Magic Circle Firms Must Pull Rabbit Out Of Hat To Stay Competitive With U.S. Firms
Report suggests top London firms may be heading to mid-market status without bold action.
Last week, Womble Bond Dickinson and BDB Pitmans announced a possible merger. If a new report is to be believed, transatlantic mergers may become a lot more common in coming years.
According to Arden Partners, the top firms in the UK simply cannot keep up with the American firms and absent significant merger-based growth, the firms will fade into mid-market work. As the expression goes, the American firms are “overpaid, oversexed, and over here” and while we’re all probably better off not dwelling on the sex lives of Biglaw, the “overpaid” factor has led to U.S. firms consistently outspending the Brits in the talent wars.
From Financial News:
Arden Partners argued that the Magic Circle firms either need to find merger partners to boost their balance sheets or shift their strategies to focus on mid-market work.
Paraphrasing arguments previously made by The Future of the Professions author Richard Susskind, the report concludes that Magic Circle firms have the wrong strategies, but the vested interests of the partnership model means they are unlikely to change them.
“They probably don’t have the right answer because they are a room full of millionaires that refuse to believe that their business model is in trouble,” the Arden report said.
It probably doesn’t help that the country shot its business genitals off when its ginned up populace voted to leave the EU without a whiff of a plan. As the UK shambles toward becoming one of the weakest economies in Europe, even the good news coming out of the big firms isn’t all that good:
The Magic Circle has continued to perform well in recent years. Clifford Chance, for example, posted an 8% revenue increase to £1.97bn last year, and boosted partner pay 10% to £2.04m.
However, that growth looks anaemic next to Los Angeles-headquartered Latham & Watkins, which added $1bn to its top line last year, growing revenue more than 25% to $5.49bn, and upping partner profit more than 25% to $5.7m.
It could be a busy couple of years for law firm stationery suppliers.
Magic Circle law firms must merge or move to mid-market in fight against US firms, says report [Financial News]
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to email any tips, questions, or comments. Follow him on Twitter if you’re interested in law, politics, and a healthy dose of college sports news. Joe also serves as a Managing Director at RPN Executive Search.
