Ashurst tries on Herbies’ elephant trap for size

What is it about Herbert Smith’s elephant trap that seems so tempting to other law firms? Despite recent years giving repeated proof that, for quality law firms with global aspirations, the one thing that you do not want to get sucked into is the magic circle debate, there are plenty still queuing up to give it a go.

And so here comes Ashurst, which has taken of late to putting forward a hypothesis about seven firms in the City pulling away from the rest of the market. Obviously, they’re in the club. This could be taken to have side-stepped the magic circle issue, but such hyperbole tends to not end very well for law firms who make such claims.

The reason is plain. There are five firms (and arguably only four) that have pulled away from City rivals on the global stage. London’s big four dwarf their rivals in size and, perhaps more importantly, are operating in a different league from their nearest rivals in cross-border M&A and banking and securities work.

The last yardstick quality outfits that have a real chance going places like Herbert Smith and Ashurst want to be judged by is that of the magic circle. That raises expectations to a level they cannot yet sustain and actually neutralises one of their key selling points – that they are seen as hungry and with less complacency and more client focus than their larger rivals.

One reason that firms sometimes get suckered into taking this line is because they are competing so often with magic circle. The mistake is not realising that this illustrates the all-pervading ubiquity of the magic circle more than their own elevation. Eversheds probably finds itself competing more against Clifford Chance than DLA Piper these days - but what does that tell you?

In Herbert Smith’s case, the firm finds itself in the odd position of being criticised as it goes through a slower period by the same people who put the magic circle tag on it in the first place (though it could have done more to reject the tag). Recent times have been kinder to Ashurst, which has put in two years of excellent performance and has much to be proud of. But keeping pace with the magic circle for a short period does not mean you have joined the club – the distance is far too great to be closed in that time. Ashurst will have to outperform for a decade and probably make a couple of masterfully-successful market bets along the way to justify such claims.

The truth is that, while no one is impervious to competition over the long term, it is hard to see any City law firm closing the ground with the magic circle for years, at least in attempting to replicate the model that the group have already used.

Far better for firms like Ashurst to look for ways in which they can differentiate themselves, culturally, in client services and practice lines. There is still a lot to play for - there’s just not much point playing a game that someone else has already won.

Alex Novarese