GLOBAL 100
ALL YOU CAN EAT The insatiable appetite of the world’s largest law firms
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THE LB GLOBAL 100: CONTENTS
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THE LB GLOBAL 100: CONTENTS
GLOBAL 100 LB GLOBAL 100: FEATURE AND ANALYSIS OF THE TOP 100 FIRMS MAIN FEATURE ‘SLICE BY SLICE’ Chart Global 100 change in leverage Chart Global 100 total gross profits and revenues Chart Global 100 headcounts Box Partnership growth Box The ins and outs Box The currency effect Box PEP and revenue: biggest risers and fallers
48-63 50 50 52 54 56 58 60
LB GLOBAL 100 MAIN TABLE Key financials of the top 100 firms
64-67
GLOBAL EXPANSION FEATURE ‘TO THE ENDS OF THE EARTH’ Chart Global 100 Europe headcount (excl. London) Box The new hot spots – cities with the most office openings Box A one-way special relationship Chart Australian firms Chart Global 100 Asia headcount Chart Global 100 London headcount Box Where in the world Chart Global 100 US headcount Chart Global 100 distribution of lawyers by region
68-79 70 70 72 74 74 76 76 78 79
GLOBAL ELITE FEATURE ‘THE TOP TABLE’ 80-87 Chart Global Elite 82 Box The criteria 83 Box Corporate kings: 2010 a year of M&A deals for the Global Elite 84
VITAL STATISTICS
88-89
ENDNOTES Methodology and notes
90
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SLICE BY SLICE The Global legal market is stratifying at a pace never seen before. From the rocketing profits on Wall Street to the rapidly expanding global giants, which model paid off in this year’s Global 100? BECKY PRITCHARD AND RICHARD LLOYD
Whether your strategy is to devour the world whole, or take it piece by piece, financial centre by financial centre, global competition has never been fiercer. Bounding straight into the top ten of the Global 100 this year is the newly merged Hogan Lovells, while a dose of revenues from down under has seen Norton Rose rocket into the top 40. But while the likes of Hogan Lovells’ co-chief executive David Harris and Norton Rose’s chief executive Peter Martyr busy themselves in carving up the globe wholesale, the more conservative, US elements of the Global 100 are back in the business of making money. A lot more money. Leading contentious firms such as Kirkland & Ellis, Quinn Emanuel Urquhart & Sullivan and Paul, Weiss, Rifkind, Wharton & Garrison not surprisingly had stellar years in 2010, as counter-cyclical practices continued to drive business in the US. But then so did some of the more international denizens of Wall u
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$100m Since it merged in 2007 Dewey & LeBoeuf’s revenues have fallen by $100m
u Street. Cleary Gottlieb Steen & Hamilton’s long-term commitment to an international presence continues to pay off in spades – the New York firm saw revenues up 9% to just over $1bn while profits per equity partner (PEP) also increased by 11% to a little over $2.5m. Overall the picture is of a market back in the black. Total revenue for this year’s Global 100 stands at $76.35bn compared with $74.61bn last year. Profits are back on the rise after last year’s slight dip. Net income for the top 100 now stands at $29.16bn compared to $27.26bn in 2009/10. Profits are still some way off their 2007/08 peak of $29.95bn but the resilience that the market has shown throughout the economic downturn has been remarkable. Despite the improving financial outlook, firms have continued to keep a tight grip on headcount. The total number of lawyers in the top 100 is now 105,002 compared with 106,352 last year and down from the peak of 108,935 in 2008/09. The number of equity partners sharing from the profits pot decreased
GLOBAL 100 CHANGE IN LEVERAGE Equity partners
Other lawyers
1
4.9
1
5.0
1
5.4
1
3.7
2011
2010
2009
2004
marginally from 21,244 to 21,052 while the number of non-equity partners increased marginally last year to 12,847 from 12,803. It’s a small jump but it seems unlikely that this is going to lead to a period of sustained reduction of the non-equity ranks. Non-equity partners are a significant cost burden and by their very nature are not the rainmakers that firms need to generate business but they still have many advantages in terms of giving firms flexibility in less profitable practice areas and jurisdictions. As firms’ principal business generators, equity partner numbers have not surprisingly remained steady throughout the economic downturn. They’ve now hovered around the 21,000 mark for the past three years. It is firms’ associate bases therefore that have taken the hit. ‘The downturn hasn’t necessarily led to more partner-led matters but it has led to less demand for associates,’ maintains Rick Burdick, head of Akin Gump Strauss Hauer & Feld’s international u
GLOBAL 100 TOTAL GROSS PROFITS AND REVENUES Year
Total profit (% change on previous year)
Total revenue (% change on previous year)
2010/11
$29.16bn (+7%)
$76.35bn (+2%)
2009/10
$27.26bn (-2%)
$74.61bn (-6%)
2008/09
$27.84bn (-7%)
$79.12bn (+1%)
2007/08
$29.95bn (+18%)
$78.64bn (+17%)
2006/07
$25.38bn (+16%)
$67.21bn (+14%)
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THE LB GLOBAL 100
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THE LB GLOBAL 100
GLOBAL 100 HEADCOUNTS Year 2010/11 2009/10 2008/09 2007/08 2006/07
Total equity partners 21,052 (-1%) 21,244 (0%) 21,214 (+3%) 20,664 (+5%) 19,682 (+1%)
Total non-equity partners 12,847 (0%) 12,803 (+5%) 12,230 (+5%) 11,599 (+4%) 11,160 (+12%)
Total others
Total lawyers (including partners) 105,002 (-1%) 106,352 (-2%) 108,935 (+4%) 104,842 (+8%) 97,146 (+6%)
71,104 (-2%) 72,304 (-4%) 75,491 (+4%) 72,579 (+9%) 66,304 (+6%)
(-) Figures in brackets denote percentage change on previous year
u corporate transactions practice. ‘More
routine tasks can be done by lower cost providers,’ he adds. Most in the market would agree. But just how you capture more of the higher cost matters is where the differences start to emerge.
