Baker & McKenzie announces higher women promotions and all-time high productivity.
- Revenues up 2.2%
- Total productivity hits an all time high – up 5%
- Record number of partner promotions – over 40% are women
- Good growth expected in Fiscal Year 2016
Baker & McKenzie, the world’s premier global law firm, has announced global revenues for the fiscal year ended 30 June 2015 (FY15) of $2.43 billion.
Based on like-for-like exchange rates, the Firm’s total global revenues were up 2% compared to the previous financial year. In US dollar terms this translates into a modest decline of 4%, highlighting the exceptional appreciation of the US dollar against most other currencies in the period.
Profits per Equity Partner at $1.25 million in like-for- like exchange rate terms or $1.14 million reported in dollars were also impacted by major investments the Firm made in FY15, the strength of the US dollar and by an expected, one-off delay in billing and collecting across the Firm as a result of the conversion of the Firm’s global technology platform to a single integrated system.
Baker & McKenzie Chairman Eduardo Leite (pictured) says, “Fiscal Year 2015 was a successful and important year of investment for Baker & McKenzie. We have continued to lead the legal profession in terms of innovation while our 12,000 people have been busier than ever with total productivity up 5% to an all time high and stronger client relationships around the world, highlighted by 48 major client panel appointments.”
Leite continues, “During the past fiscal year we invested in opening offices in Brisbane and Jeddah, a new Global Services Center in Belfast and our unique Joint Operation in Shanghai, allowing us to practice both international and Chinese law. And last month we promoted 83 partners, over 40% of whom are women, a record for any law firm. We have also invested substantially in our future by implementing a single powerful new global financial and management information system, SAP, which will allow us to serve our clients better and more efficiently.
Our increased activity and investments will be reflected in a strong fiscal year 2016. In the meantime, our year end financials for 2015 were impacted by three main factors:
First, we are one of the most geographically diverse professional services firms in the world, collecting revenues in more than 35 different currencies. This diversification means that after converting revenues for reporting purposes into US dollars, we have been significantly affected by the appreciation of the US dollar and the devaluation of many currencies around the globe.
Second, the migration to a new global financial system in the second half of our financial year caused an expected one-time delay to our billing and collection cycle — we anticipate the vast majority of that inventory to convert into revenue during FY16.
Third, for many professional services firms the effect of this delay would be negligible as they account on an accrual basis (i.e. recognizing revenue when the work is billed). We maintain our books on a cash basis and so there has been a short-term impact on our reported revenues for the second half of FY15.
Standout practices in FY15 included Antitrust & Competition and Tax which grew in dollar terms. Our transactional practices – Banking and Finance, Capital Markets, Mergers & Acquisitions, Private Equity and Real Estate also had a busy year. And in some of our newer areas such as Compliance and Cybersecurity we also saw a significant demand for our services.
Brand and client recognition
Clients repeatedly turn to Baker & McKenzie for their most important cross-border cases, disputes and projects, and rate the Firm highly in industry surveys. In FY15 the Firm was:
- Ranked Number 1 in the world by number of cross-border deals for the sixth year in a row by Thomson Reuters. More than 65% of our deals are cross-border.
- It is the tenth year in a row the Firm has been ranked first for deals with emerging market involvement, by both number of announced and completed number of deals.
- Recognized as the world’s strongest legal brand for the fifth year in a row by Acritas. Achieved the highest four-year score increase of any firm in Acritas’ US Law Firm Brand Index. In August 2015 Baker & McKenzie was also reconfirmed as the leading legal brand in Asia Pacific.
- Honored by Corporate Board Member Magazine as one of America’s top 10 corporate law firms, and by BTI Consulting as one of the top firms for client service.
- Had more firm and lawyer rankings in Chambers Global than any other law firm.
- Awarded Chambers Latin American Law Firm of the Year.
- Appointed to 48 major global clients’ panels over the past 12 months.
The Firm advised on some of the world’s most important deals and cases during the year, including:
- The financial advisors and lead managers on the $6bn IPO of The National Commercial Bank, Saudi Arabia’s largest lender. This was the second-largest IPO in 2014 and the largest ever in the Middle East.
