The year in review: Strong performance backed by cross-practice growth and leading global network
15 July 2021
We delivered a strong financial performance in the year to 30 April 2021, as the global economy steadily recovered from the upheaval and uncertainty brought about by the pandemic. This success results from our balanced, long-term strategy of investing in the development of our legal practices, forging ever closer relationships with our clients, a geographically diverse, international network built over many years and the commitment of our people.
After initially focusing on the wellbeing of our people, their ability to work remotely and our continued ability to service clients, we accelerated our investment in the network as governments brought the pandemic under control. Most notably, we hired 14 new partners in the United States, including a market-leading project finance and renewables practice, and opened a West Coast office in Los Angeles.
As in the world at large, there was a step-change in A&O employees’ awareness of race and ethnicity and commitment to creating a truly diverse and inclusive environment that allows every one of our people to thrive and give their best. To that end, we launched ‘All In’, our commitment to creating an inclusive culture that celebrates and embraces difference.
Highlights from the past year
Turning to our financial results for 2021, after a quiet first few months, business activity started to recover in Europe and North America during September and October, spreading to Asia and elsewhere in the 2021 calendar year.
Client revenue grew by GBP80 million 5% to GBP1.77 billion (USD2.32bn; EUR1.98bn), with the pick-up in activity more than compensating for the slow early months. Profit before tax rose by 19% to GBP822 million (USD1.08bn; EUR921m), due to the combination of higher revenues, the release of certain provisions and lower costs resulting from the pandemic.
There were stellar performances across all practices. Litigation stood out especially in areas such as contingency planning, contractual impacts, employment issues, the effects of emergency legislation and insurance-related claims.
Turning to Banking, there were unprecedented levels of activity during the second half of the year. Restructuring, leveraged finance and asset finance practices all had exceptional years. Significant investment in the global practice led to the hire of 23 new partners in projects, restructuring, funds, fintech, leveraged finance, private credit and real estate.
The Corporate practice worked on a record level of transactions in the second half. As a top-tier global practice, we advised on a large share of the most complex cross-border and high-value deals, with a leading position in growing markets such as European SPACs, and a growing presence in sectors such as private equity, technology and life sciences.
Finally, in International Capital Markets, the fourth main practice area, we advised clients on complex funding matters as they navigated difficult economic conditions. Focusing on the future of capital markets, we hired talented specialists in sustainable finance, fintech and blockchain-related finance.
While people remain the future of law, they will be powered by technology. To that end, investing in the Advanced Delivery & Solutions (AD&S) teams remains a strategic priority. The AD&S offerings, which include an array of technology, resourcing and end-to-end solutions as well as specialist advisory services through A&O Consulting, enable us both to reshape how we deliver traditional legal projects and to develop complementary services. A significant milestone for AD&S was the increasing use of legaltech tools and advanced delivery methods by our own lawyers, further fuelling innovation within the firm and on behalf of our clients.
Fuse, the AD&S tech innovation space, received more than 150 applications from lawtech and fintech start-ups looking to join – the highest number yet. Illustrating the power of Fuse, the Loan Market Association launched LMA.Automate, a document automation platform for syndicated loans, which is hosted by A&O and powered by the software of Fuse cohort member Avvoka.
Another notable development was the launch of Rulefinder Data Privacy from aosphere, A&O’s online legal information business.
Looking forward to 2022, we have started with high activity levels across practices and geographies, with an especially buoyant M&A-related inflow of work. The worst of the crisis appears to be behind us and we can go back to a new kind of normal, which allows us to engage more with each other once again.
What we did for our clients
Many of the deals we advised on during the year helped our clients achieve their goals through complex transactions, involving a mixture of English, US or local law across multiple jurisdictions.
A good example was our work advising global communications infrastructure leader American Tower Corporation on its friendly acquisition of Telxius Towers from Telefónica SA. The acquisition involved 31,000 existing communication sites in Germany, Spain, Brazil, Chile, Peru and Argentina, establishing American Tower as one of the largest independent communications infrastructure providers in Europe. Announced in January 2021, the total consideration was EUR7.7 billion.
Some of our work also related to businesses refinancing early in the pandemic. In June 2020, we advised the underwriters in Cathay Pacific’s HKD11.7 billion rights issue that formed part of its HKD 39 billion recapitalisation.
As conditions improved and the deal pipeline began to thaw, we advised the group of lenders on one of 2020’s largest acquisition financings, AstraZeneca plc’s acquisition of Alexion Pharmaceuticals Inc. Announced in December 2020, the bridge financing facility covered the USD17.5 billion cash portion and associated costs of the USD39 billion acquisition.
The theme of environmental, social and governance (ESG) matters grew in importance. For example, A&O’s US litigation practice supported the American Civil Liberties Union by filing an amicus brief in support of LGBTQ+ employees. In a landmark ruling, the Supreme Court made clear that US law prohibits discrimination against workers based on their sexual orientation or transgender status.
There were several green capital markets issues. These included advising the bank consortium on AXA’s first green bonds, advising Glennmont Partners on the first green synthetic securitisation done in Italy and advising the joint lead managers on China Construction Bank Corporation’s ESG bonds.
