Freshfields Bruckhaus Deringer’s latest limited liability company accounts highlight the reliance of law firms on withholding capital from their partners in light of the financial disruption.
Like many of its peers, Freshfields improved its net cash to £98.4m in the 2020-21 financial year ending April 30, 2021.
In the accounts, the company also states that it has “considerable discretion on the timing of cash distributions to partners.”
Several companies chose to delay the distribution of partner profits early in the pandemic as they assessed the financial impact.
In the statement accompanying its accounts, published on Companies House on Thursday, Freshfields said: “Although Covid-19 has not had a material impact on the business to date, it remains possible that the pandemic could have an impact on demand for our short-term services Liquidity pressure on our customers could also have a negative impact on business.
“However, the company has considerable financial resources as well as a wide range of customers and in different geographies and industries. The company also has considerable discretion over the timing of cash distributions to partners.
The accounts also reveal that revenue from its operations in the United States, Asia, the Middle East and North Africa fell in the fiscal year ending April 2021, as the company’s European operations stabilized its global performance.
US revenue fell slightly from £175.7m to £174m. In 2020, the company’s US operations outpaced all other regions in 2020, with revenue growth of 11%.
The company’s revenue in Asia fell 6% from £143.3m to £135.2m, while its revenue in the Middle East and North Africa fell 9%, dropping from £31.3m to £28.5m.
However, its European arm fell from £1.19 billion to £1.29 billion.
Despite the stagnation, total compensation for the management committee, which includes the senior partner, managing partners and heads of its global practice groups, rose by almost 19% to £16.5 million.
According to LLP accounts, the company’s operating profit fell from £500.3m to £449.2m, while payroll costs increased by 5.8% to £728m. £.8m to £771.4m.
Notable assignments for Freshfields in fiscal 2021 include advising UK auto retailer Cazoo on its $7 billion SPAC deal in March, setting up a UK and US team on the matter.
The weak international growth is in line with the LLP 2021 accounts of other international companies. Total revenue for DLA Piper’s international arm was dragged down by a notable decline in the company’s business in Asia and Australia, which suffered declines of 6.2% and 5.7% of their income respectively.
Freshfields has recently invested more in its European business by setting up a special unit in Germany to handle mass ‘dieselgate’ complaints, which will see the opening of four new offices.
It also continued its push in the United States, adding several notable hires. These include New York entrepreneur Hogan Lovells, partner duo Arnold & Porter and Cravath, Swaine & Moore marketer Damien Zoubek.