Don’t doubt the extent of the magic circle’s ambition. With the UK elites’ average profits now outpacing all but a few on Wall Street, that old dream of cracking the US suddenly looks less of a joke.
First it was Allen & Overy, which was rejoicing that its New York practice was turning over some $100m (£48.81m). And now it’s Clifford Chance’s turn. The firm has spent more than a year wondering how to differentiate itself from the rest of the magic circle, and it’s this: a gigantic US business that actually makes some money.
Letting the US practice chug along subservient to the rest of the global business would have been the easier option. It’s performing okay financially; reputationally, however, it’s nowhere near the standing enjoyed by Clifford Chance in Europe. So the firm’s explicit commitment to hike it up the Wall Street ladder is a bold move.
The strategic review – the first since the three-way merger in 2000 – puts the partnership’s weight behind the relaunch. Yet the fact that managing partner David Childs has had to affirm his personal commitment to the US at several partner conferences is a clue to how sensitive the issue has been internally.
Clifford Chance never really made the most of its merger with Rogers & Wells; the political fallout lasted most of the decade, compounded by that ill-fated foray into the West Coast market. The easy wins will be in regulatory and finance, where the firm can leverage its global brand almost immediately. Corporate – an area crucial to its standing on Wall Street – is a harder proposition.
Plateau partners now earn well over $2m, so it is highly unlikely that Clifford Chance will have to use ladder three – the super-equity ladder granted to the US after its last bit of lockstep tinkering. That ladder is theoretically available for star performers, but memories are still raw after the disastrous super-pointer experiment a few years ago.
In any case, the strategic review also coincides neatly with a statement of the firm’s principles. Among them is this: “We believe in the power of collaboration, collegiality and teamwork” – code for lockstep, if ever there was one. The good news for Childs is that his firm’s buying power is now unprecedented. Success may be in the timing.