The back-to-school feel in the City is unmistakable, not least because the actual schools are back, as major law firms attempt to find something like normality in an environment that remains a few standard deviations from the norm.
In some ways it was ever thus come the end of August. As one law firm leader remarks: ‘I said to our FD: “September will be crucial,” and was swiftly was reminded I’ve said that for the last five years.’ This has always been the defining period for law firms’ financial year, just more so now. So, how’s it looking out there? Continue reading “‘The top firms can hardly believe it’ – City law firms are quietly gathering momentum amid the uncertainty”
Everybody likes to go along with the crowd, in business as much as life. So as the global economy is battered by the coronavirus fallout and many business sectors are on their knees, it’s inevitable that the legal industry has adopted a subdued tone focusing on the existential challenge it too faces. After all, official figures this week showed that the UK, home to probably still the world’s second largest legal market, saw its sharpest economic contraction since records began in the second quarter of 2020, falling 20.4%, one of the worst downturns in Europe.
The only issue with the profession’s stance is that the emerging facts are establishing this position as entirely unrepresentative of the outlook for major commercial law firms. Legal Business recently highlighted the robust showing in the face of Covid-19 judged from a dozen early results from top-50 UK law firms. The second-wave set of numbers from another group of firms in the same peer group doesn’t just support that picture of remarkable resilience, it materially strengthens it. These results are extraordinary! Continue reading “Comment: City law shows remarkable crisis immunity (but managing partners aren’t ready to spread that message)”
The other day we were presenting a webinar on ‘The Lawyer of the Future’ to a firm’s summer associate class, now in the midst of their remote June and July programme, and the question came up, ‘What do associates need to know?’
Here’s where I suspect many were anticipating we would have headed straight to, ‘Technology’ or ‘IT’ or even ‘How to code.’ Continue reading “Build Back Better: Two things associates need to know (and neither is ‘how to code’)”
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”
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”