The aggressive hiring pursued by US law firms in London is winning them market share at the expense of their UK rivals, research published today said.
US law firms operating in the UK averaged 5.8 per cent lawyer headcount growth last year, according to the report from Thomson Reuters and Acritas.
Demand for American law firms in the UK grew 4.5 per cent last year, compared to the US firms’ overall demand growth of only one per cent, making the UK a “highly attractive market,” the report said.
US firms such as Kirkland & Ellis, Weil Gotshal & Manges and Latham & Watkins have used their financial firepower to repeatedly hire partners from the Magic Circle in the UK market.
Roger Barron, a former Linklaters corporate partner who joined US firm Paul Hastings in 2018, said the London offices of US firms were attractive to clients needing advice on cross-border deals.
“There is a lot of cross-border activity, whether it is for US clients or not, where US market practice and UK legal expertise merge and UK lawyers at US law firms are well-placed to provide that advice,” he said.
Practices areas such as litigation, tax and employment at US firms in London grew headcount by more than seven per cent last year, often at the expense of UK firms.
The report said UK firms should be concerned by “this exodus of top talent”.
On average, 27 per cent of a fee-earner’s work follows them to a new firm, according to Acritas’ research.
“A proactive approach to retaining both people and clients is essential to protecting this income,” the report said.
However, the US firms have not had it all their own way. The research shows that expansion of headcount has exceeded the amount of work coming through the door, leading to a fall in the level of lawyer utilisation.
Intellectual property, real estate, tax, employment, corporate general, and litigation all have lawyer growth that exceeds their individual level of demand growth, resulting in declining utilisation, the report said.
“It could be that US firms are attempting to gain traction in the UK market through laterals…or it could be that they expect demand in these areas to pick up in the future,” the research said.
“Either way, however, it is clear that current hiring practices relative to demand levels in the market are not sustainable.”