States of mind

Stop the clocks: it’s time for Clifford Chance to say it’s going to crack America again.

Every five years, CC runs the slide rule over the States. 2002 was the year of the Brobeck raid; it didn’t end well. 2007 was the year of a major US relaunch strategy; a year later, Lehman put paid to that. And now, in 2012, managing partner David Childs is coyly admitting that the US is back on the agenda. The talk in the States is that CC – which is very much hoping that time has detoxified its post-Brobeck brand – is sniffing around the West Coast again, 10 years after its original California raid.

CC’s global heft has never been enough to crack the US on its own. The more recent lateral hire route has simply not delivered; the Americas practice (£144m) turns over less than it did back in 2007 when the firm last vowed to crack the States on its own.

There is a wider issue though, about where growth is going to come from. CC’s Asia revenues performed well, up 28 per cent on the previous year and helped in large part by Australian mini-mergers with Chang Pistilli & Simmons and Cochrane Lishman Carson Luscombe. However, organic growth in the region is still hard to come by – hence Allen & Overy’s abortive talks with Allen & Gledhill and Linklaters’ deal with Allens Arthur Robinson.

And China is complicated. The central bank’s decision to cut rates for the second time this year betrays a nervousness among the authorities that its growth is not keeping pace with its internal requirements; gone are the days when the management of a UK-headquartered firm could airily assume that Asia was the answer. Quite the reverse; Chinese firms are developing fast and the margins on PRC work are shocking.

CC, scarred by its Rogers & Wells merger experience, professes that it is unconcerned about the Asia land-grab, but the past five years have shown that global organic growth is arduous.
And you can see it in this year’s set of magic circle financials, which are largely flat. Growth is increasingly a chimera. David Childs has had a tough old time of it in the past eight years. His successor will be presented with a situation infinitely tougher.