The world is getting smaller and the top 100 law firms are getting richer as a result. The Global 100, which we produce annually in association with The American Lawyer, now has – rejoice! – 17 UK firms in it. And that number does not even include the handful of transatlantic practices such as Dechert, Jones Day, Kirkpatrick & Lockhart Nicholson Graham and Mayer Brown Rowe & Maw.
In any case, transatlantic consolidation is only one piece of the puzzle. Talk to any managing partner with an atlas and they’ll tell you the biggest growth area for them is China. This is not a stunning revelation, but dig a little deeper and you’ll see that UK firms with long histories in Hong Kong are also building strong platforms on mainland China.
Now take a look at the US firms that dominate the global profit tables (see page 4.) Virtually none has any significant presence on the ground in China; Cravath even closed its office in Hong Kong four years ago. Slaughter and May has cannily cultivated strong relationships with elite China practices Haiwen, Jun He and King & Wood, but many of the others have not built such solid connections.
The white-shoe firms will always be close to the institutional clients and will always be in line for US pieces of big securities offerings. However, not only has the curse of Sarbanes-Oxley made New York Stock Exchange listings increasingly unattractive, but big-ticket securities work is starting to slow down, say corporate lawyers.
Instead, the dominant US names in China are the national players that have business models similar to the UK outfits’ – Baker & McKenzie, Jones Day and Orrick to name but three. No wonder Dewey was interested in talking to Orrick. No wonder Kirkpatrick is in merger discussions with Preston Gates, which already has some 30 lawyers in China. And no wonder Fried Frank took five partners out of Simmons’ China practice last week.
China is a slow burn for any business; for the big Wall Street beasts it is simply not remunerative enough. For them to capitalise on the world’s biggest growth market they would have to change their entire business model, which is predicated on high returns on relatively short-term investments.
UK firms may only represent 20 per cent of the global 100 by turnover, but unlike the Wall Street elite they are not trapped by their own profit margins. There’s still all to play for; let’s just hope the Brits and the US nationals don’t squander their advantage.