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law currently govern an overwhelming majority of cross-border transactions, financings, and
disputes. Any firm seriously wanting to work on higher-value international transactions will need
to demonstrate either a credible capability to work under English or New York law firms, or choose
an effective relationship with other law firms so that the client receives as seamless a service as
possible. This has been the key driver for U.S. firms to develop in London. In the U.K., more than
5,000 lawyers work in U.S.-headquartered law firms, which is a clear demonstration of the impact
of U.S. firms in the market. Some U.S. firms have performed extremely well in London and have
developed top-tier practices, but others have struggled to make an impact in what is one of the
most competitive legal markets in the world. The progress of U.K. firms in the U.S. had been more
mixed, with Clifford Chance’s troubled merger with Rogers & Wells in 2000 probably being the
most high-profile move into New York.
However, the big four U.K. firms — Allen & Overy, Clifford Chance, Freshfields, and
Linklaters — now seem to be making effective progress in the U.S., although they now recognize
that this will be a difficult market to crack. The Hogan & Hartson and Lovells merger in 2010 to
create Hogan Lovells appears to be working well, although Hogan & Hartson was not a primarily
New York-focused firm.
Building out a U.S. Practice
The U.S. is the world’s biggest, most diverse, and most profitable market for legal services.
Various estimates attribute between 40 percent and 50 percent of external legal spend occurring in
the U.S. Even the financial crisis and the emergence of developing markets do not appear to be
threatening the primacy of the U.S. legal market. Indeed, the litigious nature of U.S. society and
the new, post-crisis assertiveness (or rapacity, depending on your views) of U.S. regulators has
helped U.S. firms to exceed pre-crisis levels of revenue (although not necessarily in real terms).
As a result, many U.S. firms rightly see the U.S. as a primary market for development. The U.S.
legal market is not just about New York. Washington D.C., Chicago, Atlanta, Houston, Boston,
Los Angeles, and San Francisco, to name but a few, are all major centers of legal services, and
many would probably rank in the top 10 cities of the world in terms of legal spend.
Our strategic alliance partners, Altman Weil, track mergers involving U.S. firms3 and 2012,
2013, and 2014 were the three most active years ever in terms of U.S.-related law firm mergers.
This is no surprise, as firms have been seeking to develop the depth and breadth of practice across
the key U.S. markets. Some of these mergers have or will create $1 billion or $2 billion firms in
their own right. The U.S. as a whole is still a relatively fragmented market, but if this merger trend
continues over the next few years, a far smaller group of truly national firms will emerge, operating
at different levels in the market. It has to be appreciated that once these mergers are integrated, it
can be expected that many of these firms will use their size and financial strength to build even
more significant international practices, either by further mergers, team hires, lateral additions, or
Greenfield openings.
Branding and Recognition
Many firms have established strong reputations in their local markets, regionally, or
3 ALTMAN WEIL, http://www.altmanweil.com/mergerline.
146
disputes. Any firm seriously wanting to work on higher-value international transactions will need
to demonstrate either a credible capability to work under English or New York law firms, or choose
an effective relationship with other law firms so that the client receives as seamless a service as
possible. This has been the key driver for U.S. firms to develop in London. In the U.K., more than
5,000 lawyers work in U.S.-headquartered law firms, which is a clear demonstration of the impact
of U.S. firms in the market. Some U.S. firms have performed extremely well in London and have
developed top-tier practices, but others have struggled to make an impact in what is one of the
most competitive legal markets in the world. The progress of U.K. firms in the U.S. had been more
mixed, with Clifford Chance’s troubled merger with Rogers & Wells in 2000 probably being the
most high-profile move into New York.
However, the big four U.K. firms — Allen & Overy, Clifford Chance, Freshfields, and
Linklaters — now seem to be making effective progress in the U.S., although they now recognize
that this will be a difficult market to crack. The Hogan & Hartson and Lovells merger in 2010 to
create Hogan Lovells appears to be working well, although Hogan & Hartson was not a primarily
New York-focused firm.
Building out a U.S. Practice
The U.S. is the world’s biggest, most diverse, and most profitable market for legal services.
Various estimates attribute between 40 percent and 50 percent of external legal spend occurring in
the U.S. Even the financial crisis and the emergence of developing markets do not appear to be
threatening the primacy of the U.S. legal market. Indeed, the litigious nature of U.S. society and
the new, post-crisis assertiveness (or rapacity, depending on your views) of U.S. regulators has
helped U.S. firms to exceed pre-crisis levels of revenue (although not necessarily in real terms).
As a result, many U.S. firms rightly see the U.S. as a primary market for development. The U.S.
legal market is not just about New York. Washington D.C., Chicago, Atlanta, Houston, Boston,
Los Angeles, and San Francisco, to name but a few, are all major centers of legal services, and
many would probably rank in the top 10 cities of the world in terms of legal spend.
Our strategic alliance partners, Altman Weil, track mergers involving U.S. firms3 and 2012,
2013, and 2014 were the three most active years ever in terms of U.S.-related law firm mergers.
This is no surprise, as firms have been seeking to develop the depth and breadth of practice across
the key U.S. markets. Some of these mergers have or will create $1 billion or $2 billion firms in
their own right. The U.S. as a whole is still a relatively fragmented market, but if this merger trend
continues over the next few years, a far smaller group of truly national firms will emerge, operating
at different levels in the market. It has to be appreciated that once these mergers are integrated, it
can be expected that many of these firms will use their size and financial strength to build even
more significant international practices, either by further mergers, team hires, lateral additions, or
Greenfield openings.
Branding and Recognition
Many firms have established strong reputations in their local markets, regionally, or
3 ALTMAN WEIL, http://www.altmanweil.com/mergerline.
146
