Page 145 - Leaders in Legal Business - PDF - Final 2018
P. 145
Clearly many firms will argue with the position of specific firms in the table, but it needs
to be appreciated that these are based on global responses, not just a handful of business centers.
It is also notable that there is a direct correlation between the size and breadth of a firm, and its
level of global brand recognition. To some extent, in branding terms, bigger really is better.
While individual tables may be contentious, firms should not lose track of the fact that their
wider reputation is important. Name recognition in the boardroom (which may be thousands of
miles away from the law firm’s head office), credibility with key regulators, acceptance by
investment banks, and name awareness by key shareholder groups can be important factors in a
law firm’s ability to win and keep work from a client.
Really Global?
Despite the trends mentioned above and the development of $1 billion and $2 billion law
firms, it is questionable as to how close we are to the creation of truly global law firms. The $1
billion firms are dominated by U.S.- or U.K.-originated firms, with King & Wood Mallesons
being the honorable exception. Indeed, of the Global 100 firms, only seven do not have a major
U.K. or U.S. presence, and all of these are ranked 80 or below in the Global 100. This is
understandable, given that the U.S. and U.K. are the two largest legal markets in the world. Of
the 30 law firms with revenues more than $1 billion, in 2013 only 11 had more than half of their
lawyers outside their home country and nine (all from the U.S.) had fewer than 25 percent of
their lawyers based outside their home country. In part this reflects the depth and maturity of the
U.S. legal market, but, given the global dispersion of GDP and the growth rates achieved in
developing markets, it is probably fair to say that firms with say less than half of their lawyers
outside their home market are not truly developing a global capability. Of course, many firms
will not want to develop a global capability — and for good reason. If you are highly placed in a
major business and financial center running a very profitable law firm, then investment outside
your home city (even into your home country) is likely to be expensive and ultimately dilutive of
firm profitability. Spending money to lose money is not a great investment decision. For this
reason, many of the most profitable firms in major markets (especially New York) will take a
rather jaundiced view of international expansion and only make any such investments when they
need to do so in order to protect their major investment bank and other key client relationships.
Even then they will (probably rightly) build the smallest international outpost that is acceptable
to those clients. It is partly for this reason and differential profitability, culture and control issues
that we have never seen a truly top-tier combination between a U.K. and U.S. law firm.
The different approaches taken by different firms means, for perfectly understandable
reasons, that neither the global legal market nor the firms inhabiting it will, or will need to,
develop in a consistent way. Firms will identify their own markets. Some will succeed and some
will fail, but so be it. The diversity of the business models in the legal sector enhances creativity
and client choice, so even as the global legal market develops, firms are unlikely to be fixed with
purely binary choices.
Leadership
In an era of larger law firms, whether with multiple offices in the home country and/or a
131
to be appreciated that these are based on global responses, not just a handful of business centers.
It is also notable that there is a direct correlation between the size and breadth of a firm, and its
level of global brand recognition. To some extent, in branding terms, bigger really is better.
While individual tables may be contentious, firms should not lose track of the fact that their
wider reputation is important. Name recognition in the boardroom (which may be thousands of
miles away from the law firm’s head office), credibility with key regulators, acceptance by
investment banks, and name awareness by key shareholder groups can be important factors in a
law firm’s ability to win and keep work from a client.
Really Global?
Despite the trends mentioned above and the development of $1 billion and $2 billion law
firms, it is questionable as to how close we are to the creation of truly global law firms. The $1
billion firms are dominated by U.S.- or U.K.-originated firms, with King & Wood Mallesons
being the honorable exception. Indeed, of the Global 100 firms, only seven do not have a major
U.K. or U.S. presence, and all of these are ranked 80 or below in the Global 100. This is
understandable, given that the U.S. and U.K. are the two largest legal markets in the world. Of
the 30 law firms with revenues more than $1 billion, in 2013 only 11 had more than half of their
lawyers outside their home country and nine (all from the U.S.) had fewer than 25 percent of
their lawyers based outside their home country. In part this reflects the depth and maturity of the
U.S. legal market, but, given the global dispersion of GDP and the growth rates achieved in
developing markets, it is probably fair to say that firms with say less than half of their lawyers
outside their home market are not truly developing a global capability. Of course, many firms
will not want to develop a global capability — and for good reason. If you are highly placed in a
major business and financial center running a very profitable law firm, then investment outside
your home city (even into your home country) is likely to be expensive and ultimately dilutive of
firm profitability. Spending money to lose money is not a great investment decision. For this
reason, many of the most profitable firms in major markets (especially New York) will take a
rather jaundiced view of international expansion and only make any such investments when they
need to do so in order to protect their major investment bank and other key client relationships.
Even then they will (probably rightly) build the smallest international outpost that is acceptable
to those clients. It is partly for this reason and differential profitability, culture and control issues
that we have never seen a truly top-tier combination between a U.K. and U.S. law firm.
The different approaches taken by different firms means, for perfectly understandable
reasons, that neither the global legal market nor the firms inhabiting it will, or will need to,
develop in a consistent way. Firms will identify their own markets. Some will succeed and some
will fail, but so be it. The diversity of the business models in the legal sector enhances creativity
and client choice, so even as the global legal market develops, firms are unlikely to be fixed with
purely binary choices.
Leadership
In an era of larger law firms, whether with multiple offices in the home country and/or a
131
