Clifford Chance has retained its position as the world's biggest law firm after announcing revenue of £1.33 billion for the past financial year, in defiance of predictions of a downturn in the legal sector.

Despite its historical strength in finance and private equity - two of the practice areas most affected by the credit crisis - turnover at the firm rose 11 per cent in the year ended April 30, according to figures released yesterday. Profit also jumped, with equity partners earning an average of £1.15 million, up 13 per cent on last year.

David Childs, the global managing partner, said a slump in high-value transactional work in Europe and the US after a record-breaking first half was offset by rapid growth in Asia, the Middle East and Eastern Europe, where the firm has invested heavily in recent years.

Mr Childs said the rise of so-called emerging markets would continue to insulate the firm if conditions worsen in London, although he admitted the coming year would be “very much tougher”. He said the firm remained in expansion mode and aimed to maintain last year's levels.

Clifford Chance is often criticised for being too big, too impersonal and overly managed. However, yesterday's figures appear to vindicate its strategy of aggressive expansion and confirmed its place among the emerging global elite. Its closest American rivals, Skadden Arps and Latham & Watkins, still trail behind despite posting turnover in excess of £1billion ($2billion).

A number of other City firms have announced impressive results in recent weeks. Herbert Smith and Norton Rose both reported increases in turnover in excess of 25 per cent.

Clifford Chance's rivals in the so-called “magic circle” - Allen & Overy, Freshfields Bruckhaus Deringer, Linklaters and Slaughter and May - have yet to release their results but they are widely expected to be equally as impressive.

Observers said the downturn-defying results were buffeted by a record first half and that the outlook for this year was bleaker. Salaries in recent years soared to as much as £90,000 for a newly qualified solicitor but increases have been flat this year and partner promotions at the leading firms were down 10 per cent on last year.

Mark Rawlinson, head of the corporate department at Freshfields, said: “Next year's figures will be down, the question is [by] how much?”

However, the pessimism may have been overstated. Law firms are typically better “hedged” against a slump than other professional advisers as they can switch their focus to counter-cyclical practice areas such as litigation and employment.

According to Mr Rawlinson, the credit crunch has even been a boon for some departments, providing a steady stream of work on rights issues and buying and selling distressed debt.

Courting profits

Legal turnovers for 2007

Field Fisher Waterhouse £88 million, up 30%
Norton Rose £297 million, up 27%
Herbert Smith £418 million, up 25%
Speechly Bircham £47 million, up 18%
Pannone £51 million, up 18%
Ashurst £323 million, up 17%
Simmons & Simmons £290 million, up 16%
Osborne Clark £95 million, up 15%
SJ Berwin £215 million, up 14%
Lovells £479 million, up 13%

Source: Times data

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