The UK’s quartet of billion-pound law firms have maintained healthy profits per equity partner (PEP) in the face of declining revenues, their financial results have shown.

Industry observers said the firms had adopted a sensible strategy of cutting partners to bolster average partner earnings, enabling them to retain and attract talented lawyers.

Last week Clifford Chance won back its place as the largest firm in the UK by turnover (£1.2bn), followed by Linklaters (£1.18bn), Freshfields Bruckhaus Deringer (£1.14bn) and Allen & Overy (£1.05bn). All four firms reported that turnover fell in 2009/10.

In terms of PEP, Freshfields (£1.4m) was ahead of Linklaters (£1.2m), followed by Allen & Overy (£1.1m), then Clifford Chance (£933,000). Clifford Chance and Allen & Overy reported improved PEP, while Freshfields and Linklaters posted only single-digit percentage declines.

William Arthur, a partner at consultants Kerma Partners, said that it is ‘essential’ for top firms to maintain healthy PEP figures. ‘It’s not just bragging rights,’ he said. ‘If firms want to be able to attract top lawyers, they have to maintain remuneration packages for their partners. If a firm is playing at the top in a particular field, it is already difficult for them to maintain the quality of that practice over the long term, so maintaining partner profitability is key.’

Tony Williams, principal at consultants Jomati, said: ‘Despite the fact that we’re in a downturn, the best lawyers are always marketable. You have to provide an earnings level that compares well with your competitors, and with some of the more profitable US firms.’

But Williams said that maintaining partner profits was not the sole driver for top firms. ‘Any business in a bull market gets a bit flabby,’ he said. ‘They have clearly had a fairly major review to right-size their business.’

Turnover at Clifford Chance fell by 5% to £1.2bn in 2009/10, with average PEP up by a quarter to £933,000 over the same period. Revenues at Linklaters dropped 9% to £1.18bn, with PEP down 7% to £1.21m.

Turnover at Freshfields dipped 11% to £1.14bn, while PEP fell by 3% to £1.41m. Allen & Overy reported revenues down 4% to £1.05bn, with PEP up to £1.1m from £1m.