It is a measure of how fast-moving the Brexit-dominated landscape now is that imagery in this year’s Legal Business 100 (LB100) is dominated by Conrad, Castro and Coppola as the summer months have moved to rapidly challenge notions of how Britain works. One of the most stable and predictable major economies in the world has been locked into a mounting political conflict more akin to a banana republic than the Mother of Parliaments. Sooner or later Westminster drama on this scale will spill into a real economy that already contracted in the second quarter.
And yet, the UK’s largest law firms have endured another 12 months of uncertainty and ominous haze with impressive resilience, pushing revenues up 9% to £26.35bn, one of the better years of all-round performance since the banking crisis. And though a handful of mergers flatter that headline figure, 28 firms managed double-digit revenue growth, showing that plenty of UK firms are thriving in these challenging conditions.
Most law firm leaders, who have already seen off one Brexit ‘cliff-edge’ in March, have been surprised that demand has remained so strong for corporate legal services. And, overall, 2018/19 demonstrated a dynamic that looks increasingly entrenched since the banking crisis. The largest law firms have again proved to be erratic performers, struggling to sustain growth beyond the odd strong year. Certainly the Magic Circle looks permanently robbed of the explosive momentum the group took for granted pre-2008. Now even a union with a fading US player like O’Melveny & Myers looks beyond the group. In contrast, mid-tier and specialist firms have been the star performers. And readers will notice that many of the names posting pace-setting growth this year have been the same standouts from recent years. Of the quality mid-weight operators, Taylor Wessing, Osborne Clarke, Fieldfisher, Macfarlanes, Stephenson Harwood, Travers Smith and Mishcon de Reya all have a familiar ring. As do insurance players like Clyde & Co and Kennedys and litigation shop Stewarts.
Bucking that wider trend, Ashurst, Eversheds Sutherland and DLA Piper all posted firmer numbers after years of soft form. Furthermore, the once-flaky Simmons & Simmons is looking like a sure thing with a confident five-year track record now behind it.
There were also plenty of confident performances across the LB100 from quality national and regional players of varying scale. Outside the top 50, the market diverges hugely between the firms achieving potency and coherence in the regions and City, among them Freeths, Foot Anstey and JMW, and those struggling.
In practical terms that means that there are around 30 firms within the top 100 becoming impressively consistent at grinding out results, year-in-year-out. As much as anything connects the winners, they have sharpened their business geographically and in practice terms. Large law firms with sprawling practices and networks are in the main drifting as focused rivals surge ahead. Which, if nothing else, suggests many of the UK’s leading law firms have learned a few lessons since the banking crisis put their models and practices to a sterner test than the years of easy growth.
That is just as well because as Legal Business goes to press, the politics law firm leaders could once safely ignore are threatening to manifest destructively in what must surely be a tougher trading year. Many firms already saw stronger first half performance in 2018/19 before uncertainty and a slowing global economy took their toll. Apocalypse now? Not yet but, whatever your views on Brexit, it is startling how badly our governance and institutions have degraded in just three years since the referendum.