If much of the commentary in this issue focuses on what has gone awry for major UK law firms in the previous decade, this column will tackle one big opportunity ahead and there is no bigger opportunity for City firms than the US.
Now for many, the received wisdom is that the London elite have wasted their chance, leaving the vast US legal market effectively closed to them. There is much to that argument. Had the group built on their initial beachheads in the early 2000s, the picture would be very different now. Clifford Chance (CC) partners still lament the Rogers & Wells tie-up, a mis-sold marriage that nonetheless offered a basis for growth that CC instead spent the next 15 years squandering. Had it achieved a conservative 3-5% annual growth at this practice after the deal, it would be generating over $600m stateside now.
Procrastination has certainly made the task harder, leaving currencies and profitability to turn against UK firms and yet substantial progress remains closer to the art of the possible than commonly supposed. Wall Street collectively ignored European invaders because a) New York lawyers are like that and b) they worked out years ago that London firms were failing to make the mental leap needed for Manhattan.
You only have to see the sharp reaction in New York at Freshfields Bruckhaus Deringer’s audacious four-partner M&A hire from Cleary Gottlieb in November to see that local firms realise this is potentially a different ballgame… if Freshfields is prepared to keep up the pressure.
If London firms are prepared to demonstrate the commitment needed for key markets like New York and Washington DC, they will have a far better chance of attracting the talent to which they aspire. Money is obviously a major part of that equation but only part. The most ambitious partners will not move unless the platform and scope to build is compelling.
Many respond that the prospect of London firms challenging New York leaders in the medium or long-term is slim, in itself true but a false test. Aspiring global firms don’t need to tackle Manhattan’s elite firms head-on – these firms remain essentially domestic in focus, the London elite just need credible US practices that support their global aspirations.
In the next five years that means building 400-lawyer-plus practices in New York with additional cover in Washington DC. To make ground they will also have to pursue a brutally stripped-down version of their London practices focusing on only the strongest, most profitable and transferable parts of their business.
Substantial progress remains closer to the art of the possible than commonly supposed.
That would mean hard choices on compensation and a willingness to pull out of some foreign markets to mitigate profit dilution of heavy US investment. London firms would also have to demonstrate a willingness to put serious US lawyers in senior roles to Anglo-Americanise their entire business in model and sensibility.
But if major London firms are not prepared to make these steps, it is not clear why they bother with the US at all. Certainly, they shouldn’t bank on a merger. It is hard to see such a union happening, and if it did the culture clash would be formidable. Moreover, getting their own US practices in shape would improve the odds of later securing a union from a position of strength.
As the decade turns, this would be a perfect moment for UK firms to dwell less on what held them back in America and more on what it would take to succeed on their own terms. So far, they’ve sold themselves short.