Clifford Chance
When people refer to global law firms they generally mean Clifford Chance (CC) — the world’s largest law firm, with an annual turnover of more than £1bn.
While other firms such as Baker & McKenzie have also spread out around the globe, CC is one of the few that can handle top-tier work through sizeable offices across Europe, the US and Asia.
This was not always the case. Its
For a few years, this hit CC’s profits per equity partner (PEP) figure, which fell so low that some started to question its status as a magic circle firm. PEP subsequently recovered to a respectable £810,000, thanks partly to an effective cost-cutting drive by current managing partner and former chief operating officer David Childs.
CC’s finance credentials mean it is often closely benchmarked with magic circle rival Allen & Overy (A&O). Partners such as Mark Campbell and Malcolm Sweeting are renowned for their investment banking links. But CC is also highly-regarded in the lucrative private equity industry, acting for clients such as Permira, CVC Capital Partners and Blackstone.
Being a top City firm, the culture is understandably hard-working. Lawyers are expected to bill around 1,700 hours a year and finance-driven firms do tend to suffer from fairly high staff attrition. Although this is not unusual in such a large institution, the firm’s management is looking at the issue and is considering a range of work-life balance initiatives, as well as bringing in an ‘of counsel’ role as an alternative to partnership.
Linklaters
Many would argue that Linklaters is the best all-rounder in the City, with clients including BP and Vodafone as well as Barclays and the Royal Bank of
Its financial results speak for themselves. Under outgoing managing partner Tony Angel, the firm has grown rapidly. It is on track to break the £1bn mark in revenues this year after reporting a 22% increase for the first half of the financial year, with turnover hitting £536m. And its
Linklaters offers decent partnership prospects — making up 38 this year, with many going straight into the equity — and has a good record of building the careers of its younger partners. Corporate partner Charlie Jacobs and new firmwide managing partner Simon Davies are examples of those fast-tracked to work with older names, such as highly-respected senior partner and ex-corporate chief David Cheyne.
Recently the firm has been rebuilding its private equity practice following a few departures last year. It has hired high-profile names including CC partner Ian Bagshaw and Freshfields banking partner David Ereira.
With offices across the world and a particularly strong presence in
Be warned though — results like Linklaters’ do not come without a price. While those within the firm boast of its collegiate nature, its management is seen as more ruthless than many of its peers.
Freshfields Bruckhaus Deringer
Few would dispute Freshfields’ barnstorming performance across the European deal market in recent years. The firm has comfortably established itself as the continent’s leader for cross-border M&A.
Freshfields has acted on an amazing proportion of big-ticket deals. Highlights last year included acting on headline-hogging takeovers of P&O and airports operator BAA.
The firm has acted for the Bank of England for hundreds of years (it is one of the City’s oldest surviving law firms) and acts for Tesco and private equity houses including Cinven.
On the corporate side, it houses top names including Mark Rawlinson and Tim Jones as well as up-and-coming partners such as David Higgins.
Yet the strength of Freshfields’ recent performance has arguably been overshadowed by a radical restructuring of its partnership, which until recently had been one of the most conservative in the Square Mile.
The firm changed its pensions scheme to encourage around 40 partners to take early retirement to maintain favourable terms, while it also introduced a rank of ‘salaried partner’, which is understood to have resulted in the demotion of approximately 30 partners.
The profits drive has done nothing to aid prospects for partnership at the firm. Just seven of the firm’s 24 promotions were in
However, the firm has attempted to address some work-life balance issues among its associates and recently held an associate away day, after which it changed a dodgy-looking reception carpet in a bid to prove it really was listening to its staff.
Allen & Overy
Allen & Overy (A&O) is best known for its reputation in top tier finance work. Its international capital markets, general bank lending acquisition finance and project finance departments hold close links to the world’s leading investment banks and regularly secure roles on the financing side of the largest M&A deals.
This reputation has frequently played to the detriment of its corporate department, which although respectable lacks the gravitas of its magic circle rivals.
The firm’s PEP has slipped down the tables in recent years. While its current figure of £788,000 represented a 10.5% rise and should not be sniffed at, the firm lags the rest of the magic circle and its international capability is not as strong as Linklaters, Clifford Chance or Freshfields Bruckhaus Deringer.
The firm has also suffered from some notable partner departures in the last two years. One of the most well-known was finance partner Stephen Gillespie, who left to join
A&O has traditionally been one of a number of finance firms associated with high associate attrition and has a long hours culture.
However it has recently introduced a raft of measures to address ‘work-life’ balance issues raised by young lawyers at the firm. Measures include an associate bonus to reward top performers, a ‘counsel’ role as an alternative to partnership and flexible working options such as a two-year sabbatical.
Prospects for making partner remain high, with the firm promoting 32 partners this year and 33 the previous year.
Lovells
There is no hiding that Lovells has had a difficult few years. The firm has lost a steady stream of partners to rival firms and endured a protracted review of its lockstep partnership model which ended up producing very few major changes.
That said, the firm argues it has now been through the worst. Last year, PEP rebounded by 34% to reach £572,000, although the figure had dropped in the previous few years.
For those keen to make partner, its promotion rates are pretty impressive. Lovells made up a massive 31 new partners this May — equivalent to around 10% of its partnership. The firm is also making a concerted effort to nurture its junior ranks. This year
it introduced a senior associate rank and is considering alternatives to partnership, such as an ‘of counsel’ role.
