Freshfields Bruckhaus Deringer is the latest magic circle firm to substantially increase its cash pile amid buoyant trading. 

The firm’s cash and cash equivalents almost trebled from £35m to £98.4m in the year to 30 April 2021, following other magic circle firms such as Allen and Overy and Clifford Chance.

It also reported an 11% drop in profit before tax despite a 6% increase in total revenue: the firm recorded pre-tax profits of £440.2m last year, down from £492.9m, although overall revenue was up from £1.54bn to £1.64bn. Freshfields outperformed its results as announced in July, which predicted revenue would be £1.59bn for the financial year.

Profit before partners’ annuities also increased by just under 4% from £520.5m to £540m, although profit available for discretionary division among members was down by almost 3% from £430m to £417.9m.

The firm paid key personnel – senior partner, managing partners and heads of the global practice groups – a total of £16.5m last year, up from £13.9m.

‘While Covid-19 has not had a significant impact on the firm to date, it remains possible that the pandemic could impact demand for our services in the short term,’ the firm said in its annual report. ‘Liquidity pressure on our clients could also have an adverse impact on the business.

‘However, the firm has considerable financial resources together with a diverse range of clients and across different geographical locations and sectors. The firm also has considerable discretion over the timing of any cash distributions to partners.’

Freshfields also said it had made changes to its legal structure due to Brexit, ‘impacting Germany, Austria and Spain’, but added that there were no changes to its consolidated results as a result.