wind Tre’s mobile and fixed network and Macquarie Capital’s acquisition of a majority stake in CloudExtel. The firm’s strength across multiple investment strategies has helped the group to create deeper relationships with key clients, which means the firm is well positioned to win work when transaction volumes pick up.

The global technology practice had a successful year advising on a balanced mix of transactions and disputes. For example, it acted on OpenText’s USD6billion acquisition of MicroFocus, and won mandates on a large number of projects in the booming digital infrastructure space. It has also advised on a range of emerging technology matters, from AI to quantum computing to blockchain, such as EIB’s first GBP denominated, dual blockchain digital bond.

The Silicon Valley office is in its second year, which has opened up greater opportunities to not only advise technology companies, but to advise all clients on how to capitalise on the opportunities that technology presents. The firm also invested further in the all-important area of privacy and data security with a U.S. lateral hire, as its teams advising clients on the complex and ever-changing privacy and cybersecurity landscape remain busy.

Global platform growth and investment

Europe, the U.S. and the Middle East and Africa performed well and recorded strong growth in FY23.

In Europe, client demand for pan-European work continued to increase, as political and economic turbulence, together with the European Commission’s bar-setting regulation in areas such as sustainability, privacy and technology, drove the need for advice on complex, emerging risks and opportunities. 

U.S. growth and expansion has remained a high priority. We have continued to invest in growing the team across our six U.S. offices with lateral hires and partner promotions. Revenue growth in the region continued to be driven by energy transition work and the opportunities presented by technology transformation. 

FY23 saw the Middle East’s strongest financial performance ever, with each of its practice and product areas seeing very strong activity. This has been driven by a hot IPO market; significant opportunities in Saudi Arabia as the market opens up to international law firms; market-leading infrastructure deals; and venture capital transactions.

Proposed merger

In May, the firm announced a proposed merger with Shearman & Sterling, which is subject to partner approval. The merger addresses clients’ need for a seamless and integrated global offering of the highest quality to support them in navigating an increasingly complex legal, regulatory, and geopolitical environment. Following the merger, A&O will benefit from increased board-level recognition and expanded access to a corporate client base in the U.S., while Shearman & Sterling will gain access to a dramatically expanded ‘rest of the world’ offering across practice areas.

Increased adoption of legal technology

A&O’s Advanced Delivery & Solutions (AD&S) grew by 13%, driven in part by the retention and increase in aosphere clients, and significant growth in Peerpoint revenues generated by external client placements.

A&O was the only law firm in the world – and one of the few firms of any sort – that rolled out GPT-4 across its entire business. Harvey, the generative AI tool, is now used by 3,500 of its lawyers and business teams, across 43 countries, in their day-to-day work. A&O’s gold standard legal advice on all AI regulatory and legal matters is given by lawyers who don't just understand the cutting edge of technology but are using it in their day-to-day work.

Progress on environmental sustainability

A&O is committed to continually working to make its operations more sustainable by reducing its own emissions and those that come from its supply chains. It has a Science Based Target (SBT) to reduce its carbon footprint from both Scope 1/2 and Scope 3 emissions by 50% by 2030 against a 2019 baseline. The key to reducing its emissions is measurement, so for the first time, this year, it will report its global emissions through the Carbon Disclosure Project (CDP). The scheme is trusted by more than 10,000 participants globally, including many of A&O’s clients.

A responsible global employer

A&O is focused on building an environment that promotes diversity of thought, and it sets itself stretching and specific DE&I targets that it regularly tracks its progress against. One of its long-term global objectives is to increase the proportion of women in the partnership. This financial year, 42% of its partner promotions were women – increasing the proportion of women in the partnership globally to 25%, up from 18% in 2019. Each office implements initiatives which evolve where necessary to maintain progress and momentum. The firm’s activity this year has included implementing a Reconciliation Action Plan in Australia; promoting the role of male allies with colleagues and clients in the Middle East; and piloting a program in the UK to make the recording of requirements for colleagues with disabilities easier.

Positive impact on communities and society

For the second year running, there has been a significant increase in A&O’s pro bono and community investment work – with more of its lawyers becoming involved, delivering nearly 78,000 hours in support of access to justice, social finance, education and employment around the world. That’s an increase of 56% over the past two years, in part down to large-scale programmes of support for asylum seekers fleeing the conflicts in Afghanistan and Ukraine, as well as longer-term work to assist asylum applicants in Greece and on access to family reunion pathways.

A&O partners also contributed GBP3.9 million to charitable funds during the year, including GBP2.4 million via the Allen & Overy Foundation, which provides grants to non-profit organisations around the world.

The firm recently announced the creation of a Social Impact Group, reflecting the broadening scope of its expertise in corporate and social responsibility, which reflects the positive impact the firm has on communities and society. The move aligns with clients’ heightened focus on global environmental, social and governance challenges, which has led to an increase in social impact legal work.

Gareth Price

Gareth Price, global managing partner, has resigned from A&O for personal reasons, after 30 years, of which almost four years were spent leading the firm.

Wim said: “I want to express our gratitude for Gareth’s stellar contribution to A&O over the last 30 years - starting out as a trainee, becoming one of our youngest partners in 2003 and being elected managing partner in 2020. He led our market-leading energy and infrastructure practice for many years and as managing partner steered us through the pandemic and played a pivotal role in the negotiations with Shearman & Sterling that set us up for success in the future.”

The annual results fact sheet is available here.

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