This is being combined with a crackdown on performance by the firm’s management, keen to improve its profitability. But, for the time being, it is unlikely to lose its reputation for being a nice rather than aggressive firm.
Lovells may not have the M&A reputation of magic circle firms but it has a strong client list including SABMiller, Prudential and BNP Paribas. It also offers a broader range of practice areas than some City rivals with real estate, insurance, intellectual property and litigation all well regarded within the firm.
The firm is one of the largest in the country, with more than 3,000 staff across 25 offices in Europe, Asia and the
DLA Piper
Such has been the rapid growth of DLA Piper, few remember how the international giant actually originated in
Since branching out from its northern heartlands in the 1990s, the press-savvy firm has become synonymous with the legal industry’s domestic and international expansion of the last 10 years.
The most dramatic step came in 2005 when it merged with US firms Piper Rudnick and Gray Cary Ware & Freidenrich to become one of the world’s biggest legal operations.
The firm has also grown through countless lateral hires and internal promotions. Notable hires include the capture of an 11-partner
The firm has also promoted more partners than any other top
The growth, much of which has been attributed to high-profile chief executive Nigel Knowles, has also seen the firm forge a credible presence in
Crucially, the firm boasts PEP of more than £600,000, though this is in large part due to its sky-high assistant-to-equity-partner ratio, which is significantly higher than most top 50
Slaughter and May
The most profitable firm in the
Many of the firm’s clients date back to early last century and include
The firm operates almost as an M&A boutique, but this does not hinder its capability to handle major transactions. Recent deals include advising the General Electric Company on its $4.8bn (£2.4bn) acquisition of Smiths Aerospace and Corus on its £4.4bn offer from Tata Steel.
Slaughters has also just landed the mandate to advise on the £2bn Olympic Village development for 2012 and it houses the City’s best-known corporate partner, Nigel Boardman, who is famous for successfully defending M&S from hostile bids in recent years.
Still, this sort of elite operation does not come without downsides.
Many criticise the firm’s refusal to enter the international scene. It may be called a magic circle firm, but in this way it remains very different to its rivals. Instead of having overseas offices, the firm holds alliances with an elite grouping of similar top-tier firms in individual jurisdictions.
While it is way too soon to predict the demise of the
Eversheds
With offices throughout the
The sheer scale of its 10-office
This has caused management to overhaul its governance structure — which included the appointment of managing partner David Gray as its first-ever chief executive — and ditch its traditional ‘modified lockstep’ model in favour of a more modern ‘eat-what-you-kill’ format.
The changes represent part of a wider drive to boost the firm’s profitability. National firms’ partner profits usually lag those of their City counterparts, and Eversheds is no different, with PEP of £422,000.
However, the firm last year unveiled an ambitious growth plan for its London office, which it hopes will achieve £110m turnover and average partner profits of £600,000 by 2009, as well as a renewed focus on the corporate, projects and financial services sectors.
The firm acts for a number of household names including DuPont, Tyco and Adidas but often secures its best mandates outside of
Prospects for making partner at the firm are good. The firm promoted a record 30 lawyers this year and made up 24 the year before.
Herbert Smith
Ask anyone at Herbert Smith and they will tell you the firm is part of the magic circle. It has been a sensitive issue for a long time.
In reality, the firm is not generally regarded in quite the same class as the elite five. Much of this is due to its corporate practice, which acts for clients including Warner Music, Essar and Standard Life but lacks the same prowess as its larger rivals bar A&O. It also holds nothing like the same investment banking links or international presence.
In addition, the firm has a greater number of salaried partners than its rivals. This boosts its PEP, which stands at an impressive £839,000.
However, Herbies still stands tall among the City’s commercial firms, especially in litigation, where it boasts senior partner David Gold — perhaps the
Credit should also be given to the firm’s real estate practice, which has come to be regarded as one of the City’s finest, although it recently lost highly-rated partner Chris de Pury to Berwin Leighton Paisner.
Herbies operates a different international strategy to many other top
That said, the firm did open in
Simmons & Simmons
Simmons & Simmons is often thought of as an unlucky firm. Throughout the last decade it has suffered from a series of big-name partner departures.
In more recent years, however, the firm’s path has become considerably less bumpy. Managing partner Mark Dawkins is credited with realigning its practice areas and focusing on improving the firm’s financial performance, which currently sees Simmons achieve PEP of £470,000.
The firm has a number of niche areas for which it is well known. It is strong in the hedge fund sector, under partners Jeremy Hoyland and Richard Perry, and has landed a number of deals with banks including Deutsche Bank and JP Morgan. Its corporate department holds clients including HMV, Telefonica and New Look. However, it now handles less work for historical major clients such as the Ministry of Defence — which reshuffled its advisers last year — and the now-defunct Railtrack.
Simmons is regarded as less of a sweat-shop than its top-tier City rivals and was one of the first firms to address the work-life balance issues facing most major commercial firms. The firm’s former senior partner and employment guru Janet Gaymer drew up a flexible working scheme in which lawyers would have greater control to choose the hours they worked. The scheme appears to have lost momentum under Simmons’ new management, although it has recently introduced a new role of ‘counsel’ as an alternative to partnership.
For more inside information on the top 50
The article appears in the Spring 2007 edition of the Legal Week Student supplement. Click here for a full list of articles. To order a hard copy email ben.martin@legalweek.com or ring 020 7004 7422
Legal Week Student Spring 2007