Tony Angel, managing partner, Linklaters
On 2007:
“It may turn out to be remembered for the credit crunch more than anything else, but the bigger picture is that it was the year that London really emerged as the leading international financial centre. The magic circle has been able to leverage off the back of this success and have emerged as world-class players.”
The future
“Next year is potentially very turbulent but in these markets some people – those who have cash and courage - do extraordinarily well and law firms will be the same. There will be big opportunities for us but we’ll have to be very fleet of foot to identify those areas of business where things are really happening. There will still be M&A deals it’s just a question of who’s doing them so for firms it’s a question of building the right relationships. I would hope some of the diversification we’ve already made will help us.
On Linklaters:
“We have made some very senior management transitions in the firm and that is always a challenge, but it has gone quite smoothly and that has been an achievement. This was the end of our three-year market leadership initiative and the whole firm has got behind what we tried to do. It is a bit like the A-Team — I love it when a plan comes together.”
Simon Bromwich, managing partner, Ashurst
On 2007:
“The year has seen some huge deals — of which we have had our fair share — and that might change in 2008 when the size of deals might be expected to fall off. The mega-private equity bid has probably disappeared for a while but there could be a renaissance in trade-buyer deals and deals could move eastwards.”
On Ashurst:
“This year Ashurst has continued to grow and increase its profitability and the partnership is committed to continuing that — even if the credit crunch means growth will not be on the same scale.”
David Childs, managing partner, Clifford Chance
On 2007:
“The good news is that 2007 will go down as a very busy year — indeed, it will be this firm’s best ever. The rise of the sovereign wealth funds has been very marked in 2007 and the year also showed the increasing shift in emphasis from West to East with the Middle East and Asia very busy. But people are surprised there is also still so much activity in London.”
On 2008
“There is a big question mark over 2008 given the risk of recession in the US. It will be the first time in a couple of years that we’ve faced a new year with this element of uncertainty around. It’s quite a different situation and we have to accept there may be less work around. We haven’t yet seen much of an uptake in litigation although everyone is talking about it and the same is true of restructuring.”
On US firms:
"On the basis that we – along with our rivals – have had a very good 2007 and will have grown at a faster rate than the US firms I would think there will probably be a further narrowing of the gap in profitability - particularly with the poor dollar exchange rate.”
On growth of the partnership:
“Most firms will be quite cautious going into 2008. We are certainly being cautious about hiring and will have to see if it impacts new partners.”
On work-life balance:
“Work-life balance is an issue that is not going to go away. All we can do is be more flexible with our working practices.”
Ted Burke, chief executive, Freshfields Bruckhaus Deringer
“It has been an interesting and active year. Although the disruptions in the financial markets have certainly had an effect on transactional activity, that effect has not yet been as severe as many feared. So we continue to be pretty busy in all of our offices and are particularly active in Asia and the Middle East.”
James Dallas, chairman, Denton Wilde Sapte
On 2007:
“The last two to three years have seen globalisation move up a gear each year. It has been a very good year, until recently, for anyone with anything to sell. For the first time in my career having cash for a business was not all that important.”
On the war for talent:
“There has been a real squeeze on people. Everyone was looking to pull in people to service their work and employers are becoming more awake to the need for a work-life balance. Alternatives to partner are becoming more popular. With profits per equity partner becoming the driver, people are keeping tight reins on letting in new partners. On the flipside, there are people for whom partnership is just not what they want.”
On the potential downturn:
"When the last recession hit, the US firms were not hit as badly as the UK firms in many ways because of the size of their disputes team. Some people are suggesting in addition that this time round the US firms are more clued up because US firms and banks have been more forthright about the problems. I don’t know what lessons the UK firms have learnt from last time, but we are certainly watching the figures very closely. The banks are certainly less bullish than they were six months ago."
Boyan Wells, capital markets partner, Allen & Overy
“The beginning of the year was very busy for structured finance; the debt and equity markets continued to be strong in a continuation of last year. The liquidity crunch hit and July and August were quiet. The summer is often quiet but this has flowed right through into winter with everything slowing down. Issuance has been much slower since the summer and opinion is divided as to whether this is a temporary blip or whether the market will remain slow for a longer period.”
Richard Dedman, senior partner, Barlow Lyde & Gilbert
“This year has seen a significant picking-up of disputes work that we see going on into next year. We have recruited successfully, having weathered the storm of lawyer departures, and are coming back strongly. We have embedded a new chief executive and implemented a new management structure which will make us even more effective next year.”
Chris Carroll, managing partner, Travers Smith
On the deal market:
“Cautious optimism is the catch phrase isn’t it? I would be cautious about being optimistic more like. I don’t really see any fantastic signs; am I missing something? The macroeconomic picture is definitely looking bleak. The conventional wisdom is that the big ticket, multi-jurisdictional deals have been hit whereas the mid-market is buoyant, particularly on the sell-side to take advantage of the capital gains opportunities handed out in April. Frankly, I think it is the final throbbings of a corpse. We still could steal the ship from the rocks of the storm but the signs are not great."
On work-life balance:
“Law firms are getting slightly better at the work-life balance situation. There are still plenty of dissatisfied people though. Having said that, it will right itself overnight in a slowdown. We detected the first signs of that in September, when the assistants become a bit less cocky. At the moment we still haven’t got enough people, in common with most firms. The weight transfers to the other side of the boat in a down-turn.”
On US firms in Europe
“US firms will struggle to grow by double-digit numbers, at least on the profit side. They have run out of levers they can pull: there are no more hours they can get out of their assistants; they can’t get the gearing up; and they can’t get the overheads down with increasing salaries. The US really might go into recession and as much as people might say the recession brings a different type of work, it is not as good for law firms. We all do better in the boom. They are definitely not doing so well on the cocky-ometer."
Chris Mullen, senior partner, Pinsent Masons
“Statistics show that the national firms have been doing well over the past year and this trend is set to continue, especially into next year if there is a slowdown. National firms are strong across the board, offering good lawyers and a high quality service at good value for money. This could set them apart from the mid-tier firms, which might find it more difficult next year."
David Frank, practice partner, Slaughter and May
“The first nine months of the year were very active, which was reflected in the degree of business. The markets are by no means dead and you only have to look at deals such as BHP/Rio Tinto to see that. Private equity has effectively dropped off a cliff. Despite the crunch, law firms are likely to say that 2007 has been a good year. The uncertain pipeline will be the only concern for people going into the next year."
David Stewart, managing partner, Olswang
“So far we have seen a resistant mid-market and corporate activity remains very high. We are cautiously optimistic but this has been our busiest billing month ever. It’s all about confidence in the economy and that is going to remain guarded for the next year. A number of firms have posted strong H1 results but the question is what will happen at the end of the year and have firms really been as busy in the second half. We are very happy with the second half so far. I expect more deals will fall over but other, cash-deals will replace them. Many businesses are sitting on substantial disposal hoards. There has been an increase in big-ticket litigation, but there has not been an explosion and insolvency remains quiet. The issue is the confidence in the mainstream economy without the cheap debt. The US economy is teetering on the brink of a consumer-led recession that could affect the entire economy.”
Talkback: What are your highlights (or lowlights) of the year? And how confident are you for 2008? Click here to have your say.