BACK IN BUSINESS For all the focus on the emerging markets, nowhere still comes close to matching the depth of the US market. The traumas of Lehman Brothers and the global financial crisis that followed have not had the profound impact on Wall Street’s finest that might have been expected. New York’s ability to corner the most complex, business-critical matters, fuelled by America’s predilection for high-stakes litigation, has kept the US elite performing in a manner that would make businesses in almost any other sector more than a little envious. Not all firms have rebounded this year – of the New York firms Cadwalader, Wickersham
& Taft, Shearman & Sterling and Weil, Gotshal & Manges all saw their revenues shrink – and for them there’s more than a little food for thought from the confident statements of their rivals. ‘Last year was a record breaker in every respect,’ trumpets Brad Karp, chairman of Paul Weiss. ‘We handled more multi-billion dollar litigation matters, bet-the-company regulatory matters and multi-billion dollar deals than at any point in the firm’s history,’ he adds. Paul Weiss’s contentious pedigree means that it’s no surprise that the firm reported such strong numbers. Among its highlight matters it acted for Citi in its dispute with Guy Hands’ Terra Firma over the acquisition of EMI. Of greater note is the firm’s relatively aggressive lateral hiring of a seven-partner corporate finance team from the New York office of O’Melveny & Myers in May this year. ‘Never before have we taken a group the size of the O’Melveny team,’ Karp reveals. ‘We’re trying to be strategic and opportunistic to secure our future path and to ensure that our practice
strengths are stocked with stars.’ As well as the O’Melveny team, Paul Weiss added an office in Toronto in April 2011 with the addition of two partners from Shearman & Sterling. But Karp cautions that the additions in North America aren’t going to be followed by the firm moving away from its policy of advising only on US law. ‘We think about our strategy every day. We’re mindful of other firms’ global strategies. But right now, our approach is paying enormous dividends for us in this environment and we have no plans to change it,’ he says. Cleary may not be able to match Paul Weiss’s lateral raid on O’Melveny but with the launch of a Hong Kong-law practice led by former Norton Rose partner Freeman Chan, and the upcoming launch of an office in São Paulo, the firm has reaffirmed its global credentials. ‘We’ve surpassed 2007 in terms of activity,’ says Steven Wilner, a New York-based Cleary corporate partner. ‘I think you’ve seen our u strength in acting on complicated matters
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52 Legal Business July/August 2011
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THE LB GLOBAL 100
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THE LB GLOBAL 100
2
u while the economy has been going through the downturn. It was the same story across all the top firms in the market.’ One firm that would certainly like to see itself bracketed in that group of top firms is Shearman & Sterling. The problem is that Shearman’s financials have slipped significantly against the rest of the market and revenues and PEP continued to fall last year – both by 8%. ‘The results of the firm over the last two years broadly reflect the wider economic pressures but also our willingness to invest,’ Shearman senior partner Rohan u Weerasinghe insists. He points to new
If you’re a recruitment consultant there’s still not a great deal to get excited about. The number of lateral partner hires made by the Global 100 has fallen for another year to 980. That’s down from 1,033 last year and 1,365 the year before. However, take K&L Gates out of the picture – it added 300 laterals in the previous two years largely through bolt-on acquisitions – and the numbers don’t look that bad. This year the US firm reined in its expansive tendencies somewhat, adding ‘just’ 51 laterals. The top five hiring firms last year, ranked as a proportion of total lawyers, were all American. Littler Mendelson took top spot, while Greenberg Traurig and Denton Wilde Sapte’s merger partner Sonnenschein Nath & Rosenthal also feature in the top five. The picture for senior associates with a close eye on partnership is a
GLOBAL 100 PARTNERSHIP GROWTH 2.0%
Lateral hires* Promotions**
As % of Global 100 lawyers
PARTNERSHIP GROWTH
Herbert Smith now has two more non-equity partners than equity, the first time that those with a profit share have been in the minority
1.5%
1.0%
0.5%
0.0%
07/08
08/09
09/10
10/11
* during financial year ** most recent round
little better. Promotions were back on the rise this year to 1,032, up from 878 last year and 1,152 the year before. McCarthy Tétrault and Kirkland & Ellis topped the list for most promotions relative to the size of the firm.
Kirkland is a perennial fixture in the top promoters. In the past three years the Chicago firm has made up 184 lawyers, about the same number as the entire Cleary Gottlieb Steen & Hamilton partnership.
TOP FIVE LATERAL HIRERS, RELATIVE TO SIZE Rank 1 2 3 4 5
Firm Littler Mendelson Sheppard Mullin Richter & Hampton Duane Morris Greenberg Traurig Sonnenschein Nath & Rosenthal
Region National (US) San Francisco National (US) National (US) National (US)
10/11 laterals* 31 19 28 68 20
As % of firmwide lawyers 4% 4% 4% 4% 3%
10/11 promotions** 32 70 13 28 44
As % of firmwide lawyers 5% 5% 4% 3% 2%
TOP FIVE ASSISTANT PROMOTERS, RELATIVE TO SIZE Rank 1 2 3 4 5
Firm McCarthy Tétrault Kirkland & Ellis Fish & Richardson McDermott Will & Emery K&L Gates
Region Canada Chicago National (US) Chicago National (US)
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THE LB GLOBAL 100
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THE LB GLOBAL 100
$573.2m Howrey’s revenues at its peak in 2008, before its collapse in early 2011
u hires in Brussels (the firm hired a team
from Howrey led by Trevor Soames) and Asia, as signs of the firm’s investment but which haven’t become accretive yet. However, if you compare it with Cleary – a New York firm with a similar international outlook and a traditional strength in capital markets – then the picture is startling. In 2001 Shearman’s PEP was around $100,000 more than Cleary. This year the latter’s profits outstrip Shearman’s by $1m.
To many, one of the defining traits of the downturn has been a flight to quality – the best work going to a familiar band of practices in New York and London. Looking at those firms that have made the greatest gains or at least maintained their relative market position then that looks broadly true. Client expectations might have gone up in terms of improving efficiencies but when a business-crucial deal needs to be done or piece of litigation won, they are still prepared to pay top dollar.
THE INS AND OUTS There are six firms leaving the Global 100. Howrey checked out for good after filing for bankruptcy earlier this year. While Dorsey & Whitney, Crowell & Moring and Finnegan, Henderson, Farabow, Garrett & Dunner all saw turnover nudge below the cut off of $337m. But that’s good news for the five new firms who entered the Global 100 this year: Berwin Leighton Paisner; Patton Boggs; CMS Cameron McKenna; Baker & Hostetler and Allens Arthur Robinson. There are now 82 US firms in the top 100 – the highest level since the survey began in 1999.
IN Rank (change) 9 (n/a) 85 (+20) 87 (+17) 96 (+14) 98 (+9) 99 (+4)
Firm Hogan Lovells Allens Arthur Robinson Baker & Hostetler CMS Cameron McKenna Berwin Leighton Paisner Patton Boggs
Turnover $1,644.6m $389.7m $386m $351.3m $345m $337.5m
Change n/a 19% 17% 12% 15% 2%
Firm Crowell & Moring Dorsey & Whitney Finnegan, Henderson, Farabow, Garrett & Dunner Hogan & Hartson Lovells Howrey
Turnover $327.4m $322.5m $318.5m
Change -3% -6% -9%
n/a n/a n/a
n/a n/a n/a
OUT Rank (change) 105 (-6) 107 (-9) 108 (-11) Merger Merger Collapsed
‘Low-cost providers may not have proven to be the best place to be over the last few years and people in the market may not have expected that,’ Cleary’s Wilner says. ‘I do think they’ll rebound because companies will want to staff up with lots of in-house lawyers.’ Akin Gump Strauss Hauer & Feld hasn’t made the same investment overseas as Cleary but its focus for the past year has been on its international footprint. ‘After an experience like the global economic crisis you come out of it very cautiously but we’ve recognised that there are a lot of opportunities to expand overseas,’ says Akin Gump’s Burdick. Through the course of last year and the first half of 2011, the firm hired seven lateral partners in its international offices and another two in the US that are focused on emerging markets. It also added a Geneva office in the course of 2010 with a team from the legacy Hogan & Hartson. Not exactly growth on the scale of a K&L Gates or DLA Piper but significant for a firm of 170 equity partners.
