A no-deal outlook and the law – time for pragmatic pessimism

A no-deal outlook and the law – time for pragmatic pessimism

We go to press with Parliament locked in battle with the Government over threats to take the UK into a ‘no-deal’ exit from the European Union (EU). I’m not going to offer political predictions but we are clearly at the point where a disorderly exit from the EU is a very real prospect for the country and the profession.

The good news is that the largest UK law firms feel confident they can largely mitigate the immediate impact of no-deal, even with the abrupt end of EU rights to practise that have been such a boon. This is because potentially obstructive Bars in key markets in France and Germany have been kept onside and UK lawyers feel that other decent workaround options are available (see pages 12-13). With leading UK firms also having substantial foreign operations, including the Legal Business 100 having 19% of their lawyers in mainland Europe, and rapidly increasing their ranks of Irish-registered solicitors, the large outfits at least are braced. The Law Society recently issued research arguing a no-deal would knock 10% off the value of the UK legal market, equivalent to more than £3bn, and costing 10,000 jobs. Most law firm leaders see such predictions as excessive – a scepticism I share – though the industry does believe such an exit would be damaging. Continue reading “A no-deal outlook and the law – time for pragmatic pessimism”

LB100: Legal elite shows resilience amid ominous haze

LB100: Legal elite shows resilience amid ominous haze

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. Continue reading “LB100: Legal elite shows resilience amid ominous haze”

The end of A&O’s marathon O’Melveny merger bid reveals the stark choices facing the Magic Circle

The end of A&O’s marathon O’Melveny merger bid reveals the stark choices facing the Magic Circle

This article sits in the news leader slot of our latest issue, but when considering Allen & Overy (A&O) and its epic courtship of O’Melveny & Myers, the defining factor has been the absence of news. Since it emerged last spring that A&O was in merger talks with the Los Angeles-bred firm, there have been bare scraps of information, alongside alternating whispers the deal was/was not on. Finally the resolution came on 2 September, with the pair announcing the end of the talks with the traditional noises about mutual respect.

The reason for the long delay was as much the scale and ambition of the merger as the inevitable complications of bringing 700 partners on side. The looming spectre of a messy ‘no-deal’ Brexit and fresh falls in sterling further strained a delicate situation, probably tipping it over the edge. Not only were the firms aiming for full financial integration upfront – a move never attempted on the scale of a £2.4bn transatlantic union – the aim was to do an immediate merging of governance, leadership and remuneration. Forget vereins and grace periods kicking tricky issues down the road. That all-in approach raised the stakes and logistic issues enormously. Not least it would have involved substantive reform of A&O’s remuneration structure to make it more compatible with a US firm. Continue reading “The end of A&O’s marathon O’Melveny merger bid reveals the stark choices facing the Magic Circle”

The price of everything – Law firm metrics cannot measure broader values that will define their future

The price of everything – Law firm metrics cannot measure broader values that will define their future

Pinsents senior partner Richard Foley argues the industry needs new benchmarks for success

As Legal Business publishes its LB100, it seems apt to step back and ask ourselves whether the industry is focusing on the right things as it seeks to measure success. It should be uncontroversial to say that if law firms are to work better – for themselves, the wider business community and society – they must be diverse and inclusive of all talents. Measuring that type of success is every bit as important as whether a firm moves up or down a place or two in the financial league table. So, perhaps one measure we should look to in the next year’s LB100 is the progress firms are making in tackling issues of inclusion and diversity? Continue reading “The price of everything – Law firm metrics cannot measure broader values that will define their future”

Letter from… Amsterdam: Dutch lawyers find a deft balance amid testing times in cross-border trade

Letter from… Amsterdam: Dutch lawyers find a deft balance amid testing times in cross-border trade

The secret to making your country attractive to foreign investors at a time when populism is reshaping global politics and protectionism is on the march? A stable and business-friendly government, an open society, a well-trained and internationally-minded workforce, and reliable infrastructure are not bad places to start.

