Strong financial performance reflects breadth of international capabilities
16 July 2020
- Client revenue up by GBP65 million (4%) to GBP1.69 billion (USD2.14bn; EUR1.93bn)
- Profit before tax down 2.5% to GBP 690 million (USD 875m; EUR 788m)
- Profit before tax remained flat excluding provisions made under IFRS9 resulting from the current market uncertainty caused by Covid-19
- Profit per equity partner (PEP) down 1.7% to GBP1.63 million (USD2.06m; EUR1.86m)
- Strong performance in all regions, with standout revenue growth in the U.S. and across Europe
- All practice areas saw increased revenue, with Litigation and Real Estate notable performers
- Advanced Delivery & Solutions revenue grew by 15%, demonstrating the growing importance of innovation in legal services to clients
- Robust results that put the firm in a strong position as the Covid-19 crisis struck and for anticipated tough market conditions ahead
- Continued progress on diversity and inclusion programmes and wellbeing
Commenting on the results, global managing partner Gareth Price said: “These are strong results, with revenue growth in all our global practices, proving the success of the broad-based strategy we have followed over the last decade. The combination of the widest international network of our peers, genuine local insight and a market-leading position in use of technology and alternative client services is increasingly compelling to our global client base. Our growth is due to the hard work of all our people and I would like to thank everyone for their dedication in the last twelve months.
"These results, combined with the measures we have taken in response to the pandemic, put us in a strong position to continue to support our clients as they navigate the more difficult market conditions ahead.”
A resilient global business
A&O’s international network, the broadest among the global elite law firms, delivered a strong performance across all regions with standout results in the U.S., a strategic priority for the firm. In the last financial year, A&O has made considerable investment in its U.S. business, adding eight partners comprising five lateral hires and three internal promotions.
From a practice perspective, Litigation had a very strong year across all of its core areas globally. In addition to being very busy on a range of commercial disputes, the global IP practice was a standout performer, acting for some of the world’s most advanced life sciences and tech companies on their most business-critical disputes. Investment in the last financial year has created one of the most rounded global investigations practices in the market, which will be of great support to clients as regulators scrutinise corporate and individual behaviour in the aftermath of Covid-19.
A strong performance was delivered by the global Banking practice across products and it continues to be recognised as a top-tier practice in all key geographic markets. In particular, the global projects, energy and infrastructure team marked another highly successful year advising on multiple mega-development projects. Continued investment in the Asia Pacific Restructuring & Recovery Group saw it named ‘Restructuring Team of the Year’ by IFLR, which commends innovation and firms that break new legal ground. The global Funds Establishment and Regulatory practice also saw growth, with particularly strong performances in Luxembourg, France and London. Real Estate also delivered particularly strong results following a year acting for both major banks and alternative investors on complex matters.
The global Corporate practice had another record year, with growth driven by the U.S., UK and Western Europe. The team advised on a large share of the most complex, cross-border and high-value transactions in a wide range of sectors and markets globally, for corporate clients, private equity funds, banks and other institutional investors. Investment was made in the global practice with 13 new partners across the world, comprising lateral hires and internal promotions, in a diverse range of markets including U.S., Germany, Japan, Vietnam, UAE and Russia.
The ICM practice had a good year with growth in Securitisation and Debt Capital Markets. Last year saw continued investment in Asia Pacific and the U.S., with lateral partner hires as well as internal promotions. The global team advised on some of the largest transactions in the market and continues to be recognised as a market-leading practice, winning multiple awards.
Continued growth for Advanced Delivery & Solutions
Advanced Delivery & Solutions built on a very strong year in FY19 with further revenue growth of 15%. Fuse, A&O’s collaborative tech innovation space, welcomed its fourth cohort virtually due to the impact of the Covid-19 pandemic. For the first this time includes FinTechs following nominations from four bank clients. A&O Consulting continued to grow in both revenue and headcount, including launching in Asia Pacific with the hire of Managing Director Lee Alam in Sydney.
Advanced Delivery & Solutions brought a number of new solutions to market, focused on helping clients resolve complex challenges through a combination of deep subject matter expertise with smart technology and resourcing. IBORmatrix is an end-to-end solution to assist with the transition from LIBOR to new interest rates at scale. A new technology-enabled contract review service was launched to help clients understand which, if any, of their contracts allow relief for non-performance under force majeure provisions during the Covid-19 pandemic. Rulefinder e-signature is a new subscription service from aosphere, A&O’s online legal information business, providing a law and practice analysis of e-signing across 48 jurisdictions.
A responsible global employer
A&O’s responsible approach to its global workforce’s health and wellbeing was evident in how the firm dealt with the impact of the Covid-19 pandemic across its global business in the latter part of the financial year. The firm has embraced flexibility, creating an environment where everyone can work and feel supported whatever their individual circumstances.
Last financial year the firm launched Mindful Leader training for partners as part of its Minds Matter programme which aims to promote a culture of health, where people can flourish and deliver healthy and sustainable high performance. The firm has also appointed more than 40 Mental Health Advocates, who are partners and senior support professionals in every major office and practice group, to lead and sponsor the programme at a local level.
A&O’s priority of creating an inclusive environment for a diverse range of talent was accelerated with a significant increase in its work on race and ethnicity, including using data to better understand where to focus efforts to improve inclusion and grow representation of minorities, particularly at the most senior levels.
Last year the firm further strengthened the pipeline of women at the firm by embedding accountability for achieving gender diversity goals, refining processes and supporting women from the earliest stages of their career. A record 45% of A&O’s 2020 partner promotions are women.
Initiatives to create an inclusive working environment for the firm’s LGBT+ community were highlighted when it was recognised as a 2019 Stonewall Top Global Employer for the second year running.
Progress on environmental sustainability
During the year A&O demonstrated its commitment to environmental sustainability through addressing sources of CO2 emissions and supporting UN Sustainable Development Goal 13 – Climate Action. This has included purchasing Gold Standard Voluntary Emissions Reductions (VER) credits to offset the CO2 emissions from global air travel for 2018 and planning to offset all global residual CO2 emissions, including aviation emissions, in the future. The firm has also made progress on its global carbon footprint, reducing it by 5% in calendar year 2019, with the most significant factor being reduced electricity consumption and reduced grid emissions.
Helping our wider communities face the challenges of Covid-19
Last year the firm met its fundraising target of GBP1 million for global charity partner Hope & Homes for Children and continues to fundraise for the charity around the world. A&O is extending its partnership with the charity, which was due to end in September 2020, to July 2021, in response to the Covid-19 pandemic.
In the last financial year, A&O lawyers delivered 120 hours of pro bono and community investment (PBCI) work every day, amounting to 43,938 hours worldwide. More broadly in response to the impact of the Covid-19 pandemic, the firm increased its focus on PBCI activities. This includes adapting existing programmes to respond to the needs of PBCI clients, for example by taking projects online or reworking schedules to provide more regular support for the duration of the pandemic. A&O has also provided emergency funding to UNHCR to support vulnerable people in their communities.
The current financial year will see the full impact of the ongoing Covid-19 pandemic, affecting every market in which the firm operates. The firm takes a conservative financial approach and took action at the beginning of the crisis, announcing a raft of prudent management measures. The outlook for the coming year is uncertain, as the effect of the crisis on global markets unfolds. However, the breadth of A&O’s international business and diversity of practices and sectors puts the firm in a resilient position should economic conditions worsen.