LONDON STALLING In London the picture is much less bullish than across the pond. Of the Magic Circle, Freshfields Bruckhaus Deringer and Linklaters are both largely flat, although Freshfields saw a 7% drop in profits. Clifford Chance’s profits rose again but ever since it saw PEP drop to £733,000 in 2009, it has been playing catch-up with its closest rivals. In financial terms, it’s still chasing their tails. (With the sterling still in the doldrums – this year we used an average exchange rate of £1 = $1.56128 compared with $1.56593 last year – UK firms’ figures haven’t been boosted against the dollar.) The current performance of the Magic Circle has echoes from the last period of economic turmoil. In the admittedly much more muted economic downturn that followed the bursting of the dotcom bubble in 2000, u
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u
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u the Magic Circle fi rms reached their profits nadir in 2003 and 2004. Freshfields’ PEP, for instance, hit a low of £675,000 in 2004, while Clifford Chance dropped to £562,000 that year. Today the UK’s leading practices are clearly better, meaning more aggressively managed, so that profits are unlikely to drop off in the same way as they did in the early 2000s. But it is another period of relative stagnation for the Magic Circle as they struggle to grow revenues and have done most of their cost-cutting to maintain profits. While the feedback from management is that there will be some growth to report next year, another macro-economic shock or two in the eurozone might cause expectations to be revised downwards. ‘We have become hardened to this long downturn and we feel on balance we’ve done pretty well,’ maintains Freshfields’ u
7%
Freshfields PEP dropped 7% this year, the first time the firm’s profits have fallen (in sterling) since 2004
THE CURRENCY EFFECT We present the Global 100 in US dollars, that means non-US firms are subject to fluctuations in exchange rates, so it gives a truer reflection of performance to see financial results in home currencies. For the Brit firms, once Norton Rose is out of the equation, turnover is up
Rank 5 6 7 8 34 38 41 56 68 70 74 77 79 80 82 84 85 86 89 96 98
Firm Clifford Chance Linklaters Freshfields Bruckhaus Deringer Allen & Overy Norton Rose Herbert Smith Slaughter and May Eversheds Ashurst Garrigues Minter Ellison Mallesons Stephen Jaques McCarthy Tétrault Freehills FIDAL Loyens & Loeff Allens Arthur Robinson Clayton Utz Simmons & Simmons CMS Cameron McKenna Berwin Leighton Paisner
Currency GBP £ EUR €
average exchange rate 1.56128 1.32433
REVENUE 2011 (home currency) £1,208m £1,200m £1,140m £1,120m £484m £465.1m £440m £355m £302m €352.8m AUS$503m AUS$494.4m CAD$430.1m AUS$474.6m €300m €298m AUS$444m AUS$442.7m £243m £225m £221m
AUS $ CAN $
a modest 3% and PEP up by around 6%. The five Aussie firms have fared less well with an average drop of 2% in turnover and a static PEP. The antipodeans account on a July to June financial year so numbers are for 2009-10, the low point for the global legal market.
(change from 2010) (1%) (1%) (0%) (7%) (58%) (3%) (2%) (0%) (3%) (6%) (3%) (-11%) (-5%) (-2%) (2%) (5%) (7%) (-10%) (-3%) (5%) (16%)
PEP 2011 (home currency) £953,000 £1,165,000 £1,308,000 £1,093,000 £485,000 £881,600 £1,753,000 £553,000 £721,000 €859.000 AUS$775,000 AUS$1,961,000 CAD$697,000 AUS$955,000 €140,000 €903,000 AUS$973,500 AUS$1,098,000 £458,500 £496,000 £667,000
(change from 2010) (6%) (2%) (-7%) (0%) (0%) (2%) (7%) (7%) (5%) (13%) (0%) (-3%) (10%) (-2%) (-4%) (13%) (21%) (-12%) (0%) (12%) (44%)
0.8777 0.9705
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PEP AND REVENUE: BIGGEST RISERS AND FALLERS While most of the UK market has been trying simply to maintain profitability, Berwin Leighton Paisner has been busy transforming its bottom line. In dollar terms PEP is up 46% – by far the biggest jump in the top 100 – to just over $1m. ‘The rise in PEP is straight off the back of our increased revenue,’ comments BLP managing partner Neville Eisenberg. ‘We haven’t been cost cutting and we’ve kept promoting a high number of partners.’ The firm’s relatively new overseas offices in Moscow, Singapore and Abu Dhabi are clearly proving a success but given that the vast majority of the firm is still based in the City, BLP has thrived in what has been a moribund domestic market for many of its rivals. Norton Rose’s merger with Deacons is the main reason that the UK firm has added almost $300m to its top line, making it the biggest climber in revenue terms and helping it jump 32 places in the top 100. Of the biggest fallers in revenue and PEP, Shearman & Sterling is the only firm to feature in both. The firm’s top line has now fallen from a peak of $921m in 2008 to $737m. It could clearly do with taking a leaf out of BLP’s book.
BIGGEST RISERS IN PEP Firm Berwin Leighton Paisner Arnold & Porter McDermott Will & Emery Fried, Frank, Harris, Shriver & Jacobson Kirkland & Ellis
% change in PEP 46% 31% 29% 28% 28%
PEP $1,041,000 $1,311,000 $1,457,000 $1,589,000 $3,097,000
% change in PEP -9% -8% -7% -4% -4%
PEP $186,000 $1,565,000 $2,042,000 $765,000 $1,156,000
% change in revenue 57% 31% 19% 17% 15%
Revenue $755.7m $550.5m $389.7m $386m $345m
% change in revenue -9% -8% -8% -6% -6% -6%
Revenue $648.5m $383.7m $737m $373m $429.5m $438m
BIGGEST FALLERS IN PEP Firm FIDAL Shearman & Sterling Freshfields Bruckhaus Deringer Squire, Sanders & Dempsey Covington & Burling
BIGGEST RISERS IN REVENUE Firm Norton Rose Quinn Emanuel Urquhart & Sullivan Allens Arthur Robinson Baker & Hostetler Berwin Leighton Paisner
BIGGEST FALLERS IN REVENUE Firm Dechert Fish & Richardson Shearman & Sterling Schulte Roth & Zabel Cadwalader, Wickersham & Taft Nixon Peabody
‘When you are a global operation it is in your nature to continue to grow but you have to ask whether it is the right growth.’ Andrew Moyle, Latham u managing partner Ted Burke. It’s proving tougher than ever just to stand still. Outside of the Magic Circle and the main story is the spectacular growth of Berwin Leighton Paisner. The firm is back in the top 100 this year (it last made the cut in 2008) having increased revenues by 15% to $345m and PEP by just under 50% to $1.04m (in sterling terms the top line increased to £221m with PEP at £667,000). The fi rm’s buoyant top line means that it has passed Clyde & Co, Bird & Bird and Pinsent Masons in revenue terms. ‘The key reason for the rise is that we continued to invest through the recession and that has given us forward momentum so that all areas have grown significantly,’ comments managing partner Neville Eisenberg. The firm’s international revenues have grown by 30% so that the firm’s overseas offices in Moscow, Paris, Singapore and Brussels now contribute around 10% to the top line – still relatively small but then the UK firm is new to u international expansion.
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THE LB GLOBAL 100
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$1bn There are 21 firms with revenues of more than $1bn
u
Norton Rose is a little more experienced at the global game. The UK firm has surpassed even Berwin Leighton Paisner’s revenue growth but its jump of 32 places up the top 100 is thanks to an increase of $274m to its top line, in part from its Australia merger. ‘For the firm, growth has been good but growth has been more difficult,’ admits Peter Martyr. ‘The last quarter was not as good as the previous three.’ Thanks to deals with Deacons down under and more recently with Deneys Reitz in South Africa and Canada’s Ogilvy Renault, Norton Rose is in a period of complete transformation. ‘Our bigger offices did well but some of our smaller investments hurt a bit and this is partly due to the fact that they don’t have the same weight and size,’ Martyr adds.
CUTTING BACK The question that firms now face on either side of the Atlantic is can they grow their top lines sufficiently to keep up with rising costs? Last year the top 100 reduced overheads by just under $4bn so that, although revenues dropped $5bn, profits only dropped by just under $600m. This year costs have crept up marginally but the increase in revenues of just under $2bn means that the bottom line is back up. However, there’s a limit to how much firms can take out of their cost bases and although most will insist that they will continue to keep a tight rein on costs some increases are inevitable. ‘There’s only so much you can do on cost cutting but at a certain
point you need to get back to investment in training and IT,’ Eduardo Leite, chairman of Baker & McKenzie, comments. Plus with salaries starting to creep back up and competition for talent becoming more intense, most notably in New York and Asia, some managing partners recognise that costs will inevitably rise. ‘Our cost base is certainly not growing at the same rate as it once did, but wage and other inflation in some markets means that it’s increasingly difficult to reduce aggregate cost,’ Simon Davies, managing partner of Linklaters, admits. Which means that any improvement in profitability needs to be driven by revenue growth and this is where the Magic Circle starts to diverge. Freshfields and Linklaters have largely set themselves against more international expansion over the past two years while Allen & Overy and CC have continued to pursue a policy of opening in new markets. In the first six months of 2011 CC has added offices in Doha, Istanbul, Perth and Sydney. A&O has added an association in Jakarta to the offices it opened last year in Doha, Perth and Sydney. For Freshfields and Linklaters therefore the answer is to push themselves further upmarket or to change course slightly and begin a new period of office openings. The announcement that Robert Elliott, senior partner-elect of Linklaters, is to review the firm’s lockstep and whether the firm needs to expand its non-equity partner numbers, suggests that it may soon have more flexibility to open or expand in less profitable markets.
