Cash cows

The revenue-generating potential of the top City law firms’ counter-cyclical practices – especially dispute resolution – is about to be tested. In these tough times for deal making, the received wisdom is that London’s corporate and finance partners are more likely to be kicking their heels whilst their colleagues in the City’s leading litigation practices come to the fore. And their firms will need them to.

It has to be considered a sign of the times when a Magic Circle law firm, and particularly one as squarely focused on finance as Allen & Overy, reveals that it is shifting its global strategy so significantly that as much as 40% of its firmwide revenue could come from litigation in just four years’ time. This is the radical game plan conceived by the firm’s new global head of litigation, Tim House, who has been at the helm since January 2008. The proposition has, says House, been given the green light by the firm’s senior management duo, senior partner David Morley and managing partner Wim Dejonghe.

To put this in context, Allen & Overy’s financials for 2007/08 show that finance accounted for 44% of its total gross fee income of just over £1bn. Corporate accounted for 33%. Litigation, meanwhile, accounts at present for a relatively meagre 9%: approximately £94.4m. To achieve his aim, then, House will need to see revenue from litigation rise to something in the region of £406m; a huge figure even without factoring in the inevitable growth in total revenue over the next few years.

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