Clifford Chance and Linklaters took the top two spots
in the Global 100, while Pinsents' and Addleshaws'
debuts boost the UK firm total to sixteen. Big profit,
though, remains largely a US game.
By Catrin Griffiths
THE GLOBAL market for legal services has been shifting. This is the second edition of The Lawyer Global 100, published in association with The American Lawyer. This report, which contains all the statistics you need on the global legal market, proves that several trends are emerging.
US FIRMS' MARKET SHARE DECREASING
Last year, there were 14 UK firms in The Global 100. This year there are 16, with UK regionals Pinsent Masons and Addleshaw Goddard making the cut. And that 16 does not even include Mayer Brown Rowe & Maw, Dechert, Jones Day, Reed Smith and Kirkpatrick & Lockhart Nicholson Graham, all of which cut major mergers with UK firms. The 16 UK-headquartered firms represent £5.924bn of fees, up 8.4 per cent from last year's £5.467bn. That represents 29.4 per cent of The Global 100, compared with last year's 18 per cent of the total revenues of £29.489bn.
When it comes to growing the revenues, UK firms also easily kept pace with US firms. In a global legal market that was pretty flat (total revenues were down just under 1 per cent), only seven firms made double-digit percentage increases in turnover. Five were from the UK - DLA, Herbert Smith, Linklaters, Simmons & Simmons and Slaughter and May. Only New York's Wachtell Lipton Rosen & Katz outgunned them in terms of percentage increase, at 24 per cent.
Of the five new entries into The Global 100, two were Pinsents and Addleshaws, UK firms with little or no presence overseas. The only new US entry was Philadelphia- based Blank Rome, which scraped in at 100th place.
The other two new entries were both Australian - Allens Arthur Robinson (AAR) and Clayton Utz. In fact, Australia now has five representatives in The Global 100: AAR, Clayton Utz, Minter Ellison, Freehills and Mallesons Stephen Jacques. Together they turn over £795.2m, or 2.7 per cent of the total. For years, the Australian firms have been characterised by their snootier US and UK cousins as being too big and not profitable enough for global mergers. But Australian firms have been setting their sights on Asia. Their financial muscle and increasing visibility within The Global 100 will make them serious players in the coming decade.
UK FIRMS BIGGEST PEP MOVERS
For the most part, US firms tended to hold steady on their profit per equity partner (PEP). There were some dramatic decreases on the part of Howrey (37 per cent), Holland & Knight (down 27 per cent), Kirkpatrick & Lockhart (down 18 per cent) and Wilson Sonsini Goodrich & Rosati (down 11 per cent). The biggest US risers were Wachtell (up 21 per cent to £1.9m average) and Cadwalader Wickersham & Taft (up 17 per cent to £1.15m).
But UK firms stood out in clusters at the top and bottom end, underlining the sheer volatility of the UK and Continental markets in which they are most prominent. Simmons & Simmons posted the highest increase in profitability, up 40 per cent to £385,000. That increase was closely followed by Slaughter and May (up 35 per cent to £1.05m), and Linklaters (up 25 per cent to £843,000). Herbert Smith (up 15 per cent) and Clifford Chance (up 12 per cent) and DLA (up 11 per cent) were also near the top of the table.
At the bottom end, Lovells and Denton Wilde Sapte showed the biggest drops in PEP within the global league. Lovells had the second biggest decrease in The Global 100 - 27.6 per cent to £427,000 - while Dentons had the seventh biggest drop - 14.4 per cent to £279,000. Lovells is now 62nd in PEP and Dentons 93rd, compared with 39th and 85th the previous year.
NEW YORK ELITE STILL UNBEATEN
The top 10 most profitable law firms all have average PEP of more than £1m, and the same names recur at the top of the PEP tables: Wachtell, Cravath Swaine & Moore, Simpson Thacher & Bartlett, Davis Polk & Wardwell, Sullivan & Cromwell, Paul Weiss Rifkind Wharton & Garrison, Cadwalader and Kirkland & Ellis. Only Kirkland is not headquartered in New York, but it operates a similarly lean model from Chicago.
