Five things not to like about US firms

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  • Good to see you are supporting (with your prejudicial point of view) the many thousands of people currently employed by US law firms in the City of London

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  • 1. How much more financial disclosure do you want from the American firms? Making a statement like "US firm financial disclosure is bad" is nothing more than non-sensical. Your focus should have been--what additional indicators would you like from firms? And how would these additional indicators help?
    2. This is a pretty illogical paragraph. You attack PEP as a single metric, which is fair enough. But then lead into a rant on City pay? Not sure how this is related or relevant to a bash on American firms.
    3. Conservatism is bad, therefore American firms are bad? Conservatism effects UK firms even more so. Its the legal profession for god sakes. Slaughters is most certainly open, rapidly changing and cutting edge! All MC firms are and should be unfazed by ABS. Private-equity backed law firms are far from healthy changes. Your worried about an American firm not fully disclosing, but are welcoming law firms with additional interests in returning profits to non-legal owners? Makes sense.
    4. Most of the American firms in London are white shoe. We're talking Weil, Skadden, etc. These firms are on the same level as the MC. Clients picking these firms are focussed on a particular type of quality that outweighs the fee. Sure, attack the upper echelon of these high billing firms. But this is NOT an "American" issue. This is called economics. If a consumer doesn't want the service/good then they won't pay for it. There does not need to be anymore pressure than competitive economics.
    5. Dewey was an anomaly and admittedly a disaster. The rest of the firms you listed were known to be on the verge of implosion. Broebeck relied on tech work. Everyone knew the dot-com bubble would be their downfall. Heller was hit by the financial crisis--their collapse was far from a "surprise". I'll stop there. But again these things effect the UK-side as well. What about Cobetts? These problems are not uniquely American. They effect the legal profession as a whole.
    This is DailyMail quality journalism.

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  • Dear Anonymous

    1. How much more financial disclosure? Any would be a good start. At the moment many top US firms’ revenue figures are estimated, not just PEP. So it’s not a question of additional indicators. Over here, we can talk profit per lawyer, margin, property costs/profit per square metre, lock-up targets etc till the cows come home, but very few top US firms engage, so the conversation just reverts to PEP.

    2. Nothing illogical here. As long as PEP continues to be seen as a virility measure we can’t get to a nuanced debate over financial health (see 1.). It would be satisfying to discuss US figures outside this narrow framework and move to an analysis of firms’ business rather than where they lie in the PEP status league. As for City pay, that is a related point. It’s not uncontroversial to say that many UK clients resent the sort of PEP figures that have been reported for the last decade and that PEP as a key metric does not serve the cause of the (private practice) legal profession. By the way, this piece was written in the week where we had an enormous online debate on City NQ pay levels, to which I tacitly refer. I’ll link to it here.

    3. Elite UK firms are much less conservative than elite Americans (yes, agreed that this is in a legal context, so it’s hardly Silicon Valley). Slaughters is not the stuffy, inflexible organisation of legend. Personally, I do have reservations about LPO and ABSs, and I have never believed they will affect law firm structures in the short term. However, you mistook my point; they provide new thinking. If some of those structures work at the value end of the market – for both client and workforce – then City firms will adopt certain elements, just as they have looked elsewhere for best practice.

    4. I don’t agree. Carillion managed to get Slaughter and May to consider LPO arrangements for lower-value work. Furthermore, magic circle firms have years of coping with panel arrangements and procurement. By the way, American firms in London are not mostly white shoe; see Dechert, Reed Smith, K&L Gates, Baker & McKenzie, Quinn Emanuel. Bingham, Gibson Dunn. All of these firms are happy to discuss a variety of financial metrics.

    5. You entirely skate over the fact that Cobbetts refused to declare its financials for two years before it collapsed. Wilful opacity won’t save a business.

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