With the improved profitability of some of the leading US practices, Linklaters’ managing partner is clear on one of the firm’s priorities. ‘Obviously US firms that are not on lockstep have a bit more flexibility when it comes to what they offer lateral partners so you have to ensure that your profitability is competitive,’ says Davies. Balancing growth with maintaining profits and quality is a challenge that all the leading firms face. ‘When you are a global operation it is in your nature to continue to grow but you have to ask whether it is the right growth,’ says Latham & Watkins London partner Andrew Moyle. ‘You need to focus on high-end work and the danger is to grow for growth’s sake, so you need to be very careful.’ Profits for the top 100 may be back on the rise but few of the largest firms are predicting runaway growth in the short term. ‘The profession has shown itself to be extremely resilient, and I expect we’ll continue to see incremental growth,’ comments Eric Friedman, executive partner of Skadden, Arps, Slate, Meagher & Flom. ‘However, law firms must be willing to constantly re-evaluate their value proposition and evolve to capture shifting practice and geographic opportunities.’ How firms carve out those opportunities around the world is still a work in progress. LB becky.pritchard@legalease.co.uk richard.lloyd@legalease.co.uk Legal Business would like to thank Barclays Wealth for its sponsorship of the Global 100.
62 Legal Business July/August 2011
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THE LB GLOBAL 100
Ogier position tbc
u
July/August 2011 Legal Business 63
LB216 p48-63 G100 1 main feat.in63 63
24/6/11 16:50:21
THE LB GLOBAL 100: MAIN TABLE
REVENUE GENERATION
1 (0)
Baker & McKenzie
International, 717 equity ptnrs, 626 non-equity ptnrs, 3,738 total lawyers
2 (0)
Skadden, Arps, Slate, Meagher & Flom
New York, 445 equity ptnrs, 0 non-equity ptnrs, 1,939 total lawyers
3 (0)
DLA Piper
International, 416 equity ptnrs, 802 non-equity ptnrs, 3,576 total lawyers
4 (+2) Latham & Watkins National (US), 451 equity ptnrs, 145 non-equity ptnrs, 1,959 total lawyers
5 (-1)
Clifford Chance3
London, 379 equity ptnrs, 173 non-equity ptnrs, 2,912 total lawyers
6 (-1)
Linklaters3
London, 442 equity ptnrs, 31 non-equity ptnrs, 2,520 total lawyers
7 (0)
Freshfields Bruckhaus Deringer3
London, 416 equity ptnrs, 29 non-equity ptnrs, 2,232 total lawyers
8 (0)
Allen & Overy3
London, 398 equity ptnrs, 89 non-equity ptnrs, 2,529 total lawyers
9 (n/a) Hogan Lovells International, 512 equity ptnrs, 297 non-equity ptnrs, 2,601 total lawyers
10 (0) Kirkland & Ellis Chicago, 278 equity ptnrs, 343 non-equity ptnrs, 1,396 total lawyers
11 (-2) Jones Day National (US), 828 equity ptnrs, 0 non-equity ptnrs, 2,502 total lawyers
12 (-1) Sidley Austin Chicago, 297 equity ptnrs, 326 non-equity ptnrs, 1,582 total lawyers
13 (-1) White & Case International, 274 equity ptnrs, 119 non-equity ptnrs, 1,959 total lawyers
14 (0) Greenberg Traurig National (US), 317 equity ptnrs, 595 non-equity ptnrs, 1,721 total lawyers
15 (-2) Weil, Gotshal & Manges New York, 194 equity ptnrs, 101 non-equity ptnrs, 1,253 total lawyers
16 (-1) Mayer Brown International, 269 equity ptnrs, 338 non-equity ptnrs, 1,969 total lawyers
17 (-1) Morgan, Lewis & Bockius National (US), 245 equity ptnrs, 228 non-equity ptnrs, 1,283 total lawyers
18 (+1) Sullivan & Cromwell New York, 166 equity ptnrs, 0 non-equity ptnrs, 751 total lawyers
19 (-1) Gibson, Dunn & Crutcher Los Angeles, 292 equity ptnrs, 30 non-equity ptnrs, 1,084 total lawyers
20 (-3) K&L Gates2 National (US), 294 equity ptnrs, 613 non-equity ptnrs, 1,763 total lawyers
21 (-1) Cleary Gottlieb Steen & Hamilton New York, 192 equity ptnrs, 0 non-equity ptnrs, 1,134 total lawyers
22 (0) Wilmer Cutler Pickering Hale and Dorr National (US), 297 equity ptnrs, 0 non-equity ptnrs, 890 total lawyers
23 (-2) Reed Smith National (US), 317 equity ptnrs, 374 non-equity ptnrs, 1,503 total lawyers
24 (+1) Morrison & Foerster San Francisco, 270 equity ptnrs, 76 non-equity ptnrs, 1,029 total lawyers
25 (+1) Simpson Thacher & Bartlett New York, 177 equity ptnrs, 0 non-equity ptnrs, 810 total lawyers
Cost = Profit
$2,104m
(0%)
9%
38%
$563k - $347k
$2,100m
(0%)
5%
48%
$1,083k
$1,960.9m (1%)
5%
24%
$548k - $416k
$1,929m
(6%)
6%
47%
$985k
$1,886m
(0%)
0%
30%
$1,873.5m (1%)
2%
(0%)
(change from 2010)
PEP 2011
$1.6m
$1.2m
$1m
$800k
PROFIT MARGIN
per lawyer per lawyer
$600k
CAGR* (06-11)
$400k
(change from 2010)
$200k
HQ; headcounts
TURNOVER 2011
$0
Rank (change on 2010); firm
Revenue per lawyer
$1.4m
Global 100 1-25
CAGR* (06-11)
= $216,000
$1,124,000 (13%)
8%
$569k = $514,000
$2,242,000 (9%)
3%
= $132,000
$1,137,000 (8%)
2%
= $459,000
$1,993,000 (5%)
4%
$648k - $454k
= $194,000
$1,488,000 (6%)
0%
43%
$743k -
= $318,000
$1,819,000 (1%)
2%
2%
48%
$797k -
= $380,000
$2,042,000 (-7%)
6%
$1,748.6m (6%)
6%
39%
$691k - $423k
= $269,000
$1,707,000 (0%)
5%
$1,664.6m (n/a)
n/a
34%
$640k - $419k
= $221,000
$1,121,000 (n/a)
n/a
$3,097,000 (28%)
8%
$1,779.9m
-
-
$526k
$425k $417k
$1,625m
(14%)
11%
53%
$1,164k
$1,616m
(6%)
4%
42%
$646k - $374k
= $272,000
$821,000
(8%)
0%
$1,340m
(-1%)
4%
33%
$847k
= $275,000
$1,467,000 (2%)
3%
$1,278m
(-2%)
4%
33%
$652k - $439k
= $213,000
$1,530,000 (7%)
5%
$1,236m
(5%)
8%
34%
$718k - $475k
= $243,000
$1,322,000 (1%)
4%
$1,185m
(-4%)
3%
37%
$946k
= $350,000
$2,260,000 (-2%)
4%
$1,107m
(-1%)
2%
26%
$562k - $416k
= $146,000
$1,070,000 (1%)
2%
$1,084.5m (1%)
6%
32%
$845k
= $267,000
$1,402,000 (14%)
7%
(8%)
4%
50%
$1,437k - $718k
= $719,000
$3,250,000 (11%)
7%
$1,062.8m (7%)
7%
60%
$981k
= $589,000
$2,184,000 (16%)
6%
$1,055.6m (2%)
18%
26%
$599k - $441k
= $158,000
$947,000
(10%)
5%
= $439,000
$2,586,000 (11%)
7%
$638k = $443,000
