Baker McKenzie has broken through the $3 billion revenue barrier. Already the largest law firm in the United States by lawyer head count, it has announced revenue increases of 7.8 per cent in its latest report.
The revenue growth makes Baker McKenzie similar to other law firms that have experienced double-digit growth helped in part by the pandemic’s reduction on costs. The costs reduction was reported in a February survey from Wells Fargo Private Bank Legal Specialty Group.
The firm reported $3.1 billion in gross receipts in fiscal 2021 through June 30, with revenue growth ranging between 5.5% in North America, 5.8% for its Asia-Pacific operations and 12.7% in EMEA. In its previous fiscal year, the firm said it grossed $2.9 billion.
Baker McKenzie said revenue for its Latin America operations dropped 5.6% “mostly due to steep local currency devaluations in Argentina and Brazil, but were positive on a constant currency basis.”
The firm also reported spikes in profitability — profits year-over-year surged 36.7% while its profit per equity partner in fiscal 2021 grew by a whopping 41.5% compared to last year.
Latin America revenues dropped 5.6per cent , mostly due to steep local currency devaluations in parts of the region, but were positive on a constant currency basis.
EMEA saw strong growth in the UK, the Middle East, Poland, Austria and Sweden. In Asia Pacific the financial centres of Hong Kong and Japan were the strongest performing markets. North American growth was driven in part by a strong performance on the West Coast, the firm said.
Welcome Turn of Events
The increase was welcome for the Chicago-based law firm which has about 6000 fee earners spread across its global network of over 70 offices. The 2020 year had shown flat growth for the third year in a row and it was one of the Big Law firms that laid off employees last year.
In September 2020, two months into fiscal 2021, the firm said it was reducing the size of its North American workforce, laying off lawyers and other timekeepers and staff professionals.
The firm also paid bonuses to associates with US associates reaching $100,000 and with the potential to reach higher levels, as the competitive focus on law firm associates’ pay continued apace among Big Law firms and boutiques.
It also recently announced a range of senior promotions.
In the firm’s press statement Milton Cheng, Global Chair, Baker McKenzie said:
“Against such a challenging backdrop, to achieve record revenues is a huge vote of confidence from our clients, and testament to the hard work and resilience of our people around the world. Much of this increase in activity was driven by the adoption of our Firm-wide, comprehensive Client & Market Strategy, with success in areas such as the TMT sector, and across our Private Equity practice, an encouraging validation of the investments we have made, and continue to make, in these areas. However, while we are proud of what we have achieved together in this last, extraordinary year, we know that we can still do more. We need to continue to build momentum – focusing on how we can achieve sustainable and inclusive growth – for the Firm and for our clients. Our Client & Market Strategy will help us to achieve this.
“We have headed into FY22 confident in the lessons we have learned dealing with the many challenges and issues we have faced in the past 18 months. We continue to grow both through our excellent home-grown talent and by recruiting high quality lateral talent to join our Firm and build on key strengths in areas including M&A, PE and in other complex cross border transactions, multi-jurisdictional investigations, and in the digital transformation space.
“As businesses in all sectors around the world embrace and adapt to the digital age, we also continue to invest in technology, being at the forefront in bringing advanced machine learning to the legal sector. Our partnership with SparkBeyond will use artificial intelligence to analyze massive amounts of data gathered by the firm and from the internet to predict the kind of legal services a given client will need in the near future. I expect it to be a catalyst to a cascade of new ways of thinking our firm, helping us to drive and leverage our growth mind-set at Baker McKenzie.”