In the same way the sports media has speculated long and hard these past couple of years on the ‘demise’ of Tiger Woods, much has also been said about the Magic Circle also losing its aura of invincibility since the global financial crisis.
The Magic Circle’s relentless pursuit of domination has inspired awe over the last two decades but at the same time has drawn brickbats when things have gone awry. It is all too easy to build something up only to knock it down.
However, any prediction of the demise of the leading firms is both misplaced and premature. In our corporate round-up in the last issue, for example, we noted that just five firms – Linklaters, Freshfields Bruckhaus Deringer, Allen & Overy, Slaughter and May, and Hogan Lovells – accounted for 53% of the UK M&A market by value. The grip by the leading firms on the top end of the corporate market appears to be as tight as ever.
Financial performance among the Magic Circle has been fairly unspectacular in the last two years.
Nonetheless there are cracks if you care to look for them. According to Winmark’s recent Chief Legal Officers Programme benchmarking survey, which has been carried out every year since 2004, companies surveyed that use Magic Circle firms reported using them less in 2011 – the third year in a row this has happened. Also, with the notable exception of Allen & Overy, financial performance among the Magic Circle has also been fairly unspectacular in the last couple of years.
And our recent Legal Business Awards, held at the Grosvenor House Hotel in February, provided a reminder that other less celebrated firms are stealing some of the Magic Circle’s limelight. In 2007, either a Magic Circle firm or one of its lawyers won eight awards. This year, only Slaughter and May and Clifford Chance picked up an award each. But the biggest story on the night was that for the first time in more than a decade, a Magic Circle firm didn’t win Corporate Team of the Year – that went to Akin Gump Strauss Hauer & Feld. The diversity of firms picking up our awards reflects the increasing strength of US firms in the City, as well as how many good mandates are now going to less obvious firms.
This is why there’s more pragmatism to our fantasy law firm selections this year. When we last pulled a ‘dream team’ together in 2002, we decided to pick individuals outside of the Magic Circle, mainly because we didn’t want the elite firms to have all the fun. We also said that from a recruitment perspective, thinking ‘outside the circle’ was the logical approach.
This time, however, it was far easier to find talent beyond those six UK firms that form part of our Global Elite. It’s a clear sign that although the cream may still rise to the top, it may be a bit too rich now for many tastes.