Barring an unlikely revival in big-ticket M&A in the second half of the year, the key deal leagues look likely to be remembered chiefly as the BHP/Rio tables, so complete is the grip of the £114bn mining merger bid on the key tables from Mergermarket.

As reported by Legal Week, a starring role for Rio Tinto has helped propel Linklaters to the top of three key benchmarks for major City firms: global, European and UK. As Linklaters also topped the Asia-Pacific ranking, short of a miracle storming of the closed shop that constitutes US M&A, Silk Street has as good as secured a clean sweep. As far as the deal rankings are concerned, the firm now has a near-unassailable position for the year. There are also 13 other ranked law firms, including Slaughter and May, Allen & Overy, Lovells and the Herbert Smith alliance, that have been lucky enough to see their deal profile get the BHP treatment, but Linklaters remains well ahead.

But as the position of a handful of large mandates is heavily distorting the key tables, the underlying figures are more illustrative. So while it is clear that £5bn-plus bids outside a very select handful of sectors have dried up, as have £1bn-plus private equity deals, the detailed breakdowns actually illustrate a surprising resilience in global deal markets.

Mergermarket ranked 1,295 announced bids in Europe in the three months to the end of June, down from 1,407 in Q1. But considering the turmoil the global economy has been through, deal activity — a far more reliable indicator for law firm activity than value — has hardly fallen off a cliff: judged against the record three months of Q2 2007, the number of deals has fallen only 19%. In contrast, on a value basis the same comparison registers a 67% plunge. A similar pattern is shown in the global statistics, down from an all-time record of 3,926 in Q2 2007 to 2,993 in the same period this year. Coupled with the shortage of larger deals, this is a substantive drop, to be sure, but when you consider that global deal activity was frequently below 2,000 deals a quarter back in 2003 and was not getting above 3,000 a quarter regularly until 2005 on Mergermarket’s criteria, it’s a good way from collapse.

Viewing deal performance in terms of volume, it is also apparent that the City’s big four international firms are not loosening their grip, with Freshfields and Clifford Chance (CC) both bringing in a respectable number of deals despite lowly value rankings.

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As interesting are clear indications that larger UK law firms have substantially increased the number of corporate mandates coming through the door in Q2 despite the underlying drop in deal activity.

So, for example, while Mergermarket’s figures had Linklaters winning 40 European deals in Q1, in Q2 the firm was ranked on no less than 68. A similar pattern is recorded across the magic circle with CC securing 60 ranked mandates in Q2, against 38 in the first three months of the year.

This pattern is not confined to the magic circle, with firms such as DLA Piper and White & Case managing to soak up market share in the second quarter. The assumption has to be that these firms are now aggressively pricing and hustling to win business and it is smaller firms that are suffering in comparison.

It is not yet clear who will be the biggest victim of this mid-market push — the traditional mid-tier like Berwin Leighton Paisner or the larger chasing-pack firms such as Simmons & Simmons that have emerged as such strong performers in 2007-08. But one way or another, someone’s going to be going hungry soon.

Related Articles

• Elite firms push into mid-market M&A as battle heats up for fewer mandates
• BHP/Rio role helps power Linklaters to lead four key M&A leagues in H1

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