When U.S. law firms open offices in Europe or Asia, hires are typically in the international corporate and finance realm, as the firms either aren't allowed to or don't want to do local litigation work.
So what happens when the troubles faced by U.S. financial markets in 2008 migrate to Europe and stall deal work in the region?
The financial troubles of the eurozone have had the expected effect for some firms that said deal flow is restricted, counseling advice is up and their hiring in those regions is cautious. But at least one firm has seen double-digit increases in revenue from its European offices year over year.
"Those that have offices in eurozone countries I think are subject to what I would just call currency risk," Altman Weil's Ward Bower said.
If the euro collapses, firms would certainly face difficulty, but even if the euro continues to be in the "doldrums" compared to other currency, firms billing and collecting in euros have challenges, Bower said.
Deal work will most likely be down if those firms are serving European clients, but they will get paid a nice price for doing counseling work, he said. While lawyers in London and other European countries tend to bill fewer hours than their U.S. counterparts, they make up for that lower utilization through higher billing rates.
European lawyers typically charge rates equal to the hourly rate of U.S. lawyers, but when converted, they equal much more. While the euro is falling in value, $500 an hour is still less than 500 euro an hour. And firms with London offices that are billing in pounds sterling are really earning a nice conversion rate, Bower said.
As the eurozone makes its way through these economic troubles, Bower said he doesn't think many U.S. firms will open offices in the region. But he doesn't anticipate many office closings either as U.S. firms have limited exposure in the most deeply affected eurozone countries, such as Italy, Spain, Greece and Portugal, because the offices there are small.
London is home to Reed Smith's largest office with 350 attorneys. The firm also has a small outpost in Piraeus, Greece, that is focused mainly on the firm's shipping practice. Reed Smith's other European offices are in Munich and Paris.
"The economic troubles in Europe have exactly the impact you think they would," Reed Smith managing partner Gregory B. Jordan said. "They give people pause in terms of doing transactions and financings so there's less typical transaction work."