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More U.K. Firms Aspire to Top 10 Law Firm Status
Our chief European correspondent reports on the latest buzz from London
The American Lawyer
February 15, 2008
There may never have been a U.S. financial reporting season as keenly watched by the Magic Circle as this one. Global market conditions, continued international integration and the weak dollar mean the city of London's leaders have never had a better chance of closing the gap on New York's elite firms.
Last year Linklaters joined Slaughter and May as the only U.K. practices among the world's 10 most profitable law firms. This year, given the initial results from the United States, it looks like Allen & Overy, Clifford Chance and Freshfields Bruckhaus Deringer will come tantalizingly close. On a rough estimate, to have an outside shot of making that select band, the U.K. triumvirate needs profits per equity partner (PPP) of at least $2.4 million (1.2 million pounds). This means Freshfields needs bottom-line growth of 16 percent, A&O 17 percent and CC 18 percent.
But at this level of the game, PPP is a means to an end -- attracting the best lawyers in New York. The key to a sustained profitability drive among the Magic Circle is turning growth in PPP from a defensive play -- keeping hold of your biggest billers in London -- to a potent weapon used for strategic hires in key markets.
Of course, growth in New York is supposedly at the top of the to-do list for the U.K. elite. And this could be -- no, should be -- the year for the Magic Circle to make some powerful hires in New York, the kind that start to give them visibility in New York.
But delivering on that promise will not just come down to PPP -- it will be as much about nerve in the one market where the Magic Circle has recently shown very little, even if it is acknowledged that it has been more a astute New York recruiter during the last 18 months.
With Clifford Chance well stocked again in New York, the smart money is on Freshfields and Linklaters making hires in corporate or finance that have a more starry quality to them. And current indications are that three major City firms are weighing up a quality trans-Atlantic acquisition that would make such a splash.
But such moves have been mooted before, if only because nerves failed at the last minute. Freshfields's Ted Burke, Clifford Chance's David Childs, A&O's David Morley and Linklater's Simon Davies may want to wait before they have the full picture of the current state of the U.S. market to fully commit. That will come in May, when the Am Law 100 hits desks. They should be reading with interest.
A version of this piece appeared in The American Lawyer's sibling publication Legal Week.
