Allen & Overy (A&O) has broken through the £2bn revenue barrier despite a dip in profits as it reveals that global managing partner, Gareth Price, has resigned for personal reasons.  

The UK Magic Circle firm grew turnover 7% to £2.1bn in the year ending 30 April, though profits before tax remained constant at £892m and profit per equity partner (PEP) dropped 6.7% from FY22’s £1.95m to £1.82m. The firm pointed to the impact of “challenging market conditions” and high inflation.

As part of today’s announcement, A&O said Price, who was elected global managing partner in February 2020, had resigned after almost 30 years at the firm. Global senior partner, Wim Dejonghe, will cover his role pending a decision by the board on the appropriate next steps. That decision is likely to be influenced by a partner vote, slated for October, on the firm’s proposed merger with Shearman & Sterling. 

Dejonghe told legal media outlets Price’s decision was unrelated to the firm’s plan to merge with Shearman & Sterling, creating a global giant with 3,900 lawyers across 49 offices and revenue in the region of $3.4bn. 

Commenting on the results, Dejonghe said: “Our diversified business continued to show client revenue growth over the past 12 months, despite intensifying headwinds. Like the rest of the sector, we were impacted by the global economic slowdown, inflationary pressure and geopolitical turmoil.

“Over the past year, we’ve focused on long-term growth with the addition of new partners around the world. We are well positioned to capitalise on the opportunities presented by the energy transition, technology transformation and the private capital industry.”

In terms of region, A&O said its US network continued to perform strongly in FY2023 following an “exceptional” performance the year before. The firm has prioritised growth in the US, opening three offices there in FY22 in Silicon Valley, San Francisco and Boston, and has continued to grow its teams across its six offices in the country in the last financial year. 

The firm also highlighted its performance in Europe, where a combination of political and economic turmoil and the European Commission’s bar-setting regulation in areas including privacy and sustainability fuelled client demand for pan-European work. 

Meantime A&O’s Middle East offices posted their strongest financial performance to date, A&O said, driven by a hot IPO market, the opening of Saudi Arabia’s market to international law firms and major infrastructure deals and venture capital transactions. 

A&O said fee income growth was driven by the opportunities arising from global macrotrends, including navigating the energy transition, tech transformation and the private capital industry. The firm’s more than 250-strong energy team advised on projects in 35 jurisdictions in FY23, including advising the credit providers on the $8.4bn financing of the NEOM green hydrogen project in Saudi Arabia. 

A&O said its infrastructure and private capital teams had also been an important source of income, with private capital client revenue growing 60% over the past two years. Notable work included advising EQT Infrastructure fund in its €3.4bn stake in Wind Tre’s mobile and fixed network. 

Meantime, the firm pointed to the balance of disputes and transactions work in its tech practice, including OpenText’s $6bn acquisition of MicroFocus, adding that it had continued to invest in its privacy and data security offering with the hire of Helen Christakos in Silicon Valley from Fenwick & West to lead the practice in the US.

The firm said that its consulting and legaltech arm Advanced Delivery & Solutions grew by 13%, fuelled by an increase in clients for its online legal services provider aosphere and “significant” growth in Peerpoint revenue, its platform for consultant lawyers. 

The firm also rolled out GPT-4 across its entire business – becoming what it said was the only law firm in the world to do so. Harvey, the generative AI tool, is now used by 3,500 of its lawyers and business teams in their day-to-day work. 

In terms of gender diversity, 42% of A&O’s partner promotions in the last financial year were women – increasing the proportion of women in the partnership globally to 25%, up from 18% in 2019.

Dejonghe said of Price’s departure: “I want to express our gratitude for Gareth’s stellar contribution to A&O over the last 30 years – starting out as a trainee, becoming one of our youngest partners in 2003 and being elected managing partner in 2020. He led our market-leading energy and infrastructure practice for many years and as managing partner steered us through the pandemic and played a pivotal role in the negotiations with Shearman & Sterling that set us up for success in the future.”

A&O is the first of the four international UK Magic Circle law firms to publish its results. Anglo-Australian firm Ashurst posted its results yesterday (12 July): revenue grew by 10% to £879m with profit per equity partner (PEP) marginally down.