London’s legal market has solidified its position as one of the City’s most resilient sectors after a year of strong financials and high pay packets.
Despite the double whammy of Brexit and pandemic uncertainty, UK and US firms have managed to secure some of the most remunerative work and solidify London as a leading global force.
The Lawyer’s City 50, which measures the London revenues of both US and UK-headquartered firms operating in the capital, reveals an upward trend. Total revenue climbed to £10.6bn this year, up from £10.1bn in 2019 and £9.5bn in the previous year.
And partners enjoyed bumper pay packages as average revenue per partner (RPP) among the 50 firms grew
While this has in large part been helped by huge revenues among the larger US firms, The Lawyer’s ranking shows the UK’s elite corporate firms – collectively known as the Magic Circle – continue to dominate the top spots.
Linklaters retains the lead becoming the first firm to break the £700m City revenue after posting a six per cent rise in London revenue from £695m to £737.9m.
Allen & Overy, Clifford Chance and Freshfields all kept their positions in the top four although Slaughter and May dropped to sixth as CMS entered the top five.
The City 50 ranking reveals how the large US-headquartered firms have consolidated their presence in the capital as Kirkland & Ellis reported a 23 per cent rise in London turnover to £348.6m to take the eighth spot.
Rival Latham & Watkins is shortly behind, increasing revenue by 21 per cent to £336.9m.
“Together with White & Case, and the four global magic circle UK firms, Kirkland and Latham have formed an identifiable group of seven, high-earning, high margin legal businesses powering the City”, said Matt Byrne, deputy editor of the Lawyer.
The total London turnover of this group has grown by 48 per cent from £2.29bn to £3.39bn in just six years.
The City’s top firms
|Rank||Firm||HQ||London revenue (£m)|
|2||Allen & Overy||UK||633.3|
|4||Freshfields Bruckhaus Deringer||UK||483.8|
|6||Slaughter and May||UK||431.0|
|7||Herbert Smith Freehills||UK||380.0|
|8||Kirkland & Ellis||US||348.6|
|9||Latham & Watkins||US||336.9|
|11||White & Case||US||264.0|
|12||Norton Rose Fulbright||UK/US||238.7|
US firms lure junior lawyers as market share increases
The growing presence of US firms in the City has been well-documented with market share for many of the top firms increasing rapidly since 2014.
The proportion of Kirkland’s turnover generated in London has doubled from 8.9 per cent to 17.8 per cent in just six years, while Latham’s London turnover has grown almost 70 per cent, according to the Lawyer’s research.
“This speaks volumes about the top US firms’ success in utterly transforming the London market dynamics, not to mention the impact it has had on the likely career path of many a young lawyer,” Byrne said.
US firms have pursued an aggressive laterals strategy which has seen them poach some of London’s best talent with the promise of top salaries.
US firms are considerably more financially secure, particularly in the wake of the coronavirus pandemic which saw some UK firms pause pay packages and furlough staff.
Between March and October this year 1,514 deals were announced in the UK valued at $148bn, compared to 6,877 deals in the US worth a staggering $788bn.
The chequebook approach has been going on for a while to lure junior lawyers away from the prestigious Magic Circle firms with promises of six-figure NQT salaries.
A&O and Freshfields offer newly qualified lawyers salaries of £93,000 and £100,000 respectively, considerably higher than salaries offered by smaller firms.
But it pales in comparison with the £150,000 paid by Kirkland and £130,000 by White & Case and Latham.