Magic Circle Firms Reap Huge Profits Amid Inflation Busting Growth
The financial performance of top law firms in London's Square Mile has been impressive, to say the least. The results season is once again filled with inflation-busting profit increases, which may raise eyebrows among those who think 'turnover is vanity, profit is sanity, cash is reality.'
A decade ago, Linklaters partners earned £1m less than they do today (£2.45m vs £1.45m), a 69% increase over the same period. The Bank of England's official calculator shows inflation has risen 41% over the same time.
The 'magic circle' firms, including Clifford Chance and Allen & Overy (A&O Shearman), have seen similar increases in partner earnings (£2.3m for Clifford Chance and £2.2m for A&O Shearman, both up from £1.23m and £1.21m respectively).
Solicitors reliant on public funding may be envious of these figures, but the wealth also comes with risks. Columnist Jonathan Goldsmith suggests that law firms focus their pro bono efforts on national legal aid needs to avoid a 'de facto windfall tax.'