City law firms are reaping record profits that confirm London’s dominance of the global legal market, according to research published today.

Partners are regularly earning in excess of £1 million a year with profits per partner up by 12 per cent, the data from Legal Business magazine shows.

The survey of the world’s largest law firms reveals that while just nine UK law firms make the world’s top 50, they account for five of the world’s six largest legal practices.

James Baxter, editor of Legal Business said: “2006/7 is most certainly the year of the British firms. UK firms have invested heavily over the past decade building solid global capabilities and it is now paying off. Together with the strength of the pound, it has never been a better time to be a global law firm billing in pounds.”

“Partners at the world’s top 50 law firms share staggering profits with individuals regularly earning well in excess of £1 million,” he said.

They show that the legal market continues to thrive and revenues of the world’s largest law firms have risen by 14 per cent to $47.52 billion, with 15 firms billing more than $1 billion annually up from 12 firms last year.

Profits have also soared by 16 per cent on the previous year to $18.31 billion.

The average profits per equity partner (PEP), an important benchmark figure for measuring law firm financial performance, is also up by 12 per cent with partners billing on average $1,561,000 in 2006/7.

Billings at Clifford Chance, the world’s largest law firm are up 22 per cent to $2.268 billion, at Linklaters up 26 per cent to $2.126 billion, and at Freshfields Bruckhaus Deringer up 20 per cent to $1.9 billion.

The highest billing US law firm, New York-based Skadden Arps Slate Meagher & Flom billed $1.85 billion, up 15 per cent on last year.

“The bold investments UK law firms made in the 1990s in China, India and other emerging markets are now delivering increased billings and profits. The European M&A boom, the phenomenal growth of London as a centre for capital markets together with stronger management means that UK law firms are operating with more momentum than anyone would have imagined possible even two or three years ago,” Mr Baxter said.

“The weak dollar is making it much more expensive for US law firms to invest abroad, particularly London, at a time when a global presence is most needed.”

But it is not all doom and gloom on Wall Street. The revenue per lawyer (RPL) figures of US law firms far outstrip those of UK firms.

The 15 firms that perform best in the Legal Business research all have RPL figures that top the $850,000 mark. Slaughter and May is the only UK firm that makes the cut, with revenue per lawyer topping $939,000. New York law firm Sullivan & Cromwell leads the field with each of its lawyers billing $1.45 million each year.

In all, the world’s 50 largest law firms created a combined turnover of $47.52 billion with profits of $18.31 billion, according to the research.

But UK firms continue to lead the global market. The Legal Business Global 50 is based on turnover for the last financial year and takes into account individual firms’ profit margins, revenue per lawyer, and profits per equity partner and five-year compound growth analysis.

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