Years ago, in the immediate wake of the banking crisis, I wrote a column on the notion that top London law firms, having pursued consolidation and growth for the preceding quarter century, had fallen out of love with being big. The argument was that they were increasingly focused on segmentation – meaning tighter focus on their core markets – than consolidation. I have made duffer calls over the years, but in retrospect only one of those points, on losing faith with growth, was substantively borne out. The second observation about a more clearly-segmented legal industry emerging has largely not come to pass. Major London firms have consistently eschewed growth strategies with generally poor results. But no matter the structural pressures building on the legal industry, they have yet to get used to the idea of being more rigorously focused on core markets. Incremental chipping – ditching a bit of structured finance here, a little employment disputes there – is about as good as it got.
Yet there is an increasingly salient argument to be made that major law firms have two broad approaches that look sustainable if they wish to be major forces in high-end law. The first is to operate closer to the classic partner-driven model – a simplified regime based on low leverage, partner-heavy service, and being focused in a relatively small number of markets and geographies. This is a stance successfully applied by many of the more potent US-bred law firms expanding in Europe.