Slaughters and friends feel the heat

CITY solicitors are hooked on league tables, and the latest one feeding their addiction is a new ranking that details which law firms are bagging FTSE 100 instructions. Movement at the top has got tongues wagging, as the historically dominant Slaughter and May has seen its position challenged for the first time in years, triggering speculation that the practice&rsquo;s long-standing international strategy may have to be reviewed.<br /><br />To be fair on the firm, the rankings compiled by investment researcher Hemscott illustrate how ostensibly subtle changes can cause the rumour mill to churn. Slaughters has been equalled at the top of the FTSE 100 instructions list this year by Linklaters, as both firms now each have 25 companies on their books.<br /><br />The change is small, but any perceived slip by the old-school tie Slaughters &ndash; which has a reputation for being the natural repository of Eton and Oxbridge-educated lawyers &ndash; triggers speculation.<br /><br />At the heart of the issue is the firm&rsquo;s long-standing policy of eschewing the magic circle trend for overseas offices in favour of a network of &ldquo;best friends&rdquo; in key jurisdictions around the world. Some suggest that the policy has run its course, and the rise of Linklaters&rsquo; position in the FTSE 100 table illustrates that its tactic of having one&rsquo;s own outposts abroad is proving more efficient and profitable.<br /><br />Remarks an experienced City legal market commentator: &ldquo;Global law firms can offer genuinely global solutions. Slaughters say to their clients: &lsquo;Hang on, we&rsquo;ve got a best friend in that jurisdiction &ndash; so we&rsquo;ll get back to you once we&rsquo;ve spoken to them.&rsquo; But FTSE 100 companies prefer to instruct firms in a truly global context.&rdquo;<br /><br />Linklaters has consciously marginalised litigation work in its mission to become a world leader in big-ticket transactional instructions. And many view the firm as leading both the UK and the US practices in that field, having had a significantly upbeat period &ndash; overtaking Clifford Chance as the UK&rsquo;s biggest law firm, despite the downturn.<br /><br />Explains Linklaters&rsquo; global head of corporate, David Barnes: &ldquo;We have recognised that for better or worse the world has become a global place and a lot of big clients by definition have become very large in a number of different centres. A couple of our biggest clients are HSBC and BP and we act for them in a number of places all over the world. That global reach perhaps gives us greater opportunities to work with large companies than other firms.&rdquo;<br /><br />However, Linklaters is certainly not crowing, and Slaughters seems sanguine. &ldquo;Our position over a longer period than just one quarter has been improving regarding both FTSE-100 and 250 representation,&rdquo; says corporate partner Paul Olney.<br /><br />So what do the numbers tell us? &ldquo;Are Slaughters about to disappear?&rdquo; asks one City practitioner rhetorically. &ldquo;Certainly not,&rdquo; is his own response. He also asks: &ldquo;Over time, might they become more UK focused than internationally focused?&rdquo; His answer is: &ldquo;Yes.&rdquo; <br /><br />The conundrum for Slaughters is that competing firms devote massive resources to becoming internationally &ldquo;joined up&rdquo; &ndash; ie, getting partners in practices in jurisdictions around the world to work together. It is something that global clients now expect as a matter of course and arguably something that is much more difficult to achieve with the Slaughters model.<br /><br />Still, Olney is confident that Slaughters has the right formula: &ldquo;The best friends strategy is favoured by a large number of our multi-national clients &ndash; including major companies such as Shell, Unilever and British Airways. It is not the only strategy available to law firms, but it is a plausible alternative that has served both us and our clients well over the years.&rdquo;<br /><br />Nonetheless, City eyes will increasingly be trained on Slaughter and May to see how much longer it remains the best of friends with its network.