For years it has been clear that the dominant international legal market trend was towards ever-larger firms with the financial muscle and international footprints to advise their equally globalised clients.
Have no doubt, today’s US results lend more credibility to that trend. Indeed, the breaking of the $2bn (£1.03bn) turnover barrier by both Latham and Skadden would appear to confirm the global elite mantra, oft spouted by consultants.
Both firms benefited last year from their investments in wide international networks, and their business models have marked similarities.
Take Latham. Approximately 80 per cent of the firm’s work involved more than one office in its network last year, while roughly 50 per cent or more involved more than one country.
Incidentally, a big chunk of that latter statistic equates to the London and New York axis, which is increasingly critical, not just for Latham but for any law firm with global pretensions. In four years the firm has doubled its turnover from $1bn (£510m) to $2bn.
Latham’s original overseas strategy was built on client sharing. As the Goldman Sachses, Credit Suisses and Carlyles expanded across the globe, the firm followed them, institutionalising them in the process.
The firm’s large footprint has also showed benefits as core private equity and investment bank clients have decentralised. A strong brand alone is not going to win mandates, it’s the relationships forged by being there on the ground that count. All of which raises a question: what do today’s results say about certain members of the New York elite, the Simpsons, Davis Polks and Debevoises of this rarefied world?Any significant expansion outside New York would require the heavy investment already covered by firms such as Latham and Skadden. It would, by definition, be hugely dilutive of profit. The debate is a perennial one, but US law firms are going to have to grapple with the question sooner rather than later.
The Lawyer opened its New York bureau last year. This week we’re enhancing our coverage by launching a twice-weekly email comment and news service, called The Lawyer in New York (which complements our UK-based Lawyer News Daily). The dynamic of the transatlantic legal market is fascinating – and we’ll be on the ground to cover it.
To find out more, go to www.thelawyer.com.