More than a decade after the 2008 global financial crisis, the world finds itself gripped by a pandemic and the resulting economic turmoil. As we saw in 2008, law firms won’t escape the impact of the recession, particularly as clients trim budgets and reduce demand for legal services. But unlike companies with diverse sources of capital, law firms, still predominantly structured as partnerships, will more acutely feel the cash crunch as they grapple with this outdated ownership model.
Already firms have begun to reduce salaries, hold back partner distributions and furlough employees to combat declines in revenue. In the short term, partners are expected to earn materially less income while firm growth and associate development are paused; in the long term, firms may need to draw down on lines of credit, lay off employees or, in extreme cases, dissolve. Continue reading “Guest comment: An argument for outside investment in law firms for the post-Covid era”
The Covid-19 crisis is creating a lot of learning and insight across the legal sector and the wider communities in which we work and live. Much of this revolves around actions that organisations and their leaders are taking to navigate the crisis – including what leaders should do to manage uncertainty.
A key feature of law firms is that many people are leaders – not just those in formal senior leadership roles. A high degree of distributed management serves a range of teams. That is a real strength of our industry. Empowering those leaders to act in a way that helps their teams and drives the wider business forward is key. Continue reading “Leadership in a crisis (or how to build the ship while sailing it)”
While it’s surprising in some regards that it took this long, Allen & Overy has done the UK legal market a favour by substantially re-setting compensation bands for its junior lawyers. The move, confirmed on Monday (22 June), will see starting salaries and bonuses for newly-qualified lawyers in London fall from the current benchmark of £100,000 to £90,000 for the intake starting in September.
Clifford Chance later that week announced more modest cuts from £100,000 to £94,500 for salary and bonus, while Slaughter and May had already pushed down its starting base salary to £87,000 for autumn starters, from £92,000. Continue reading “Resetting associate comp – Better to bend than break but a rethink is still overdue”
For journalists, ill winds usually bring a few benefits, not least that readers have greater interest in what we’re churning out. But while it’s a good time for industry anoraks to get the attention they crave, it’s not the pieces I’ve done in 2020 on crisis, coronavirus or even Black Lives Matter that have attracted the biggest audience. The most read was an article from March focused on the two-horse race between the world’s largest law firms, Kirkland & Ellis and Latham & Watkins, and its wider relevance for the high-end legal market.
That speaks to the extraordinary interest among peers in Kirkland, which has defied expectations to batter its way to the top of the global market in the last decade, much to the startled unease of traditional elites in New York and London. Continue reading “Kirkland vs Covid-19 – How the world’s largest law firm handles this crisis will define it… and the global elite”
Regular readers are familiar with our custom of penning ‘Letters from…’ when we’ve spent time in a major city and want to offer some observations and commentary on that legal market. We’re not travelling. That can mean only one thing: Time for us to compose a ‘Letter from New York.’
Let’s start with some data, shall we? Continue reading “Comment: Letter from New York – Assessing the world’s top law hub now and after the crisis”
Law firm leaders are getting restless. They are beginning to look past Covid-19 to what comes next. Even if finances remain a concern, there are fewer ‘unknown unknowns’. The process for getting people back to the office is mapped out. Huge uncertainties and challenges remain, but a way forward is emerging. The question now is: how to regain momentum and rally the troops?
A key part of any proactive strategy will likely include lateral hiring. It’s striking that a steady trickle of strategic hires has continued during the coronavirus crisis. Expect that trickle to become a gush by early 2021. And whether your firm is calling potential partners, other firms are calling yours. Continue reading “Comment: A triumph of hope over experience – Lateral hiring needs an upgrade for the post-Covid era”
It’s fair to say that Legal Business has long been sceptical of the prospects for listed UK law firms, and none more so than the most hyped of the lot, DWF. ‘The 2020s still look likely to end with public markets as a marginal force in global law,’ noted our recent cover feature on the big issues set to shape the profession through the current decade. And that assessment was written before the coronavirus pandemic, a jolt that is about to put the weaknesses of the listed law firm model to a savage test.
So in this context the news on Friday (29 May), that the UK’s largest listed law firm DWF was dispensing with the services of its long-term leader Andrew Leaitherland amid pressure on its business is both surprising and yet much foreshadowed. Continue reading “Comment: Falling stock – DWF’s predictable woes will hang over the listed legal sector for years”
Sometimes a shock looks certain to leave life forever changed only for things to carry on much as normal. Sometimes, the jolt marks a genuine crack in the foundations underpinning industries, business and society. We now know that for the profession and the City, the banking crisis proved very much in the latter camp. In law, the most visible result of this was the end of the startling 25-year success story of the Magic Circle, closing the period in which the group had blazed a trail across the global market and become utterly dominant in their core European and Asian heartlands.
After the banking crisis, growth slowed, ground was ceded to US rivals, and even some mid-tier rivals, and the group lost much of the strategic daring that defined their remarkable ascent. They remained successful institutions but the swagger was gone, the myth of invincibility lost. Continue reading “Comment: After their lost decade, the current crisis should see the Magic Circle back on world-beating form”
Try driving across London or walking its crowded parks in sunny May and it becomes hard to remember that the nation, and much of the Western world, exists in a state of at least semi-lockdown.
While food queues and the inability to do much beyond kick around the house testifies that things are far from normal, since the government in early May started obtusely unwinding the lockdown, the business and legal worlds have entered an ambiguous chapter of the coronavirus saga. Continue reading “‘Stay home, save jobs’ – How the legal elite are charting a course through half-lockdown summer”
If we can already make a few forecasts about some aspects of the post-coronavirus world, currently pole position among things the legal industry abruptly realised will look radically different as of ten weeks ago are large-scale, grand, frightfully-expensive offices. It turns out that we were all used to the modern, shiny, flagship office and now realise we had only the most tenuous grasp of why we believed it so fundamental to the business of professional services all along.
Yet the office will never be the same. Continue reading “Comment: Welcome back to the office? Re-thinking law’s real estate for the post-corona age”