$1,329,000 (15%)
8%
$1,079m
-
$547k = $617,000
- $572k
-
$596k
-
$578k
-
$392k
$1,050m
(9%)
7%
47%
$926k
-
$487k
$961.8m
(2%)
3%
41%
$1,081k
$958m
(2%)
11%
35%
$637k - $416k
= $221,000
$1,050,000 (5%)
5%
$930.6m
(5%)
6%
37%
$904k
= $338,000
$1,291,000 (13%)
4%
$923.7m
(6%)
5%
51%
$1,140k
$563k = $577,000
$2,640,000 (9%)
2%
-
-
$566k -
* compound annual growth rate
64 Legal Business July/August 2011
LB216 p64-67 G100 2 main table.i64 64
27/6/11 10:53:25
THE LB GLOBAL 100: MAIN TABLE
REVENUE GENERATION
26 (-3) Dewey & LeBoeuf New York, 185 equity ptnrs, 115 non-equity ptnrs, 1,045 total lawyers
27 (-3) Paul, Hastings, Janofsky & Walker National (US), 195 equity ptnrs, 62 non-equity ptnrs, 910 total lawyers
28 (0) Bingham McCutchen National (US), 164 equity ptnrs, 166 non-equity ptnrs, 1,050 total lawyers
29 (+2) Davis Polk & Wardwell New York, 161 equity ptnrs, 0 non-equity ptnrs, 786 total lawyers
30 (0) Orrick, Herrington & Sutcliffe San Francisco, 205 equity ptnrs, 190 non-equity ptnrs, 1,169 total lawyers
31 (+4) Ropes & Gray Boston, 262 equity ptnrs, 0 non-equity ptnrs, 928 total lawyers
32 (0) McDermott Will & Emery Chicago, 185 equity ptnrs, 366 non-equity ptnrs, 987 total lawyers
33 (0) O’Melveny & Myers Los Angeles, 210 equity ptnrs, 18 non-equity ptnrs, 851 total lawyers
34 (+32) Norton Rose3 London, 277 equity ptnrs, 143 non-equity ptnrs, 1,737 total lawyers
35 (+9) Paul, Weiss, Rifkind, Wharton & Garrison New York, 122 equity ptnrs, 0 non-equity ptnrs, 709 total lawyers
36 (-2) Shearman & Sterling New York, 184 equity ptnrs, 27 non-equity ptnrs, 795 total lawyers
37 (-1) Akin Gump Strauss Hauer & Feld National (US), 170 equity ptnrs, 122 non-equity ptnrs, 785 total lawyers
38 (0) Herbert Smith London, 132 equity ptnrs, 134 non-equity ptnrs, 1,347 total lawyers
39 (+1) King & Spalding Atlanta, 154 equity ptnrs, 143 non-equity ptnrs, 793 total lawyers
40 (-1) Winston & Strawn Chicago, 185 equity ptnrs, 211 non-equity ptnrs, 907 total lawyers
41 (0) Slaughter and May London, 123 equity ptnrs, 4 non-equity ptnrs, 728 total lawyers
42 (+3) Goodwin Procter Boston, 212 equity ptnrs, 103 non-equity ptnrs, 741 total lawyers
43 (-1) Debevoise & Plimpton New York, 143 equity ptnrs, 0 non-equity ptnrs, 686 total lawyers
44 (-7) Dechert National (US), 146 equity ptnrs, 103 non-equity ptnrs, 774 total lawyers
45 (+1) Proskauer Rose New York, 162 equity ptnrs, 47 non-equity ptnrs, 657 total lawyers
46 (-3) Foley & Lardner Milwaukee, 168 equity ptnrs, 297 non-equity ptnrs, 895 total lawyers
47 (0) Fulbright & Jaworski Houston, 316 equity ptnrs, 32 non-equity ptnrs, 854 total lawyers
48 (+1) Milbank Tweed Hadley & McCloy New York, 119 equity ptnrs, 28 non-equity ptnrs, 556 total lawyers
49 (+5) Vinson & Elkins Houston, 200 equity ptnrs, 73 non-equity ptnrs, 719 total lawyers
50 (-2) Hunton & Williams Richmond, 243 equity ptnrs, 126 non-equity ptnrs, 836 total lawyers
$909.9m
(0%)
2%
36%
$871k
-
$557k
$902m
(1%)
6%
43%
$991k
-
$873m
(2%)
8%
31%
$831k
-
$870m
(3%)
7%
41%
$1,107k
$848.4m
(0%)
9%
35%
$725k - $474k
$822.4m
(4%)
8%
47%
$886k
-
$788.5m
(-5%)
0%
34%
$799k
$782.4m
(-5%)
-1%
40%
$919k
$755.7m
(57%)
15%
28%
$435k - $314k
$750.5m
(13%)
6%
49%
$1,059k
$737m
(-8%)
-2%
39%
$927k
-
$736.5m
(2%)
4%
37%
$938k
-
$726.2m
(3%)
6%
25%
$718.2m
(6%)
7%
$713.6m
(2%)
$687m
(change from 2010)
PEP 2011
$1.6m
$1.2m
$1m
$800k
PROFIT MARGIN
Cost = Profit per lawyer per lawyer
$600k
CAGR* (06-11)
$400k
(change from 2010)
$200k
HQ; headcounts
TURNOVER 2011
$0
Rank (change on 2010); firm
Revenue per lawyer
$1.4m
Global 100 26-50
CAGR* (06-11)
= $314,000
$1,772,000 (10%)
7%
= $426,000
$1,990,000 (6%)
8%
= $254,000
$1,623,000 (4%)
6%
$648k = $459,000
$2,236,000 (6%)
2%
= $251,000
$1,432,000 (16%)
3%
= $416,000
$1,475,000 (12%)
7%
- $525k
= $274,000
$1,457,000 (29%)
4%
-
= $367,000
$1,492,000 (3%)
-2%
= $121,000
$757,000
(0%)
-1%
= $521,000
$3,025,000 (12%)
4%
$565k
= $362,000
$1,565,000 (-8%)
4%
$590k
= $348,000
$1,607,000 (13%)
11%
$539k - $405k
= $134,000
$1,375,000 (2%)
-2%
37%
$906k
= $335,000
$1,731,000 (18%)
10%
5%
36%
$787k - $507k
= $280,000
$1,374,000 (21%)
5%
(2%)
5%
49%
$944k
-
$482k
= $462,000
$2,737,000 (7%)
6%
$678.3m
(3%)
10%
45%
$916k
-
$502k
= $414,000
$1,448,000 (14%)
3%
$657m
(-2%)
4%
45%
$958k
-
$528k
= $430,000
$2,061,000 (11%)
4%
$648.5m
(-9%)
2%
45%
$838k
- $457k
= $381,000
$2,013,000 (2%)
5%
$645m
(0%)
7%
39%
$982k
= $380,000
$1,541,000 (6%)
5%
$633m
(-5%)
1%
24%
$707k - $539k
= $168,000
$898,000 (7%)
1%
$625.4m
(-3%)
3%
44%
$732k - $408k
= $324,000
$878,000 (9%)
4%
$622m
(3%)
5%
48%
$1,118k
$585k = $533,000
$2,490,000 (12%)
4%
$602.7m
(7%)
3%
45%
$838k
= $374,000
$1,345,000 (6%)
5%
$600m
(-2%)
5%
35%
$717k - $470k
= $247,000
$852,000
(7%)
5%
$565k $577k -
$470k
$552k
-
-
$538k
$571k
-
$602k
-
- $464k
* compound annual growth rate
July/August 2011 Legal Business 65
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THE LB GLOBAL 100: MAIN TABLE
REVENUE GENERATION
51 (+2) Cravath, Swaine & Moore New York, 87 equity ptnrs, 0 non-equity ptnrs, 495 total lawyers
52 (-1) Covington & Burling Washington DC, 224 equity ptnrs, 0 non-equity ptnrs, 759 total lawyers
53 (-3) Wachtell, Lipton, Rosen & Katz New York, 84 equity ptnrs, 0 non-equity ptnrs, 253 total lawyers
54 (+3) Alston & Bird Atlanta, 147 equity ptnrs, 206 non-equity ptnrs, 822 total lawyers
55 (+7) Arnold & Porter Washington DC, 183 equity ptnrs, 31 non-equity ptnrs, 658 total lawyers
56 (-1) Eversheds National (UK), 132 equity ptnrs, 196 non-equity ptnrs, 1,228 total lawyers
57 (+2) Holland & Knight National (US), 187 equity ptnrs, 345 non-equity ptnrs, 937 total lawyers
58 (+21) Quinn Emanuel Urquhart & Sullivan Los Angeles, 92 equity ptnrs, 38 non-equity ptnrs, 526 total lawyers
