Top London independent Macfarlanes has reported a slide in revenue and profits for FY23 following a barnstorming performance in 2022. 

Profits per equity partner dropped 15.8% to £2.1m, having shot up almost 20% the year before to £2.5m off the back of a record deals market. Meantime revenue fell 2.3% to £296.6m and operating profit was down 6.1% £154.1m. 

The results contrast strongly with the previous year, when along with the jump in PEP the firm grew revenue and operating profit by 16.4% and 15.4% respectively. Those results reflected near-perfect market conditions for the firm, given its focus on private equity and public M&A markets that broke record after record during the reporting period. 

Senior partner Sebastian Prichard Jones, who warned last year that conditions were becoming less favourable for the firm, said the latest results were “still satisfactory” after FY23 “proved a more challenging year” due to difficult market conditions.

“After the exceptional impact of the pandemic, which had a positive effect on our financial performance, in a number of respects this was a year of consolidation,” he said. “This included an increase in our equity partnership by 10%, which had what we anticipate to be a short-term impact on our PEP figure. This is an investment we were pleased to make. After taking a pause for breath in 2022/23, we remain in a strong position and are confident we will move forward again this year.”

The firm’s fall in revenue as well as profits contrasts with those of its Magic Circle rivals that have reported their results so far, with Allen & Overy (A&O) and Clifford Chance (CC) both growing revenue to exceed £2bn for the first time. 

However, despite the dip in its latest results Macfarlanes remains ahead in terms of PEP, with A&O’s falling almost 7% to £1.8m and CC’s holding steady at £2.0m. That level of profitability allows the firm to dip into the market for strategic partner hires, with standout laterals in the last financial year including Stephen Ross, who joined in January from Sidley Austin to lead the private investment funds team. 

Over the course of the year the firm also secured pensions expert Faye Jarvis from Hogan Lovells, financial regulation partner Michael Sholem from Cadwalader Wickersham & Taft and tax partner Sophie Donnithorne-Tait from Akin Gump Strauss Hauer & Feld.