‘The UK has embraced technology and alternative legal services faster than the US with some innovative and imaginative thinking.’
Kim Koopersmith, Akin Gump Strauss Hauer & Feld
From downturn fears to investing for the future, law firm leaders give their perspective on the challenges facing elite global firms.
Big issue
‘How the global market evolves is the million-dollar question because we have got some key things lurking in the background and also in the foreground at the minute which would change things dramatically. There is very little organic growth, so you have this continuous battle for both clients and a share of the purse with clients.’
Bryan Hughes, chief executive, Eversheds
Looking ahead
‘There’s a temptation in everything lawyers do to focus on the revenue. But sustainable revenue and profits is how you are successful. Innovation and efficiency is an obvious area that is within our control. The firm and I don’t make these decisions to get an uptick for a week, we’re doing this for the long term and that will feed through to our top and bottom lines over the coming years.’
Gideon Moore, managing partner, Linklaters
American pie
‘The reality is that there are two legal systems that are exportable in the world: English law and US law. In different sectors, given the increase of American law across the world – the FCPA [Foreign Corrupt Practices Act] space, the banking regulatory space, antitrust work – whatever you look at, American law is getting market share and we are building our practice to deal with that.’
Wim Dejonghe, senior partner, Allen & Overy
Losing pace
‘Some of the economies out there that a lot of businesses have been banking on to supply plenty of demand have slowed; a lot of the Asian economies, China in particular, have slowed compared to the pace they were at for two, three, four years and that has had an impact on some firms.’
Alex Msimang, London managing partner, Vinson & Elkins
Glass half-empty
‘There is less legal work to go around, there is not as much litigation as there was and there was also less restructuring and bankruptcy work in 2015 and it is increasingly a zero-sum game. The total volume of business for the Global 100 probably remains flat. The legal landscape is changing. I would be happy with some stability but it is an increasingly competitive environment with new entrants and price pressure. I wouldn’t say I’m pessimistic, but we may have seen the heyday already.’
George Petrow, European managing partner, Sidley Austin
Weak and meek
‘You see increasing movements of work either in-house or to alternative providers. This puts pressure across the whole spectrum of the legal market – what seems to be an inevitable consolidation across a number of sectors means fewer clients to fight for. There will be an effort to consolidate to find cost benefits in merging. Those done out of weakness are harder to pull off. There are more mergers today that are born out of necessity than strategy.’
Steve Immelt, chief executive, Hogan Lovells
Defensive strategy
‘If you judge it by the level of conversations going on, there is an increase in the number of firms talking to each other. But if you have two firms on a negative trajectory talking to each other, it’s not the most seductive proposition… they’re hard deals to get done. They may have great histories but moving partners to a mindset where the firm will be something totally different is a hard nut to crack. That will be the most interesting story over the next three years – if two firms aren’t elite, are they combining with the intention of becoming elite or is it defensive? Most of them are defensive in my mind.’
Joe Conroy, chief executive, Cooley
‘I don’t believe in apocalypse for the legal world, but when you’ve got accountants and consultants trying to get into our space, that means investing.’
Simon Levine, DLA Piper
Small world
‘Many of our clients have far more global businesses now than they did even five years ago and I can’t see that reversing direction. The cliché is that the world is a much smaller place than it used to be and I think that it will be a smaller place five years from now than it is now. We’re proud that we’re one integrated partnership across the globe. We think our clients appreciate that as well.’
Paul Theiss, chair, Mayer Brown
Prudence pays
‘Our strategy is about ensuring we have capability where we need it. It’s about not needing to supplement capability in certain offices. We may not have all the things we want in some of our offices but we’re prudent about how we spend our money. We’re not stopping making investments; that would be the wrong approach. It’s a growth strategy, but in particular areas we see potential for focus on alternative legal services and with that spending on technology.’
Sonya Leydecker, joint chief executive, Herbert Smith Freehills
Deal breakers
‘The deal market is slower. The US was soft, but the global markets right now are reeling. The good news is that we didn’t do a lot of hiring this year. It just so happened we’d already done so much hiring in the past on the assumption we’re going to continue to grow, which was a fair assumption at the beginning of the year but not so much at the minute.’
Mike Goetz, London managing partner, Ropes & Gray
British lions
‘There is a bit of doom and gloom out there about how law is a bad place to be; how everyone is going to come and eat our lunch; and the accountants are coming and big law is coming as well as all these challenger brands. But if you look back at the stats over the last decade or so, it is quite interesting how much UK-headquartered law firms have grown collectively – the size of legal services delivered by the UK 100 or UK top 50 has grown very significantly.’
Richard Foley, senior partner, Pinsent Masons
Tech savvy
‘The mindset of law firm leadership since the recession has changed for the good in terms of making sure that the institutions are as strong as they can possibly be. That focuses on growth and where there are opportunities, but also on good management… The UK has embraced technology and alternative legal services faster and better than the US firms with some innovative and imaginative thinking. The US has been more cautious but there is an increased acknowledgement of the changing role that technology will have and the recasting of roles that lawyers have traditionally done to no longer being done by lawyers.’
Kim Koopersmith, chair, Akin Gump Strauss Hauer & Feld
Speculate to accumulate
‘Law firms are short term as partners want the money out, so you have to do a lot of communication and spend a lot of time making people believe in a legacy – that it’s their responsibility not to take every penny out year on year but reinvest back into the business. The partners do understand that and in the longer term we are building a much stronger business that can operate over the next 20-30 years. I don’t believe in apocalypse for the legal world, but if we all sit at our big wooden desks and wear wigs and gowns at court, you’re not moving with the real world when you’ve got accountants and consultants trying to get into our space. That means investing.’
Simon Levine, global co-chief executive, DLA Piper
Number crunching
‘There’s an awful lot we can do on a day-to-day level in managing the firm that doesn’t require big shifts in direction. Well-run businesses have good communication and metrics – they measure cost of capital and returns. The way that translates into a law firm is to make sure partners and associates are at full capacity. Law firms are changing and we need to look at numbers and what we’re trying to do. You need to make decisions quickly and stick with them.’
Henry Nassau, chief executive, Dechert
Fast returns
‘The combinations that we did last year went better than we had a right to expect. One of the questions we asked ourselves as we approached these combinations is: could we really do something this major in one bite? We not only outperformed what we predicted financially, but the relatively small borrowing that we did in connection with the transaction was all paid back before we even got to the end of the year.’
Jami McKeon, chair, Morgan, Lewis & Bockius
Value equation
‘We’ve learned in these turbulent times you have to secure the loyalty of clients. We’ve pushed that to the limit this year with huge investments across our practice. We’ve invested a lot in a group that helps price instructions. We want to provide pricing that makes sure clients get value, with a firm that can do project management and where tasks are done to budget and on time. We’ve invested heavily in talent and systems but our average hourly rate did not go down, it was the value to clients that was enhanced. The reasons we’ve had such a profound improvement in performance is that clients saw the value equation.’
Andrew Baker, managing partner, Baker Botts
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