Back to the future: Looking back to 2008
2 September 2013
2 September 2013
30 August 2013
2 September 2013
29 April 2014
10 October 2013
Also in: 2018: A window into the future
In 2008 we quizzed leading legal management on how the market would look in 2013. Read what they had to say here and assess for yourself how accurate they were.
David Childs, Clifford Chance
Our market will continue to be driven by the needs of international clients and the growing number of increasingly complex matters requiring an integrated approach to the provision of cross-jurisdiction legal advice combined with local knowledge. At the same time, we will continue to see a marked preference among major corporates for closer relationships with a smaller number of law firms. As a consequence, a small group of elite international firms will develop, probably as a result of merger activity, and our aim is to be the leader of this group.
We believe we are well placed to achieve this. We are currently the only single profit pool firm with real depth of resource in the Americas, Europe, the Middle East and Asia, and we are able to offer clients global standards across jurisdictions.
The drive for higher levels of profitability will result in law firms becoming more professionally managed, with high quality and efficient business services functions. CC is one of the leaders in this area and has already implemented a number of initiatives that have maximised efficiency and taken costs out of the business. This has given us the advantage of being able to provide value to fee-earners and offer more consistent service to clients, which is likely to become the benchmark for other large players in the industry.
We do not expect the Legal Services Act to have a significant effect on us or other large-scale international firms. However, regulatory change in markets such as India will have a major impact on our business. We believe that liberalisation in that and other legal markets will bring huge opportunities for the firm and real benefits to the business community.
Ted Burke, Freshfields Bruckhaus Deringer
It’s very hard to predict how individual firms will fare over the next few years or whether the shape of the magic circle will change. The magic circle concept is mostly about brand, but brand is hugely important today and will become increasingly so as a result of globalisation.
Do I think that any other firms, including US firms, will join the magic circle? No. Do I think that any firm will drop out of the magic circle in the next five years? No. In the next 10 years? Probably.
Notwithstanding the globalisation of law firms over the past 15 years, the legal sector hasn’t changed very much over the past 100 years. Certainly the basic law firm model hasn’t changed. I think that technology, globalisation and regulatory reform will conspire to create some pretty radical changes in the legal sector. Those firms that are best able to adapt to these changes will be the most successful. It goes without saying that I think Freshfields will be one of those firms.
Simon Davies, Linklaters
A number of trends will radically reshape the magic circle. Globalisation will continue to underpin firms’ strategies, but shifts towards emerging economies, new client sets and reorientation of financial centres will change footprints.
Over the next five years, management structures will become more international and virtual. International experience will become the norm and winning firms will be agile, flexible and diverse – the most creative approaches to people issues will create differentiation. Winning firms will become truly commercial advisers, adapting their internal structures to connect more seamlessly across practices.
Twenty years ahead, the leading firms may converge with other services to meet clients’ wider commercial needs. Successful firms will integrate around key sectors and clients and the federated model may fail. US-UK firm mergers will change the map – winning firms will truly be part of a global elite, while some firms will be relegated to a cadre of international UK firms vulnerable to fragmentation. We will see new remuneration systems at all levels, new ownership structures, and further professionalisation of management.
David Morley, Allen & Overy
When peering into the future it’s sometimes instructive to look at the past. For example, if Allen & Overy (A&O ) grew over the next 10 years at the same rate as the last 10 we would grow from 3,000 lawyers to 10,000, from 500 partners to 1,500, and from annual revenues of $2bn (£1.05bn) to around $10bn. Improbable? Perhaps, but back in 1998 no-one would have believed we would grow to our current size in 10 years. So here are a few guesses:
A seemingly unbridgeable gap has opened up between a global elite of six firms (A&O, Linklaters, Freshfields, CC, Skadden and Latham) and the rest, based on scale, geographic reach and focus on high-end work. Other firms thrive and compete with different business models, but these six are market leaders.
Their geographic footprint continues to spread into emerging markets such as Turkey, Ukraine and Morocco. Emerging markets make up 15 to 20 per cent of the revenues of the global elite.
Regulatory regimes have begun to recognise that a different set of rules is needed to govern work for sophisticated business clients from those needed for consumers and small business clients.
Twenty per cent of the partners in global elite firms are women.
Sixty-five per cent of the magic circle’s revenues are outside the UK.
Most of the global elite have developed captive legal outsourcing operations in South Africa, New Zealand, India or Australia, and other business methods for delivering high-quality, lower cost work to very large relationship clients.
A flurry of US/UK mergers at the top level have been bedded in, creating a new competitive landscape.
India and China combined are now more important markets for the leading firms than the US.
Forty per cent of leading firms’ partners or equivalent are women
The global elite is unrecognisable from 2008. Consolidation has accelerated and new business models have developed, fuelled by external capital and technological shifts driving fundamental industry change. The winners are those with collaborative cultures that have adapted and innovated most consistently.
Hourly billing is long dead. (This last one is more of a wish than a prediction.)