And, luckily for Amsterdam’s legal elite, the Netherlands has them all. ‘In these uncertain times, the country has been able to show some stability and that’s appealing,’ says Allen & Overy (A&O)’s local senior partner Brechje van der Velden. ‘Its attractiveness was and still is its reliability – multinationals having security for the future,’ notes Baker McKenzie’s Kim Tan. ‘We know what’s going to happen. The government is co-operative and transparent.’ Continue reading “Letter from… Amsterdam: Dutch lawyers find a deft balance amid testing times in cross-border trade”

Deal View: Five years on – How Akin Gump’s Bingham acquisition turned bust to boom in the City

Deal View: Five years on – How Akin Gump’s Bingham acquisition turned bust to boom in the City

‘Our team was nearly twice the size of Akin Gump’s London team. There was potential for vulnerability on both sides. They didn’t want their entire lives disrupted by a very large cuckoo in the nest.’ Five years on, restructuring partner James Roome reflects on the potential pitfalls of Akin Gump Strauss Hauer & Feld’s 28-partner acquisition of the City arm of his former shop, Boston’s ill-fated Bingham McCutchen.

In contrast to more ostentatious US counterparts, the Texas-bred Akin Gump has since flown under the radar to turn Bingham’s bust into its boom, thanks largely to the trophy restructuring team fronted by Roome. City growth has culminated in a blistering 2018 run as revenue spiked 28% to $123.5m, catapulting it into Legal Business’ Global London top ten firms by revenue. Continue reading “Deal View: Five years on – How Akin Gump’s Bingham acquisition turned bust to boom in the City”

The Last Word: Sound methods

The Last Word: Sound methods

No-deal Brexit, accountants, Millennials and soothsaying – LB100 leaders give their views on a hazy 12 months ahead

Change is gonna come

‘You cannot continue having 10-15% growth every year – not even the Chinese economy has achieved that! The profession as a whole has had a good year, but the rate of growth has slowed down. The comforting factor is that every single business is in the same place as us. We are all doing our best to protect and predict. Anyone who tells you what’s going to happen… well, that’s just guesswork.’ Continue reading “The Last Word: Sound methods”

As specialists thrive in law’s Darwinian age too many drift on

As specialists thrive in law’s Darwinian age too many drift on

There are times in my career as a legal pundit where I’ve gone against trend to argue the unpopular view. This is not going to be one of those columns. Instead, this is about speaking up for a truism that is unusual for being largely true and one that law firm leaders themselves frequently cite. I am here to sing the praises for law firms being more specialised in the practices and markets they cover.

Radical stuff, eh? And yet despite how easily the benefits of specialism fit the rhetoric of managing partners, is there much evidence to suggest that the commercial legal profession as a whole is moving in that direction? Far less than commonly believed. Continue reading “As specialists thrive in law’s Darwinian age too many drift on”

Profit per partner and other enduring hypocrisies

Profit per partner and other enduring hypocrisies

No-one got into journalism to be consistent, the trade typically being more attractive to trouble-makers than those hunting for enduring responsibility. But while hoping that proud tradition continues, in one area the legal media has pushed its licence for hypocrisy that step too far: the debate around law firm profitability.

This over the years has typically resulted in law firms being entreated to do better on all manner of broader concerns one minute… only for the same publications to turn around and berate such institutions for not driving partner profits up to whatever stratospheric figure is deemed appropriate. Don’t bother to send in examples, LB’s done it with the rest. Woe betide the law firms that try to invest or think imaginatively about retaining profits for the middle term. Continue reading “Profit per partner and other enduring hypocrisies”

Global 100 results show US question looming ever more ominously

Global 100 results show US question looming ever more ominously

Judging the world’s largest law firms, it is becoming a familiar tradition after we unpack the results of the Global 100 to look ahead to a more troubled outlook… which then turns into another year of robust growth.

Take 2019’s results, one of the strongest showings since the banking crisis a decade ago, which have seen the group push revenue up 9% to $113.51bn, while profits per equity partner (PEP) across the 100 increased 7% to an average $1.87m. Over a third of firms saw revenues increase by more than 10%, up from 16 in 2016; just four saw declining turnover. While underlining revenue per lawyer once again barely moved upwards, there are now 19 firms with PEP in excess of $3m, all bar one American, and eight exceeding $4m. Continue reading “Global 100 results show US question looming ever more ominously”