It’s common in the legal industry to talk about unprecedented change but there are many rules of professional gravity unchanged for 20 years to keep feet on the ground and most lawyers in their place.
This year’s Legal Business 100 (LB100) has seen the dynamics of the UK legal market turn on its head as national-driven law firms outperformed those at the top of the table, including the Magic Circle.
The predicted comeback year for the UK legal elite instead turned industry trends and conventional wisdom on their head. Legal Business jumps down the rabbit hole and tries to make sense of it all.
‘Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!’ The Red Queen, Lewis Carroll, Through the Looking-Glass
If there is one big trend in the analysis of Legal Business in recent years it is the encroaching existential threat represented by US-bred law firms. That could be termed ludicrous simplification given the differences between individual law firms both US and homegrown but in many respects it remains a generalisation that speaks to profound transatlantic differences in approach covering the majority of the world’s largest law firms. There is a US model built on individualism, intense focus on profitability and higher pay for stars, and a resistance to bureaucracy. In contrast the UK’s brand of internationalism, backed by a far more institutionalised approach, had been startlingly successful until the banking crisis flipped the market.
Since then, pretty much everything has been flowing in the direction of US firms, which obviously have the huge advantage of feasting on the world’s largest legal market and biggest economy. The key issue – as highlighted in this month’s Global London debate – is that while US firms have shown some ability to appropriate elements of the UK approach to strengthen their global advance, London firms are doing their US rivals the huge service of not returning the favour.
It’s common in the legal industry to talk about unprecedented change but there are many rules of professional gravity unchanged for 20 years to keep feet on the ground and most lawyers in their place. For one: top-tier City firms were far larger, more international and at least twice as profitable as their mid-tier and smaller London cousins. They also generally outgrew the also-rans, carried on winds of transactional booms. These rules couldn’t be challenged. Except, for the first time in recent memory, such notions are being challenged, and with an intensity that few in the profession have fully grasped.
There have been many years in which major UK firms have been predicted to post disastrous results only to collectively grind out perfectly respectable numbers. This year, with a reviving domestic economy, busy deal markets and plenty of regulatory and disputes activity, larger UK firms have unveiled numbers that are at best disappointing. London’s Big Four City firms are barely tracking inflation over five years (a time horizon that takes out the reset year of 2009/10).