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Linklaters today emerged as the highest-grossing UK legal firm as it raked in fees from advising on three of the biggest corporate collapses of last year.
The Magic Circle firm, which advised on the administration of Lehman Brothers' European arm, Woolworths and Waterford Wedgwood, billed for £1.298 billion in the year to 30 April, in a move which will fuel anger over the fees bonanza lawyers have enjoyed from the surge of administrations.
Linklaters, which also acted for Lloyds on its takeover of stricken bank HBOS and its subsequent governnment bailout, has overtaken rivals Clifford Chance and Freshfields Bruckhaus Deringer as the top earning firm.
The firm made more than £30 million in fees in the first six months of advising on the unwinding of Lehman Brothers.
But average profits per equity partner - considered the barometer of a law firm's health - fell 9.6% to £1.302 million, as redundancy and restructuring costs hit.
In January, the firm axed 100 junior lawyers in its London office, as well as 100 support staff.
At the time of the redundancies, Linklaters blamed the crisis in the financial markets.
However, managing partner Simon Davies said today: "The cuts have nothing to do with either this year or last year's financial results."
But he insisted that the job losses were necessary: "Obviously cutting staff is always a very painful process but we reviewed the market for premium legal services in the next couple of years, and realised we would have to reduce our headcount."
Around 35 partners are also expected to leave the firm by the end of the year as part of the restructuring, which has been dubbed Linklaters New World.
Linklaters partners pocketed less than those at Freshfields, who made an average of £1.44 million, but significantly more than Clifford Chance where profits slumped 37% to £733,000.
Overall profits at Linklaters fell by 8.9% to £513.6 million and average profit for all partners - which includes salaried partners - fell by 8.6% to £1.056 million.
As well as seeing a surge in demand for restructuring and insolvency work, Davies said that the firm's litigation and financial regulation divisions had been very busy.
Its mergers and acquisitions arm - which includes mining giant Rio Tinto among its clients - has held up strongly despite a drop in global M&A activity. But the real estate arm was the hardest hit, as the property market plunged into crisis.
In the current financial year, the firm has benefited from companies' stampede for cash, advising on around half of the current rights issues.
Davies predicted that the coming months will be "challenging", but said that the firm would "work closely with our clients" to weather the recession.
Allen & Overy, the final Magic Circle firm to report, will unveil full-year earnings next week.
