Empire State Building
Empire State Building (Shutterstock/Kamira)

The Magic Circle’s trans-Atlantic travails have been well documented—not least by me. I’ve been critical of the elite U.K. firms’ inability to establish themselves in the United States, where an uncharacteristic lack of strategic direction has left them as largely peripheral players, despite decades of investment.

I was over in New York last month and caught up with the U.S. management at Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters to see if anything has changed. The simple answer: yes … and no.

The firms do seem determined to deal with the red, white and blue elephant in the room: that you can’t claim to be a leading global law firm without a credible presence in the world’s largest legal market. U.S. expansion was a key campaign point for all of the candidates in the leadership elections at A&O and Linklaters earlier this year, partners at both firms say. Link­laters last year appointed investment management group chief Scott Bowie as global U.S. practice head, the first American on the firm’s senior management committee.

The Magic Circle firms have stepped up their U.S. recruitment efforts over the past 18 months, making a number of notable hires. Their U.S. practices have also matured enough to start producing talent internally. In March, Freshfields for the first time promoted to partner a U.S. lawyer who had spent his entire career at the firm: New York finance attorney Ryan Suda, one of three North America-based lawyers it promoted this year. Linklaters, meanwhile, has three U.S. partners who joined the firm as newly qualified associates.

They are slowly gaining market share, too. A&O has built a solid U.S. financial services litigation team, while Clifford Chance is a market leader in real estate funds and is highly active in Latin America. The Magic Circle firms are also doing well in areas that play to their multijurisdictional strengths, such as white-collar defense and investigations. While it still lacks scale, Freshfields is emerging as a particularly serious competitor in this area, and also boasts one of the country’s top international arbitration practices.

It isn’t all good news, however. The firms remain significantly undersized in the U.S. Clifford Chance has the largest U.S. presence of any U.K. firm, at just 300 lawyers—far too few for such an important market. The Magic Circle also appear no closer in the U.S. to winning the big-ticket transactional work that is the core of their business globally, and still often have to team up with American rivals on trans-Atlantic deals. Take Anheuser Busch InBev SA’s $106 billion acquisition of U.K.-based brewer SABMiller plc. Freshfields scored the lead role advising InBev, but the company brought in Cravath, Swaine & Moore and Sullivan & Cromwell to handle U.S. aspects of the record-breaking takeover.

Cravath’s lead partner on that transaction, Scott Barshay, has since left the firm to join Paul, Weiss, Rifkind, Wharton & Garrison. Barshay is one of America’s top deal lawyers and would be the sort of hire that might help the Magic Circle open some of those resilient U.S. boardroom doors. But Barshay is being paid almost $10 million a year at Paul Weiss. Very few Magic Circle partners earn more than $2.5 million. A&O and Freshfields have recently broken lockstep for U.S. hires, but having an individual’s compensation so far out of line with the rest of the partnership can be hugely disruptive.

The Magic Circle are left with an unenviably hard task. They don’t just need to convince clients that they can handle the U.S. side of major global deals; they’re effectively asking clients to drop their existing—and often well-established—law firm relationships and take a chance on them instead. Until they solve that decades-long conundrum, the biggest transactional prizes will remain out of reach.

Email: cjohnson@alm.com.

The Magic Circle’s trans-Atlantic travails have been well documented—not least by me. I’ve been critical of the elite U.K. firms’ inability to establish themselves in the United States, where an uncharacteristic lack of strategic direction has left them as largely peripheral players, despite decades of investment.

I was over in New York last month and caught up with the U.S. management at Allen & Overy , Clifford Chance , Freshfields Bruckhaus Deringer and Linklaters to see if anything has changed. The simple answer: yes … and no.

The firms do seem determined to deal with the red, white and blue elephant in the room: that you can’t claim to be a leading global law firm without a credible presence in the world’s largest legal market. U.S. expansion was a key campaign point for all of the candidates in the leadership elections at A&O and Linklaters earlier this year, partners at both firms say. Link­laters last year appointed investment management group chief Scott Bowie as global U.S. practice head, the first American on the firm’s senior management committee.

The Magic Circle firms have stepped up their U.S. recruitment efforts over the past 18 months, making a number of notable hires. Their U.S. practices have also matured enough to start producing talent internally. In March, Freshfields for the first time promoted to partner a U.S. lawyer who had spent his entire career at the firm: New York finance attorney Ryan Suda, one of three North America-based lawyers it promoted this year. Linklaters , meanwhile, has three U.S. partners who joined the firm as newly qualified associates.

They are slowly gaining market share, too. A&O has built a solid U.S. financial services litigation team, while Clifford Chance is a market leader in real estate funds and is highly active in Latin America. The Magic Circle firms are also doing well in areas that play to their multijurisdictional strengths, such as white-collar defense and investigations. While it still lacks scale, Freshfields is emerging as a particularly serious competitor in this area, and also boasts one of the country’s top international arbitration practices.

It isn’t all good news, however. The firms remain significantly undersized in the U.S. Clifford Chance has the largest U.S. presence of any U.K. firm, at just 300 lawyers—far too few for such an important market. The Magic Circle also appear no closer in the U.S. to winning the big-ticket transactional work that is the core of their business globally, and still often have to team up with American rivals on trans-Atlantic deals. Take Anheuser Busch InBev SA’s $106 billion acquisition of U.K.-based brewer SABMiller plc . Freshfields scored the lead role advising InBev, but the company brought in Cravath, Swaine & Moore and Sullivan & Cromwell to handle U.S. aspects of the record-breaking takeover.

Cravath’s lead partner on that transaction, Scott Barshay, has since left the firm to join Paul, Weiss, Rifkind, Wharton & Garrison . Barshay is one of America’s top deal lawyers and would be the sort of hire that might help the Magic Circle open some of those resilient U.S. boardroom doors. But Barshay is being paid almost $10 million a year at Paul Weiss . Very few Magic Circle partners earn more than $2.5 million. A&O and Freshfields have recently broken lockstep for U.S. hires, but having an individual’s compensation so far out of line with the rest of the partnership can be hugely disruptive.

The Magic Circle are left with an unenviably hard task. They don’t just need to convince clients that they can handle the U.S. side of major global deals; they’re effectively asking clients to drop their existing—and often well-established—law firm relationships and take a chance on them instead. Until they solve that decades-long conundrum, the biggest transactional prizes will remain out of reach.

Email: cjohnson@alm.com.