59 (-7) Baker Botts Houston, 179 equity ptnrs, 87 non-equity ptnrs, 703 total lawyers
60 (-4) Bryan Cave St. Louis, 203 equity ptnrs, 159 non-equity ptnrs, 916 total lawyers
61 (-3) Willkie Farr & Gallagher New York, 130 equity ptnrs, 0 non-equity ptnrs, 624 total lawyers
=62 (-1) Pillsbury Winthrop Shaw Pittman San Francisco, 172 equity ptnrs, 134 non-equity ptnrs, 621 total lawyers
=62 (+1) McGuireWoods Richmond, 183 equity ptnrs, 230 non-equity ptnrs, 886 total lawyers
64 (-4) Squire, Sanders & Dempsey1 National (US), 149 equity ptnrs, 145 non-equity ptnrs, 785 total lawyers
65 (-1) Cooley San Francisco, 154 equity ptnrs, 78 non-equity ptnrs, 617 total lawyers
66 (-1) Wilson Sonsini Goodrich & Rosati San Francisco, 119 equity ptnrs, 55 non-equity ptnrs, 600 total lawyers
67 (+8) Perkins Coie Seattle, 144 equity ptnrs, 191 non-equity ptnrs, 693 total lawyers
=68 (+3) Ashurst3 London, 150 equity ptnrs, 72 non-equity ptnrs, 912 total lawyers
=68 (+9)Fried, Frank, Harris, Shriver & Jacobson New York, 136 equity ptnrs, 7 non-equity ptnrs, 532 total lawyers
70 (-1) Garrigues Spain, 104 equity ptnrs, 169 non-equity ptnrs, 2,121 total lawyers
71 (-3) Sonnenschein Nath & Rosenthal1 National (US), 141 equity ptnrs, 190 non-equity ptnrs, 604 total lawyers
72 (+1) Seyfarth Shaw National (US), 213 equity ptnrs, 145 non-equity ptnrs, 702 total lawyers
73 (+5) Katten Muchin Rosenman Chicago, 140 equity ptnrs, 174 non-equity ptnrs, 595 total lawyers
74 (+15) Minter Ellison Australia, 221 equity ptnrs, 63 non-equity ptnrs, 1,081 total lawyers
75 (-5) Nixon Peabody National (US), 190 equity ptnrs, 145 non-equity ptnrs, 650 total lawyers
$591m
(4%)
3%
47%
$1,194k
$581.5m
(0%)
9%
45%
$580m
(-1%)
6%
$571.2m
(4%)
$555m
Cost = Profit
-
(change from 2010)
PEP 2011
$1.6m
$1m
$1.2m
per lawyer per lawyer $800k
PROFIT MARGIN
$600k
CAGR* (06-11)
$400k
(change from 2010)
$200k
HQ; headcounts
TURNOVER 2011
$0
Rank (change on 2010); firm
Revenue per lawyer
$1.4m
Global 100 51-75
CAGR* (06-11)
$637k = $557,000
$3,170,000 (17%)
4%
$766k - $425k
= $341,000
$1,156,000 (-4%)
4%
63%
$2,292k - $850k
= $1,442,000
$4,345,000 (8%)
3%
8%
30%
$695k - $487k
= $208,000
$1,161,000 (27%)
7%
(6%)
4%
43%
$843k
= $364,000
$1,311,000 (31%)
9%
$554.3m
(0%)
-1%
21%
$451k - $359k
= $92,000
$863,000 (7%)
3%
$551.7m
(1%)
-1%
27%
$589k - $432k
= $157,000
$785,000
$550.5m
(31%)
n/a
62%
$1,047k
= $648,000
$3,700,000 (20%)
n/a
$550m
(-4%)
5%
45%
$782k - $432k
= $350,000
$1,374,000 (3%)
9%
$539.3m
(-3%)
6%
27%
$589k - $433k
= $156,000
$703,000
$533.4m
(-3%)
4%
51%
$855k
-
$419k
= $436,000
$2,092,000 (4%)
3%
$532m
(0%)
-2%
34%
$857k
-
$567k
= $290,000
$1,045,000 (10%)
6%
$532m
(5%)
9%
28%
$600k - $432k
= $168,000
$815,000
(2%)
6%
$518m
(-5%)
5%
22%
$660k - $515k
= $145,000
$765,000
(-4%)
4%
$517m
(2%)
12%
39%
$838k
- $511k
= $327,000
$1,310,000 (13%)
8%
$493m
(-2%)
4%
35%
$822k
- $537k
= $285,000
$1,437,000 (0%)
8%
$477m
(10%)
8%
27%
$688k - $501k
= $187,000
$900,000 (12%)
8%
$471.5m
(3%)
4%
36%
$517k - $332k
= $185,000
$1,126,000 (4%)
$471.5m
(11%)
4%
46%
$887k
= $406,000
$1,589,000 (28%)
5%
$467.2m
(0%)
n/a
25%
$220k - $165k
= $55,000
$1,137,000 (7%)
n/a
$454.6m
(-4%)
0%
26%
$752k - $560k
= $192,000
$821,000
(8%)
1%
$452.3m
(0%)
6%
35%
$644k - $421k
= $223,000
$734,000
(6%)
4%
$443.1m
(5%)
3%
38%
$744k - $464k
= $280,000
$1,193,000 (11%)
5%
$441.5m
(14%)
7%
34%
$408k - $270k
= $138,000
$680,000 (11%)
n/a
$438m
(-6%)
3%
29%
$674k - $478k
= $196,000
$670,000 (2%)
3%
- $479k
-
-
$399k
$481k
(14%)
(14%)
10%
3%
-2%
* compound annual growth rate
66 Legal Business July/August 2011
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THE LB GLOBAL 100: MAIN TABLE
REVENUE GENERATION
76 (0) Kaye Scholer New York, 127 equity ptnrs, 18 non-equity ptnrs, 425 total lawyers
77 (-3) Mallesons Stephen Jaques Australia, 98 equity ptnrs, 86 non-equity ptnrs, 1,004 total lawyers
78 (-6) Cadwalader, Wickersham & Taft New York, 59 equity ptnrs, 39 non-equity ptnrs, 481 total lawyers
79 (+4) McCarthy Tétrault Canada, 259 equity ptnrs, 52 non-equity ptnrs, 588 total lawyers
80 (+10) Freehills Australia, 199 equity ptnrs, 0 non-equity ptnrs, 987 total lawyers
81 (+7) Duane Morris National (US), 136 equity ptnrs, 217 non-equity ptnrs, 709 total lawyers
82 (-1) FIDAL France, 299 equity ptnrs, 307 non-equity ptnrs, 1,120 total lawyers
83 (-1) Locke Lord Bissell & Liddell Dallas, 142 equity ptnrs, 163 non-equity ptnrs, 545 total lawyers
84 (+1) Loyens & Loeff Netherlands, 110 equity ptnrs, 0 non-equity ptnrs, 710 total lawyers
85 (n/a) Allens Arthur Robinson Australia, 169 equity ptnrs, 7 non-equity ptnrs, 883 total lawyers
86 (+1) Clayton Utz Australia, 169 equity ptnrs, 40 non-equity ptnrs, 880 total lawyers
87 (n/a) Baker & Hostetler National (US), 140 equity ptnrs, 182 non-equity ptnrs, 645 total lawyers
88 (-8) Fish & Richardson National (US), 96 equity ptnrs, 64 non-equity ptnrs, 356 total lawyers
89 (-3) Simmons & Simmons3 London, 127 equity ptnrs, 82 non-equity ptnrs, 822 total lawyers
90 (+4) Jenner & Block Chicago, 117 equity ptnrs, 72 non-equity ptnrs, 438 total lawyers
91 (+2) Littler Mendelson National (US), 311 equity ptnrs, 105 non-equity ptnrs, 708 total lawyers
92 (0) Drinker Biddle & Reath Philadelphia, 185 equity ptnrs, 71 non-equity ptnrs, 602 total lawyers
93 (-9) Schulte Roth & Zabel New York, 88 equity ptnrs, 0 non-equity ptnrs, 406 total lawyers
94 (+1) Sheppard Mullin Richter & Hampton San Francisco, 82 equity ptnrs, 137 non-equity ptnrs, 465 total lawyers
95 (-4) Troutman Sanders Atlanta, 174 equity ptnrs, 138 non-equity ptnrs, 615 total lawyers
96 (n/a) CMS Cameron McKenna National (UK), 97 equity ptnrs, 41 non-equity ptnrs, 1,157 total lawyers
97 (+3) Steptoe & Johnson Washington DC, 145 equity ptnrs, 0 non-equity ptnrs, 517 total lawyers
