It's been a frustrating time for Lovells and Norton Rose, with both displaced on signature deals for major financial institution clients. Instead, the magic circle cleaned up. Longtime Norton Rose client HSBC gave Freshfields the key mandate for the $1.1bn (£590m) Ping An job, while Barclays opted for Clifford Chance over Lovells for the £2.9bn acquisition of South African bank Absa, which closed last week.
The market for bank M&A mandates is febrile and Clifford Chance and Freshfields have made the most of their chances. Clifford Chance has made no secret of its ambitions to capture Barclays; the fact that former partner Mark Harding is now the bank's general counsel is an extra fillip. The firm acted on the other side for Woolwich on the Barclays takeover a few years ago, but its breakthrough came with Barclays' merger of its Caribbean operations with CIBC. The Absa takeover underlines the fact that Lovells is in the cold for Barclays' next set of acquisitions.
Meanwhile, Freshfields has been hunting for a major banking client ever since RBS chief Fred Goodwin effectively sacked the firm and brought in Linklaters a couple of years ago. Hence Freshfields' wooing of HSBC, particularly in Asia, where it identified a weakness in Norton Rose's flanks.
Norton Rose's line has hilariously been this: that its exile from Hong Kong after the collapse of its joint venture with Johnson Stokes & Master made no real difference to its Asia practice. Rot, of course. Norton Rose's absence gifted an opportunity to Freshfields, and it's paying the price now.
Even more worryingly for Norton Rose, The Lawyer has learnt that HSBC has identified three law firms for high-level London corporate work - understood to be Clifford Chance, Freshfields and Norton Rose. Sure, Norton Rose could well still get the next own-account corporate job, but Freshfields' track record in Asia and Clifford Chance's success with Barclays ought to jolt it out of its complacency. Instead of bleating about a historical relationship, Norton Rose partners might want to start hanging round Canary Wharf a bit more.
It's hard to see how Norton Rose or Lovells can stop this migration to the magic circle. Both second-tier firms have the technical expertise and decent enough resources for financial institution M&A, but neither has quite as convincing offerings on banking regulatory advice, let alone the global brand.
One suspects Norton Rose and Lovells will find it increasingly hard to rival the magic circle's firepower. More importantly, they aren't rivalling the big boys' raw hunger, either.