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Combined turnovers reshape global legal market as City heavyweight rubs shoulders with the transatlantic elite
A new global pecking order dominated by multijurisdictional giants is reflected in The Lawyer’s preliminary global top 50.
The results, published today in the annual Transatlantic Elite, reveal the impact of the rampant consolidation driven primarily by US- and UK-headquartered firms. The table features a growing proportion of firms that are either headquartered in the UK or managed jointly by UK and US partners.
The combined turnover resulting from last year’s merger of Hogan & Hartson and Lovells is included, as is the combined global revenue of DLA Piper.
Key to the increasing prominence of the UK on the world stage is the emergence of Norton Rose as a global top 50 firm. Last year the firm’s revenue, boosted by its January 2010 merger with Australia’s Deacons, hit £484m ($814m).
The firm’s 2010-11 figure does not include income from its mergers with Canadian firm Ogilvy Renault and South African firm Deneys Reitz, which went live on 1 June this year.
The rise places Norton Rose 32nd in the table, above UK rivals Herbert Smith and Slaughter and May. When ranked by other metrics, Norton Rose performs less well. For example, the firm’s revenue per lawyer figure of just $497,000 leaves it bottom of the table.
Norton Rose group chief executive Peter Martyr said: “The expansion of the group is a major step towards fulfilling our strategic aim of becoming one of the leading global providers of legal services. This year we’ve also become a top 10 international firm by number of lawyers.”
The inclusion of Norton Rose, Hogan Lovells and DLA Piper, all structured as Swiss Vereins, will no doubt be controversial, particularly among firms that operate as a single partnership and share profits fully.
Sir Nigel Knowles, joint CEO at DLA Piper, said the “vast majority” of firms active in multiple countries employ more than one operating entity due to tax, regulatory, risk and currency issues.
“We find the Swiss Verein model, which is one approach to managing the financial and other relationships between the operating entities, completely enabling in terms of building and developing our business and allowing us to deliver a consistent level of service for our clients across the markets in which we operate,” said Knowles.
Peter Kalis, chairman of non-Verein firm K&L Gates, argued that clients and partners would be “the final arbiter”.
Kalis added: “The debate will focus, at least in part, on whether Vereins can match across their internal profit borders the seamless client service of single law firms; whether Vereins can maintain the attorney-client privilege in the face of one or more judicial rulings that Vereins contain independent law firms; whether Vereins take the high road on client conflicts and address them as single law firms do; and whether partners in Vereins really wish to struggle across profit borders while trying to serve global clients.”
Official figures for the UK magic circle - Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters - will not be available until July and so have been estimated following discussions with sources at those firms.
This year’s Transatlantic Elite has taken a sector-led approach for the first time, focusing on the boom of M&A activity in the global energy and natural resources market.