- Merck on the international aspects of its $14.2bn consumer care business sale to Bayer, coordinating 100+ attorneys in 63 offices on a deal that The Wall Street Journal described as emblematic of transactions “reshaping the global pharmaceutical industry”
- Leading Spanish-headquartered international construction company FCC on its $1.28 billion capital increase, one of the largest rights issues of 2014.
- CSR Corporation Limited on its $26 billion merger with China CNR Corporation Limited through a share swap, one of the largest railway sector mergers in China and globally. This is the first ever merger of two Chinese state-owned enterprises with dual listings in Shanghai and Hong Kong, and the first ever share swap involving two sets of A shares and two sets of H shares.
- Continental AG, a prominent German automotive manufacturing company, on an investigation opened by the National Economic Prosecutor in Chile after the company announced its intent to acquire Veyance Technologies for the sum of $1.9 billion.
Leite comments, “It remains a flat global market for legal services, particularly outside the major financial centers, with increasing competition from non-traditional players. Our strategy is to build long term strategic relationships to provide a full service with local expertise to our clients in all the key commercial centers globally. With the largest M&A practice of any law firm, and as our clients become increasingly global, I believe we are well positioned to stay ahead of the curve. That’s why we closed a cross-border M&A deal somewhere in the world every 48 hours last year.”
- On a like-for-like exchange rate basis, Profits per Equity Partner were $1.25m, down 3%, reflecting the major investments the Firm made in FY15, the strength of the US dollar and an expected, one-off delay in billing and collecting across the Firm as a result of the conversion of the Firm’s global technology platform to a single integrated system. On a US dollar basis PEP was $1.14m.
- During FY15, we hired 51 lateral partners and in July we announced the election of 83 new partners from within our ranks. This latest investment in talent takes the number of partners worldwide to 1,500. More than 40% of the new promotions are women.
- During FY15 we grew our overall full time equivalent (FTE) fee earner numbers to 5,685. 40% of our lawyers and 24% of our partners are women. Total staff FTE headcount as of 30 June 2015 was 11,336.
- We have increased total billable hours by 5% year-on-year to 7.8 million and increased average productivity by 2%.
Corporate & Social Responsibility
Baker & McKenzie is pleased to be one of the first global law firms to sign the United Nations Global Compact, the world’s largest corporate responsibility initiative. We are also proud to have drafted for the UNGC the framework for their Business for the Rule of Law initiative – highlighting that strong rule of law – including the protection of investments, property rights (including intellectual property), contractual rights, and legal identity – is essential as a foundation for economic and social development.
Our markets and our future
Baker & McKenzie is the most diverse global law firm with revenues spread by regions as follows: Europe, Middle East and Africa: 38%, Asia Pacific: 25%, the Americas: 37%.
In FY16, the Firm will continue to pursue strategic growth opportunities, building on notable successes last year. In July 2014 we opened a new office in Brisbane, Australia and in October 2014 we opened in Jeddah, Saudi Arabia. In August 2014, we announced plans to open a new Global Services Center in Belfast. That Center has hit the ground running, moving into new premises in July this year and is already fully operational for business services and client work.
In April 2015, we announced our unique Joint Operation in Shanghai with FenXun Partners, the first and only firms to be approved by the PRC authorities to provide clients with international and PRC law advice. As the Shanghai Bureau of Justice said, ” This new model represents a milestone in the further liberalization and development of China’s legal service market.”
Leite concludes, “Clients recognize us as the leading global law firm brand. We remain committed to investing in the long term future of our client relationships, our people and our infrastructure, from pursuing new ways of working with clients to making major investments in shared services, technology and knowledge management. Investments like these share the common goal of enhancing both our client service offerings and our competitiveness, reaffirming our reputation as the leading global law firm.”
“Over the last decade our PEP has grown by over 50% and our revenues by 80%. As always we look to the long term and to leading the rapidly evolving global legal market place. We anticipate another successful year in FY 2016 and a good upturn in our reported financial results.”