Linklaters, the world’s second-largest law firm, has reported flat growth in the first half of the financial year despite its high-profile role in the liquidation of Lehman Brothers.

The firm generated fee income of £653 million for the first six months to October 30, it announced today, up from £633 million during the same period last year — an increase of 3 per cent.

"The economic landscape has changed profoundly in the past two months," Simon Davies, Linklaters' managing partner, said. "Undoubtedly this presents significant challenges to our clients and to us in 2009."

Although Linklaters has been one of the most active of the law firms dealing with the financial crisis, revenue growth sliped markedly from the last full-year results reported in July, when it lifted fee income 15 per cent to £1.2 billion — just short of Clifford Chance’s revenue of £1.3 billion.

Its performance was also less impressive than Allen & Overy, the only other “magic circle” firm to have published its half-year results, which increased revenue 11 per cent to £548 million.

However, it is believed to have kept pace with its fiercest rival, Freshfields Bruckhaus Deringer, the law firm to the Bank of England, which declined to release its half-year results.

Law firms are traditionally slower than other professional advisers to feel the effects of a downturn and the full impact of the financial crisis has yet to show in their financial results.

Among other leading firms to have published half-year figures to date, Lovells reported a surprisingly healthy 15 per cent rise in fee income to £260 million, while Ashurst increased revenue 7.5 per cent to £158 million. In contrast, revenues at Eversheds slipped 4 per cent to £188 million.

Many predict a difficult second half of the year for commercial lawyers, with a shift in emphasis from increasing revenues to reducing staff costs. A number of leading firms have already announced redundancy talks with around 1000 jobs lost already, according to The Lawyer, a trade publication.

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