Clifford Chance has retained its position as the world’s biggest law firm after announcing revenue of £1.33 billion for the last financial year, in defiance of predictions of a downturn in the legal sector.

Despite its historical strength in finance and private equity — two of the practice areas most affected by the credit crisis — turnover at the firm rose 11 per cent in the year ended April 30, according to figures released today. Profit also jumped, with equity partners earning an average of £1.15 million, up 13 per cent on last year.

David Childs, the global managing partner, said a slump in high-value transactional work in Europe and the US after a record-breaking first half was offset by rapid growth in Asia, the Middle East and Eastern Europe, where the firm has invested heavily in recent years.

Mr Childs said the rise of so-called emerging markets would continue to insulate the firm if conditions worsen in London, though he admitted the coming year would be "very much tougher" in any case. He said he would be happy if the firm maintained last year’s revenues.

Clifford Chance is often criticised by rivals for being too big, impersonal and overly managed. However, yesterday’s figures appear to vindicate its strategy of aggressive expansion and confirm its place among the emerging global elite. Its closest American rivals, Skadden Arps and Latham & Watkins, still trail it despite both posting turnover in excess of £1 billion ($2 billion).

A number of other City firms have announced impressive results in recent weeks. Herbert Smith and Norton Rose both reported increases in turnover in excess of 25 per cent. Clifford Chance’s rivals in the so-called “magic circle” of leading UK firms — Allen & Overy, Freshfields Bruckhaus Deringer, Linklaters and Slaughter and May — have yet to release their results but they are widely expected to be equally as impressive.

Observers said the downturn-defying results were buffeted by a record first half and that the outlook for this year was bleaker. While salaries in recent years soared to as much as £90,000 for a newly qualified solicitor, increases have been flat this year and partner promotions at the leading firms were down ten per cent. Mark Rawlinson, head of the corporate department at Freshfields, said: “Next year’s figures will be down, the question is by how much?”

However, the pessimism may have been overstated. Law firms are typically better “hedged” against a slump than other professional advisers as they can switch their focus to counter-cyclical practice areas such as litigation and employment. According to Mr Rawlinson, the credit crunch has even been a boon for some departments, providing a steady stream of work on rights issues and buying and selling distressed debt.

Big winners in 2007

Field Fisher Waterhouse, turnover £88m (up 30%)

Norton Rose, £297m (up 27%)

Herbert Smith, £418m (up 25%)

Speechly Bircham, £47m (up 18%)

Pannone, £51m (up 18%)

Ashurst, £323m (up 17%)

Simmons & Simmons, £290m (up 16%)

Osborne Clark, £95m (up 15%)

SJ Berwin, £215m (up 14%)

Lovells £479m, (up 13%)

Source: Roll on Friday

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