Finally, in an illustration of how AD&S’s insight and technology is helping us to serve clients, A&O was appointed as global IBOR Transition Counsel by multiple leading global banks. We provided an integrated solution, combining the firm’s Markets Innovation Group, advice from A&O Consulting and resources from across AD&S.
What we have done for our people
Our strong performance over the year is a testament to the resilience, the sense of community and humanity of our people, working remotely at an uncertain time. This unprecedented health crisis showed vividly how our firm’s success depends on supporting our people’s wellbeing, as well as diversity and inclusion.
As a firm, we did our best to support employees struggling with mental and physical health during lockdowns. The pandemic also brought out the very best in our people, as we supported each other both within teams and less formally through online social events that helped to maintain the strong connections that bind us together as a community of colleagues.
A&O continued to train partners to be “mindful leaders” as part of our Minds Matter programme, promoting a culture where people flourish and deliver sustainable high performance. Our 40 mental health advocates, who are partners and senior support professionals in every major office and practice group, worked to embed the principles of the Mindful Business Charter, which A&O signed in May 2020 with the aim of reducing stress.
A&O must be a firm where the best and the most talented people thrive, regardless of personal differences. Both the pandemic and murder of George Floyd sparked great empathy, leading to a groundswell of support for action around race and ethnicity. We have targets for increasing the number of ethnic minority staff, but inclusion is the greater challenge.
Both gender and LGBTQ diversity continued to be success stories. In terms of gender, for the last two years we have aimed to make women at least 30% of those going into our partner promotions process – a level that we have exceeded both years. We are also continuing to meet our target of ensuring 40% of our promotion pipeline is female at each level.
Another dimension of diversity and inclusion is our commitment to social mobility. In the UK, the success of our “Smart Start” scheme to provide high-quality work experience for young people from deprived socio-economic backgrounds has now supported more than 1,500 students, resulting in A&O being ranked in the top 30 UK employers for social mobility in 2020. Most recently, in June 2021 we launched the solicitor apprenticeship scheme for school leavers in the UK.
One notable global programme that we have put in place to nurture and reinforce the progress that we have so far made in diversity and inclusion is ‘All In’. ‘All In’, which was launched in May 2021, is our commitment to making everyone at A&O feel comfortable and confident in the workplace. Our momentum towards being a truly diverse organisation that embraces difference is building.
Looking forward to the return to the office, A&O will maintain its flexibility in a new hybrid world, as different countries open their offices at different times. Our personal view is that the office will become more of a collaboration space than solely being a working space.
Moreover, we believe that the office will remain critically important in terms of preserving culture and community and in providing a space for personal development. We expect many of our people will balance their time between the office and at home going forward, in the way that works best for them, their teams and clients.
What we have done for our communities
It makes us proud to report that A&O lawyers delivered 48,896 hours of pro bono and community investment work – an increase of more than 11%, nearly 5,000 hours, from the previous year. Supporting local people in our communities who have no other access to legal advice is a key part of being an A&O lawyer.
We extended our support provided for Hope and Homes for Children, our global charity partner, by a year beyond its two-year term because of the pandemic. That helped the charity to reach 136,000 children during 2020 – its highest number ever – as it dismantled orphanage-based care systems.
Our impact on the environment
Part of our responsibility to society lies in reducing our carbon footprint. Recognising the importance of taking concrete action, we conducted a scientific analysis of our global carbon emissions and set a target of reducing emissions by 50% by 2030, against a 2019 base. In the early stages, we aim to reduce the size of our offices, followed by cutting business travel.
In the calendar year 2020, A&O reduced its total global emissions by 46%, which included a significant contribution from the drop in business travel and real estate emissions during the pandemic.
Overall, we have reduced our carbon emissions, as historically measured, by 12% over the course of the last 10 years.
In future years we want to communicate our progress more holistically. Having reviewed a number of potential frameworks, we are going report our progress using the UN Sustainable Development Goals, the aim of which is to achieve a better and more sustainable future for all by 2030. Of the 17 goals, we have prioritised 11 where we think we can achieve the greatest impact and we will report against them next year.
In closing, the 2021 financial year was a remarkable 12 months. Despite the struggles of working from home, we have reported strong financial results and continued to build our franchise. We are coming out of the crisis stronger than ever, having invested in strategically important areas such as North America.
2021 was also a year when we took further steps towards becoming a truly diverse and inclusive place to work, as well as setting ambitious new targets for cutting emissions.
As we look back on the year, we want to thank all of our staff for their commitment and our clients for their trust. In particular, we would like to recognise the contribution of Jonathan Brayne, partner and chairman of Fuse, who retires at the end of July 2021. Jonathan’s role – along with Shruti Ajistaria, partner and head of Fuse – in establishing our tech innovation space in 2017 is just one example of the impact he has had during a 43-year career.
Among his other roles and achievements at the firm, Jonathan was the founding partner of our New York and Hong Kong offices, an A&O board member, the founding chairman of aosphere, chairman of the global banking group, and chairman of the India group. In 2018, Jonathan was jointly recognised as the legal innovator of the year by the Financial Times European Innovative Lawyer Awards.
Jonathan is a true thought leader and innovator. He leaves A&O with our best wishes and deepest gratitude.
Looking forward to the coming year, we plan to continue to invest in being a leading global law practice that serves our clients, our people and society.