98 (n/a) Berwin Leighton Paisner London, 93 equity ptnrs, 101 non-equity ptnrs, 735 total lawyers
=99 (n/a)Patton Boggs Washington DC, 106 equity ptnrs, 122 non-equity ptnrs, 512 total lawyers
=99 (-3) Venable National (US), 157 equity ptnrs, 100 non-equity ptnrs, 496 total lawyers
$435m
(1%)
3%
44%
$1,024k
$433.9m
(-1%)
n/a
39%
$429.5m
(-6%)
-2%
$417.4m
(5%)
$416.6m
-
$578k
(change from 2010)
PEP 2011
$1.6m
$1.2m
$1m
$800k
PROFIT MARGIN
Cost = Profit per lawyer per lawyer
$600k
CAGR* (06-11)
$400k
(change from 2010)
$200k
HQ; headcounts
TURNOVER 2011
$0
Rank (change on 2010); firm
Revenue per lawyer
$1.4m
Global 100 76-100
CAGR* (06-11)
= $446,000
$1,492,000 (5%)
3%
$432k - $264k
= $168,000
$1,721,000 (7%)
n/a
32%
$893k
= $288,000
$2,347,000 (9%)
-2%
n/a
38%
$710k - $440k
= $270,000
$612,000
(8%)
n/a
40%
$422k - $253k
= $169,000
$838,000 (8%)
n/a
$411m
(6%)
7%
27%
$580k - $421k
= $159,000
$830,000 (24%)
4%
$397.3m
(-3%)
n/a
14%
$355k - $305k
= $50,000
$186,000
(-9%)
n/a
$396.5m
(-1%)
n/a
35%
$728k - $472k
= $256,000
$980,000 (0%)
n/a
$394.6m
(0%)
n/a
33%
$556k - $371k
= $185,000
$1,196,000 (7%)
n/a
$389.7m
(19%)
n/a
37%
$441k - $278k
= $163,000
$854,000 (21%)
n/a
$388.6m
(0%)
7%
42%
$442k - $256k
= $186,000
$964,000 (-2%)
7%
$386m
(17%)
6%
28%
$598k - $432k
= $166,000
$765,000
(27%)
8%
$383.7m
(-8%)
9%
40%
$1,077k
-
$646k = $431,000
$1,601,000 (17%)
12%
$379.4m
(-3%)
-1%
24%
$462k - $352k
= $110,000
$716,000
(0%)
-3%
$379m
(3%)
6%
43%
$865k
= $371,000
$1,390,000 (25%)
$377.7m
(2%)
n/a
39%
$534k - $324k
= $210,000
$477,000
$376.5m
(1%)
11%
32%
$625k - $423k
= $202,000
$660,000 (9%)
3%
$373m
(-6%)
3%
48%
$919k
-
= $446,000
$2,055,000 (-3%)
2%
$367.8m
(2%)
7%
27%
$790k
- $577k
= $213,000
$1,218,000 (-2%)
9%
$363.5m
(-3%)
8%
34%
$591k - $392k
= $199,000
$705,000
(5%)
5%
$351.3m
(12%)
1%
21%
$304k - $239k
= $65,000
$774,000
(12%)
-2%
$345.1m
(2%)
6%
38%
$668k - $412k
= $256,000
$910,000
(15%)
1%
$345m
(15%)
6%
28%
$470k - $338k
= $132,000
$1,041,000 (46%)
-2%
$337.5m
(2%)
9%
28%
$659k - $476k
= $183,000
$882,000 (6%)
7%
$337.5m
(-3%)
7%
36%
$680k - $433k
= $247,000
$780,000 (0%)
6%
-
-
$605k
$494k
$473k
(10%)
(10%)
n/a
14% n/a
* compound annual growth rate
July/August 2011 Legal Business 67
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THE LB THE LBGLOBAL GLOBAL100: 100:GLOBAL GLOBALEXPANSION EXPANSION
TO THE ENDS OF THE EARTH In the rush to conquer new markets, the leading British and American firms are changing the landscape of the global legal sector. Time to check your international strategy EMMA SADOWSKI AND JEREMY HODGES Costs cut. Headcount down. Profits preserved. Now is the time to grow. For the world’s law firms, some good has come out of the global financial crisis. As pricing becomes tighter and the world flatter, the move away from the traditional, more mature European and US financial centres, has meant that a number of large firms have accelerated their expansion out of their own backyards. With global growth back on the agenda for the largest UK firms, while some US firms have looked at it seriously for the first time, the last two years have been marked by the growing footprint of the international law firm. For the past decade it has been the US firms that have most dramatically shifted their horizons. Dewey & LeBoeuf boasts that 40% of its lawyers work outside of the States. In 2001 the legacy firm LeBoeuf, Lamb, Greene & MacRae had 15% of its workforce overseas, while its merger partner Dewey Ballantine had 11%. Latham & Watkins’ growth has been even u
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THE LB GLOBAL 100: GLOBAL EXPANSION
GLOBAL 100 EUROPE HEADCOUNT (EXCL. LONDON) Rank
Firm
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Garrigues DLA Piper Clifford Chance Freshfields Bruckhaus Deringer FIDAL Baker & McKenzie Linklaters Allen & Overy Eversheds Hogan Lovells White & Case Loyens & Loeff CMS Cameron McKenna Norton Rose Cleary Gottlieb Steen & Hamilton Simmons & Simmons Latham & Watkins Orrick, Herrington & Sutcliffe Ashurst Weil, Gotshal & Manges
No. of lawyers in region 2,088 1,721 1,294 1,138 1,120 1,091 1,007 955 928 810 730 710 584 401 392 306 285 274 261 245
% of lawyers in region 98% 48% 44% 51% 100% 29% 40% 38% 76% 31% 37% 100% 50% 23% 35% 37% 15% 23% 29% 20%
u more spectacular, seeing its proportion grow
ASIA MAJOR
to 31% up from a paltry 4% ten years ago. Of course the UK firms have been at this game much longer. Most of the UK firms in the Global 100 generate more than 50% of revenue from outside of London. Allen & Overy, the most recent of the Magic Circle to break through the 50% threshold in 2009, now derives 60% of its income from overseas operations. Firms’ single-minded approach to boosting capabilities outside of home jurisdictions isn’t driven purely by opportunities but also a lack of them on home turf. Struggling mature economies, particularly in Europe, have forced some managing partners to change their outlook and the competition for work and clients has reached the global market. The 12 UK firms in the Global 100 opened six new offices in 2010/11. Similarly the US firms that traditionally have taken a more circumspect approach to international expansion are on the move, most notably in Asia. The last calendar year has seen numerous US firms launch in the major Asian centres of Hong Kong, Shanghai, Singapore and Beijing. For some it’s time to stir a few of the market norms. ‘We were having lunch with the leaders of a global law firm, and they asked us what we were trying to do with our business and we said agitate,’ says DLA Piper chairman Frank Burch. ‘We want to destabilise the legal market because that is what creates opportunities for us.’