The UK's best performer was Slaughter and May, which leapt 10 places to ninth. In fact, once the New York majors are taken out of the equation, the UK firms compare much better - although that is not necessary much of a consolation.
Indeed, UK firms improved their rankings considerably. Linklaters and Herbert Smith both now make the top 20 for PEP and are easily on a par with formidable practices such as Gibson Dunn & Crutcher, Debevoise & Plimpton and Latham & Watkins. Herbert Smith's lean London-based model makes it almost inevitable that it should do better in the PEP tables than the magic circle giants, but Linklaters' performance shows that a global model can hold its own on proftability. Even Clifford Chance, which scraped 40th place last year, improved its position to 27th, while Freshfields - which had a poor year by its standards - managed to climb three places to 22nd in the table.
Meanwhile, the US national firms did no better in PEP than the UK majors, with Paul Hastings, Bingham McCutchen, Shearman & Sterling and McDermott Will & Emery all hovering around the £630,000-£650,000 mark, and Orrick Herrington & Sutcliffe sitting below that at £595,000. Wall Street aside, that's significant cause for cheer over here.
Catrin Griffiths, editor
| TOP 10 FIRMS FOR PEP 2003 |
| RANK 2004 |
GLOBAL 100 RANK |
FIRM |
PEP 2003 (£K) |
| 1 | 75 | Wachtell Lipton Rosen & Katz | 1,582 |
| 2 | =44 | Cravath Swaine & Moore | 1,273 |
| 3 | 24 | Simpson Thacher & Bartlett | 1,187 |
| 4 | 77 | Dickstein Shapiro | 1,184 |
| 5 | 21 | Davis Polk & Wardwell | 1,178 |
| 6= | = 14 | Kirkland & Ellis | 1,163 |
| 6= | = 15 | Sullivan & Cromwell | 1,163 |
| 8 | 36 | Paul Weiss Rifkind Wharton & Garrison | 1,126 |
| 9 | 50 | Milbank Tweed Hadley & McCloy | 1,114 |
| 10 | 60 | Cadwalader Wickersham & Taft | 985 |
| |
| TOP 10 FIRMS FOR PEP 2004 |
| RANK |
GLOBAL 100 RANK |
FIRM |
PEP 2004 (£K) |
| 1 | 53 | Wachtell Lipton Rosen & Katz | 1,909 |
| 2 | 14 | Sullivan & Cromwell | 1,282 |
| 3 | 23 | Simpson Thacher & Bartlett | 1,271 |
| 4 | 46 | Cravath Swaine & Moore | 1,203 |
| 5 | 38 | Paul Weiss Rifkind Wharton & Garrison | 1,176 |
| 6 | 55 | Cadwalader Wickersham & Taft | 1,151 |
| 7 | 28 | Davis Polk & Wardwell | 1,094 |
| 8 | 13 | Kirkland & Ellis | 1,077 |
| 9 | 36 | Slaughter and May | 1,050 |
| 10 | 52 | Milbank Tweed Hadley & McCloy | 1,037 |
|
| UK FIRMS AT A GLANCE: KEY RANKINGS |
| Firm |
Global 100 rankings |
| FIRM |
Turnover (£m) |
PEP (£K) |
RPL (£K) |
| Clifford Chance | 1 | 27 | =42 |
| Linklaters | 2 | 16 | 29 |
| Freshfields Bruckhaus Deringer | 4 | 22 | =42 |
| Allen & Overy | 6 | 26 | 74 |
| Lovells | 24 | 61 | 67 |
| DLA | 30 | 44 | 97 |
| Eversheds | 33 | 79 | 98 |
| Slaughter And May | 36 | 9 | 10 |
| Herbert Smith | 41 | 19 | 59 |
| Norton Rose | 62 | 63 | 85 |
| Ashurst | 67 | 40 | 61 |
| Simmons & Simmons | 70 | =70 | 82 |
| CMS Cameron McKenna | 84 | 72 | 84 |
| Denton Wilde Sapte | 90 | 93 | 83 |
| Pinsent Masons | 91 | 99 | 95 |
| Addleshaw Goddard | 97 | 67 | 89 |
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