An American law firm in London
Even after more than two decades in London no major US law firm has broken through in terms of market share and reputation; could things be about to change? An article by Jomati Consultants highlights a recent, dramatic uptick in US firm penetration of top tier M&A in the London market. Of course, one swallow doesn’t make a summer but, at the same, time swallows and summers are quite well correlated!
Holding back the tide
More broadly though, despite big investments sustained over many years, the US firms have not made the inroads they might have expected. A recent survey in The Lawyer reported the surprising findings that many associates at UK firms knew nothing much about US firms in London and had even less interest in joining them. Similar surveys among clients indicate the same thing; in the UK legal market place, the natives still dominate.
Brand awareness and reputation are, of course, very important both for recruiting the best talent and the biggest and most valuable clients.
Some US firms have done better than others. Weil Gotshal, Dechert and Quinn Emanuel have built relatively strong franchises in London by focusing very tightly on two or three key practice areas and industries (e.g. private equity, financial services and litigation respectively) and others, such as White & Case, Mayer Brown and Baker & McKenzie, have managed to build relatively large multi-practice group offices which serve local clients as well as collaborate with their US and other international offices on cross-border work. In The Lawyer survey Baker & McKenzie scored highest out of all the US firms in terms of being the one that associates would most like to join.
Ahead of the curve
The legal market is an anomaly. In almost every other area of professional services the Americans have gone a lot further. The US brands now dominate the London market and the UK incumbents have either been gobbled up by them (remember Peat Marwick), gone bust (Barings) or have clung on as relatively diminutive boutiques (Rothschild).
So, why have the Brits managed to retain their dominance in the legal market when their former professional service peers have failed and what can the US law firms do to change things?
One reason behind the success of UK law firms is that they have been more innovative and professional in their globalising programmes. The biggest UK firms put much more time, energy and effort into marketing and business development than their competitors in the US and they are managed more like large multi-national businesses than cosy partnerships. Not to everyone’s liking it must be said. Led by the Magic Circle firms (the largest and most prestigious of the London firms), the UK firms expanded eastward, first into Europe and the old Asian colonies (Hong Kong, Singapore), then latterly into the emerging BRIC economies. They then quickly consolidated their lead and built strong marketing and business development functions to grow their presence and establish strong brands locally, often moving straight to the top of the local market with a big merger (e.g. Freshfields and Bruckhaus Deringer).
So, what next?
If the US firms want to change things in their favour, they will have to become much more ambitious in their brand building, marketing and business development – both at home and abroad. Although the domestic US market remains huge – still roughly 50% of the total global market – and there’s virtually no foreign competition, there are signs of flattening. Certainly, there is realisation that the US market can no longer be relied upon for double-digit annual growth any time soon. Rapidly growing globalisation and the changing centre of economic gravity towards emerging markets is likely to persuade them that they must develop their brands globally and then they will almost certainly decide that London is the best place to do it from.