A&O Shearman profit recovery lifts partner pay to £2.2mn

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A&O Shearman profit recovery

Highlights

A&O Shearman reports a 12 per cent rise in average equity partner pay to £2.2mn and a 14 per cent increase in pre-tax profits to £1.2bn for the year to April 30.
Partner numbers fall from about 740 to around 710 following the merger of Allen & Overy with Shearman & Sterling, while revenue dips to £2.8bn from £2.9bn but remains flat in dollar terms.
A&O Shearman faces U.S. regulatory pressure, with the Department of Justice issuing subpoenas after the firm pledged $125mn in pro bono services and altered diversity programmes to comply with executive orders.

Merger integration boosts profitability

As reported by Financial Times, A&O Shearman says average pay for its equity partners rises 12 per cent to £2.2mn for the year to April 30, while pre-tax profits increase 14 per cent to £1.2bn.

The law firm is created in a 2024 merger between UK firm Allen & Overy and New York-based Shearman & Sterling. It says the improvement comes after streamlining the enlarged partnership, with partner numbers falling from about 740 to around 710 over the 12-month period. The firm loses 19 partners in London last year, the joint highest total of any firm in the UK capital.

Revenue edges down to £2.8bn from £2.9bn in the previous 12 months, but remains flat in dollar terms. Hervé Ekué, A&O Shearman’s global managing partner, says the group’s strategy is taking hold and that operational streamlining significantly improves profitability, leaving the firm with a stronger base for sustainable growth.

Legal sector pressures and key mandates

A&O Shearman is the first of the magic circle firms, alongside Linklaters, Freshfields and Clifford Chance, to report results this year. The firm highlights major assignments including advising JDE Peet’s on its €16bn acquisition by Keurig Dr Pepper and advising Sizewell C on its £38bn nuclear project.

The business also faces political and regulatory pressure in the U.S. over diversity hiring practices and its agreement with the Trump administration last year. A&O Shearman is one of nine law firms that strike deals with the administration, pledging $125mn in pro bono services to White House causes and removing diversity terms from programmes to avoid executive orders targeting government contractors.

A lawsuit brought by the American Bar Association last year is increasing pressure on the White House to release internal documents related to those agreements. This week, the U.S. Department of Justice subpoenas several groups, including A&O Shearman, in connection with the deals, according to people with knowledge of the matter, and the firm declines to comment.

Our earlier article on the UK government’s push to revive London equity listings explained how ministers have been engaging major private equity firms to understand what is keeping portfolio companies from choosing a London IPO despite recent reforms. It also highlighted the Treasury’s internal debate over potentially scrapping stamp duty on share trading as officials try to stem the drift of high-profile listings toward New York and protect long-term tax revenues.

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