At first blush, the results of Legal Week’s annual
US firms in
London survey appear contradictory. On the one hand, nearly half of the top
US firms in
London are now open to the idea of a merger. On the other, more firms than ever are taking on trainees and around half now say they have full-service offerings in the capital. The number preparing to launch new departments has also crept up. This suggests a commitment to long-term investment rather than desperation for a tie-up.
Look a little closer, though, and a pattern does emerge. The weak dollar and uncertain US economy have hurt US firms’ buying power in London. A willingness to take on trainees is more of a defensive move than an aggressive long-term plan, if only because hiring senior partners has become that much more difficult. The US firms’ London arms are also coming under increasing pressure from headquarters to deliver, so upping assistant-to-partner leverage makes good business sense.
The desire to open new departments and work towards full-service offerings could also be interpreted as a defensive move. It is a route most US firms are taking only reluctantly and reflects the harsh reality of conditions in this highly competitive market.
Expensive full service capability was certainly not part of the game plan of the leading New York firms when they launched in London decades ago. Back then, they would have been hoping to cream off the top-tier transactional mandates from the magic circle with the help of just a few decent corporate hires. While the strategy may work in other jurisdictions such as Paris, it has proved problematic in London.
How apt, then, that this research comes in the same month as a series of moves between mature US practices. William Charnley’s defection from McDermott Will & Emery to Mayer Brown and Wilmer Cutler Pickering Hale and Dorr’s hire of Shearman & Sterling executive compensation counsel Paula Holland illustrate the extent to which the battle is no longer just against the UK firms.
In truth, the survey highlights an overarching trend that has been apparent for the last couple of years. US firms have not enjoyed the degree of success in London they had once hoped for and are having to rethink their strategies. For now, at least, the time has never been better for a transatlantic tie-up — only this time it is the UK firms who can afford to be picky.
