City law firm Clifford Chance is world's first £1bn legal business

A British law firm has become the world's first £1bn legal business after reporting record profits from advising on deals across the world.

Clifford Chance was among a clutch of City law firms to smash previous profits records, which has helped to create nearly 400 new millionaire lawyers, according to tables published today.

The UK's top 100 law firms collectively billed their clients £10.8bn in 2006, up 12 per cent on last year, and made a clear profit of £3.5bn, up by a staggering 20 per cent.

But Clifford Chance, by beating its US rivals to the coveted title of the first £1bn business, stands out as the world's biggest billing law firm ever with a gross turnover that is a tenth of the total figure for all the top 100 of UK law practices.

"The firm generated £10.8bn in revenue, with 6,557 partners sharing £3.5bn of profit. For many the take-home pay package will be simply eye-watering," said Jim Baxter, editor of Legal Business, which compiled the tables. "We have seen the arrival of the world's first £1bn law firm, Clifford Chance, and Pinsent Mason's astonishing 71 per cent increase in profits per equity partner (the all important benchmark for law firm performance)."

A spokeswoman for Clifford Chance said that like all of the so-called five "magic circle" law firms based in London, its lawyers had benefited from boom times across all its international regions and market sectors. But the firm specifically identified the advice and work on national and multinational mergers and acquisitions as key to breaking through the £1bn barrier.

Last year Clifford Chance topped three tables for worldwide M&A tables, advising on 444 deals globally, valued at a total $490bn (£260bn).

Peter Charlton, global head of the Clifford Chance corporate practice, said: "It has been a busy year for all firms in the M&A market, so we are understandably proud to be top worldwide and again the clear leader in Europe.

"It is also satisfying to see the consistency of our performance over a number of years and across all our network."

According to today's report, partners at Clifford Chance are earning on average £810,000 a year, a 26 per cent increase from last year. But even the most junior of its lawyers are enjoying record pay packets. Newly qualified lawyers now earn £55,000, up from £51,000 last year, an increase of 7.8 per cent.

In addition, Clifford Chance is in the process of determining individual bonus awards (of up to 40 per cent) as part of its total reward package for lawyers.

In a statement issued earlier this year, the company's London managing partner, Jeremy Sandelson said: "I believe that these salary changes put us in a very competitive position. On a total reward basis our top performers will be among the best paid in the market."

Seven years ago Clifford Chance, which was founded in 1987 in a merger between Coward Chance and Clifford Turner, became the world's first billion-dollar practice when it unveiled a three-way international merger. Then partners at the firm voted to merge with the New York-based Rogers & Wells, a move that prompted a flurry of similar mergers, not all of which have proved to be so successful.

On Monday another report further confirmed this year's growth in profits for City law firms. Linklaters has more millionaire partners than any other firm in the City, after the research revealed that 124 of the firm's partners pocketed more than £1m last financial year.

Slaughter and May was the magic circle firm's closest rival with 90 partners earningmore than £1m a year, closely followed by Allen & Overy (A&O) with 85 partners, or 25 per cent of its equity partnership, in the £1m club.

The research, conducted by The Lawyer, revealed that 389 London-based private practice partners pocketed remuneration packages of more than £1m in the last financial year.

However, Slaughter jumps to the top spot if the rankings are based on percentage of partnership. A staggering 75 per cent of the firm's 121 equity partners earned more than £1m in 2005-06.