Summary: The expansion of American firms in London has hurt native law firms, research shows.
Financial Times reports that elite law firms in the United Kingdom have reported losing a chunk of their market shares to American rivals. American firms have been expanding throughout London due to various corporate deals.
The top 100 firms in the UK saw their combined turnover decline to £20.64 billion in 2015, reflecting a drop of 1 percent. In 2014, the combined turnover reported was £20.82 billion. Some firms were also impacted by foreign exchange fluctuations, such as the weakened euro.
The UK’s University of Law has made a bold promise to its graduates.
The number of attorneys working at the top 100 firms in the United Kingdom has dropped by 2 percent as well, down to 64,024.
The top 100 firms in the United States, some of the biggest in the world, have actually seen growth of about 5 percent, with total revenues around $92.87 billion.
Starting in 2011, many American firms began expanding their London offices. They have grabbed market share from their rivals in the UK as they profit from their close relationships with American banks in practice areas such as investment banking.
Additional research shows that American firms, particularly those in London, have recruited a number of experienced attorneys in their 40s and 50s from the United Kingdom who worry that their own firms will ask them to retire early so that younger attorneys may take their places.
The research also shows that UK firms risk losing quality attorneys because they have traditionally been poor at handling their partners’ retirement. Many attorneys decided to switch to an American firm before they ever even discussed retirement with their current firms.
Alex Novarese, the editor-in-chief at Legal Business, commented that elite firms in the United Kingdom were losing market share to their American rivals in significant practice areas, such as dispute resolution. According to CityAM.com, Novarese added, “This isn’t a new trend, London law firms have been struggling for five or six years now, but this year was meant to be the comeback year.”
The number of UK law students has actually increased, though the job market looks bleak.
Since 2011, those American firms that have grown in London have enjoyed an increase in business, largely due to mergers and acquisitions. In addition, their expertise in global bribery and corruption matters have also boosted business, as many clients prefer the knowledge of an American firm in these areas.
Novarese explained, “UK elite firms have, at a more fundamental level, failed to transform themselves into the Anglo-American organizations they need to be to succeed.”
DLA Piper remains the largest law firm in the United Kingdom. However, it also saw a decline in revenue, down 4 percent to £1.5 billion. Profit per equity partner was reported at £903,000.
Earlier this year, London’s stock market welcomed its first law firm.
Slaughter and May’s partners are the highest earners, with top partners pocketing £3 million.
Eight firms in the top 100 in the United Kingdom have an average profit per equity partner of £1 million. Therefore, some 1,868 partners are millionaires. Attorneys with Stephenson Harwood have seen the biggest jump in profits per equity partner, up an impressive 40 percent to £746,000.
Average revenue per attorneys in the UK top 100 firms is £322,000.
Research also showed that gender equality also still suffers. Only 27 percent of partners are women, whereas junior attorneys are fairly equally divided.
Source: Financial Times
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