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The law firms that constitute the Magic Circle are Allen & Overy, Clifford Chance 
, Freshfields Bruckhaus Deringer , Linklaters , and Slaughter and May. These firms are generally regarded as the most prestigious law firms headquartered in the UK. They consistently have the highest earnings per-partner and earnings per-lawyer among UK-headquartered law firms. In 2010 four members of the Magic Circle were among the ten largest law firms in the world measured by revenues. In other words, the magic circle defines the UK’s top tier and elite law firms.
Following the pace and trend lines of the sluggish economy, M&A work is also slow. Currently mergers and acquisitions activity are at their lowest point since 2009. Most firms are trying their best not to shrink along with the shrinking and slowing times.
Allen & Overy and Linklaters have been seeing their gross revenue grow in the past 12 months. Allen & Overy had a .6 percent increase in gross revenue during the last fiscal year. The firm described the 12 month period as “a year of consolidation against a backdrop of challenging market conditions, with some encouraging signs of recovery” in the fourth quarter. The firm’s net income increased by 2.2 percent, according to Am Law Daily. This is fantastic news considering the trend of downsizing and shedding that are moving across the industry. To keep from shrinking is a good sign, signifying that a firm is holding fast in the market. But to grow in a shrinking market, that gets applause and a bravo. Freshfields Bruckhaus Deringer made an impressive benchmark for themselves and the industry by recording notable gains in profits and revenues. But they may be outliers more than anything else.
Most firms are facing hard times and are responding by cutting costs, a logical step in surviving difficult doldrums. Slaughter and May for example, did not disclose its financial results. Clifford Chance saw a decline in gross revenue, net income, and PPP. Their revenue fell by 2.5 percent and their net income dropped by 6 percent. Global managing partner David Childs commented, “We are living through an extended period of choppy conditions in global markets. However, our continued investment across geographies and practices has given us a broad-based business with the resilience to weather this volatility.”
Simon Davies, managing partner for Linklaters commented that the market conditions are “volatile with M&A activity subdued especially in Europe. The demand which was steady and strong was in restructuring, regulation, and contentious matters.” The firm’s net income increased by 1.6 percent, while its PPP increased by about 6 percent.
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Leader of the pack Freshfields announced a 7.2 percent increase in revenue. The firm also saw a growth in profits while its net income increased 2.4 percent. Global managing partner Ted Burke commented on the results, “Over the past six years we have worked hard at making our offering across our practices, sectors and geographies as nimble and flexible as possible to ensure we can adapt to changing client demand,” he said. “We feel that we are now very well-placed to provide the transactional, regulatory, contentious and risk management help our clients need, wherever in the world they want it. These strong results demonstrate how this approach is working.”
