Three City law firms were among the ten most profitable in the world last year but they continued to lag behind their New York-based competitors.

Slaughter and May was the richest UK firm in the last financial year, according to The American Lawyer, a trade magazine. Its 126 partners made an average profit of $3 million (£1.7 million) on revenues of $839 million (£477 million).

But that was only good enough for fourth on the magazine's annual list of the world's 100 most profitable legal practices as measured by profits per equity partner (PEP).

Wall Street firms Wachtell Lipton Rosen & Katz ($4.9 million), Cravath Swaine & Moore ($3.3 million) and Sullivan & Cromwell ($3.1 million) topped the rankings.

The second most profitable City-based firm was Freshfields Bruckhaus Deringer, which ranked sixth with PEP of $2.9 million (£1.6 million) on revenues of $2.4 billion (£1.36 billion).

Linklaters was tenth with PEP of $2.6 million (£1.47 million) on revenues of $2.6 billion (£1.47 billion).

Clifford Chance, the world’s largest law firm by revenue, was only 15th in terms of profitability, with PEP of $2.3 million (£1.3 million).

However, the magazine said that City firms had closed the gap on New York in recent years through an aggressive focus on cutting underperforming partners, investing in overseas offices and stronger management.

Tony Williams, founder of Jomati, a legal consultancy, said: “The UK firms have shown they can deliver value to their clients around the world and are far better run than they have ever been.”

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