Clifford Chance’s highest-paid partner took home £4.9mn in its most recent financial year as strong performance and cost management pushed earnings to a record high.
The pay of the top earner jumped by more than 50 per cent in the 12 months to the end of April 2022 while the firm’s profit before tax rose by £120mn to £812mn, according to its most recent audited accounts.
Clifford Chance’s 14-strong leadership team were paid £34mn in total, up from £28mn the previous year.
The update comes after the law firm announced in July that it had broken through the £2mn barrier for average partner payouts during the same period. Profit per equity partner increased by 10 per cent to £2.04mn.
The firm’s performance followed a period of tight financial discipline and a rush of dealmaking for international law firms during 2021, triggered by stimulus measures unveiled during the pandemic.
The firm’s average partner pay fell short of that of Freshfields Bruckhaus Deringer, however, where equity partners pocketed a record £2.07mn on average in 2021-22 — up 8 per cent on the year before.
In its audited accounts for the year to the end of April, Clifford Chance said “momentum from the second half of the previous year continued into the first half of this year as demand rebounded from the uncertainty created by the pandemic.”
Activity levels returned to “historical levels” in the first half of 2022, however.
The firm also said “significant market pressures, notably on lawyer salaries, drove up staff costs”.
In recent years, the incursion of deep-pocketed US law firms into the City of London has sparked a fierce pay war, driving salaries for newly qualified lawyers to record highs.
Clifford Chance raised its pay for newly qualified lawyers to £125,00 last year, matching Freshfields.
“Magic circle” rival Allen & Overy also said in its most recent results that it had been affected by “an increase in our cost base as a result of salary inflation” and an “increase in overheads as we have been able to return to pre-pandemic working conditions”.
The firm, whose accounts were published on Companies House this month, made a profit before tax of £900mn, up from £822mn the previous year.
Allen & Overy chose not to wade into a new pay war last year, holding its own newly qualified salaries at £107,500 despite competition from its rivals, including top US law firms that pay City-based junior lawyers more than £170,000.