Allen & Overy and Shearman & Sterling have the same problem. For the past 20 years they’ve been losing ground to the competition. In 2000, Allen & Overy was ranked sixth by revenue globally and Shearman was ninth. By 202, Allen & Overy had slipped to 11th and Sherman had fallen to 61st. More worryingly, as it’s an indicator of a firm’s ability to retain its commercially strongest partners, profits per equity partner (PEP) too has been trending downwards. In 2000 both firms ranked between 10th and 20th globally; in 2021, they ranked between 40th and 50th, see Fig. 1.

The Story Behind the PEP Decline

In 1999, Magic Circle firms Allen & Overy, Clifford Chance, Freshfields and Linklaters ranked between 13th and 17th globally by PEP. Today, they are clumped between 38th and 44th. What happened?