Uptick in staff costs
Freshfields has reported a dip in profits despite rising revenues, after a sharp increase in its wage bill weighed on the Magic Circle firm’s bottom line, according to its latest set of accounts.
Figures for the year to 30 April 2025 show the Magic Circle firm posting pre-tax profits of £656.8 million, down from £668.9 million the previous year, while income climbed 6% to £2.25 billion.
Freshfields said in 2023 that it would stop voluntarily publishing detailed trading updates, opting instead to stick to the numbers it has to file in its statutory accounts. At the time, the firm said it preferred to judge its progress by the quality of the work it is doing and the client mandates it is winning around the world, rather than by headline financial results.
A sharp rise in costs appears to have weighed on the bottom line. Freshfields’ total staff bill climbed 10% to £1.2 billion during the year while average headcount increased from 5,601 to 5,945.
The cash available for distribution among the firm’s 296 equity partners also declined, slipping from £665 million to £648 million.
Further up the ladder, remuneration for the firm’s “key management personnel”, covering the senior partner, managing partners and heads of global practice groups, totalled £25.8 million, compared with £26.2 million a year earlier.
Within the Magic Circle, Freshfields now trails Clifford Chance, which reported revenues of £2.4 billion, and Linklaters on £2.32 billion, with both firms delivering growth of around 10%. A&O Shearman sits further ahead, having posted £2.9 billion in its first full year of results since the merger.