The global recession has added fuel to the eastward drift of many in the Global 100. Although building a credible presence in Asia has been on the agenda for the largest firms for decades, the past 18 months have seen particularly notable moves by some of the traditionally more conservative firms. Nothing illustrates the US firms’ growing investment in Asia than the proliferation of Hong Kong-law practices among the New York elite. Cleary Gottlieb Steen & Hamilton,
Davis Polk & Wardwell, Shearman & Sterling, Milbank Tweed Hadley & McCloy, Sullivan & Cromwell and Simpson Thacher & Bartlett have all launched Hong Kong law practices to sit alongside their US law capabilities in the last 18 months. Their numbers are still relatively small – none of the elite New York firms feature in the 20 largest Asia practices – but the commitment is clear. The interest from the US firms has been piqued, partly by a still difficult domestic market, but also by the desire to obtain a larger slice of the global energy industry and a booming capital market. The numbers coming out of the Hong Kong Stock Exchange are startling. In 2010 the total capitalisation of the market was HK$21trn, which represents an 18% year on year increase from 2009. Last year, there were 592 listed ‘mainland enterprises’ making up 57.5% of the market. Plus there’s now a clear trend of international companies – begun by Russian metals giant RUSAL in 2010 and continued by the likes of Glencore International and Prada – raising finance on the Hong Kong bourse. ‘Every five years or so the US firms tend to get interested in Asia,’ explains Linklaters managing partner Simon Davies. ‘However, their current interest looks like it’s going to be permanent. The war for talent will become intense.’ The UK firms are not exactly sitting on their hands either. In fact the likes of Freshfields Bruckhaus Deringer, Herbert Smith and Linklaters still have a very good grip on the most high-profile capital markets mandates. This year, for instance, Freshfields advised the underwriters on the $1.5bn MGM China IPO, u
THE NEW HOT SPOTS: CITIES WITH THE MOST OFFICE OPENINGS
Hong Kong ●
● Cadwalader, Wickersham & Taft ● Gibson, Dunn & Crutcher ● Wilson Sonsini Goodrich & Rosati
Houston ●
● Cadwalader, Wickersham & Taft ● Simpson Thacher & Bartlett
Brussels ●
● Cadwalader, Wickersham & Taft ● K&L Gates
Istanbul ●
● Clifford Chance ● DLA Piper
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THE LB GLOBAL 100: GLOBAL EXPANSION
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THE LB GLOBAL 100: GLOBAL EXPANSION
21 new offices opened by Global 100 firms
u with Herbert Smith advising the company. Freshfields also advised Hutchison Port Holdings on its $5.45bn IPO, the largest South-East Asian listing in 2011. For the leading US and UK firms, Asia has become about money pouring into its capital markets and M&A coming out of China. Data from Thomson Reuters shows that China was by far the busiest emerging market for M&A in the first quarter of 2011 with 827 deals worth $30.5bn. The largest deal of the quarter saw Encana Corporation, Canada’s biggest natural-gas producer, agree to sell a 50% stake in shale-gas assets to China’s PetroChina International Corporation for $5.4bn. Clifford Chance was the most active firm during the first quarter of the year, advising on five deals worth $3.4bn, according to Thomson Reuters. But making the financials add up can still be challenging. Somewhat surprisingly during the 2009/10 financial year, Linklaters saw a 14% drop in its Asian turnover, which Davies attributes to a drop off in financial institution work following the financial crisis. Its total lawyer headcount in Asia has dropped since 2008 – 335 compared with 305 today – but the Asian practice accounts for a slightly higher proportion of overall headcount – 12% compared with 11.5% three years ago. However, with the relocation of three partners to Shanghai and Beijing, plus three new partner promotions in China, the Magic Circle firm is clearly committed to growth. Plus with 52 partners now in the region, like many of the largest UK practices, Linklaters has far more scale in Asia than most of its US rivals. ‘Growth will come mostly from our good pipeline of senior associates who are coming up to partner, but also through moving more international resources into Asia and from lateral opportunities,’ Davies predicts.
A ONE-WAY SPECIAL RELATIONSHIP If the globalisation of the legal market has become dominated by firms’ own diverging strategies, it has also become characterised by the competition between New York and English law as the governing law of choice. While New York law has naturally come to dominate the Americas, over the past decade English law’s position as the law of choice on international deals has only strengthened. To look at firms’ respective strengths we asked nine of the largest practices by revenue how many English and then US-qualified lawyers they have. It’s a simple metric and has limitations – it makes no allowance for the expertise of the lawyers or the quality of the mandates the firms handle – but it shows just how tilted most of the largest firms still are. ‘London remains one of our key priorities and we need to build out our English law capabilities,’ says Latham & Watkins London partner Andrew Moyle. Latham, which has more than 1,600 US-qualified attorneys globally, currently has 220 English-qualified lawyers (158 in London and a chunk spread across its Asian offices). That number has increased dramatically in the past ten years and is significantly ahead of Skadden, Arps, Slate, Meagher & Flom, which has just 119 English qualified, but is still very low. Latham is not alone in trying to address the problem. Rival White & Case admits it is faced with the same scenario even though it is the most balanced firm among the practices below. ‘We’re underpowered in English-qualified lawyers compared to the Magic Circle firms,’ comments the firm’s chairman Hugh Verrier, who adds that London chief Oliver Brettle is already leading a seven-partner taskforce looking at how it can significantly boost its English offering. The US-based firm currently has 531 English-qualified lawyers under its belt, of which 290 are based in the firm’s London office. ‘Deals coming out of Asia and done around the world are done in English law,’ says Brettle. ‘In Asia we used to be on a US law firm growth curve but now we need to bolster English law.’ From the perspective of the UK firms, Clifford Chance, despite losing swathes of its US-based partnership, still has the highest number of US-qualified lawyers. Across its offices, CC has 316 US-qualified lawyers. Of those Magic Circle firms that have built their US base organically, Allen & Overy has the highest number of US-qualified lawyers, with 308 attorneys compared with 1,037 English-qualified lawyers. Meanwhile Linklaters, which also has a New York office, has just 205 US-qualified lawyers compared with its 1,132 English-qualified attorneys. At Freshfields Bruckhaus Deringer, things look slightly more on an even kilter. The Magic Circle giant’s US lawyer headcount of 254, which puts it marginally behind CC and A&O but ahead of Linklaters, isn’t as dwarfed by UK-qualified lawyer numbers (those come to 859). Firm Baker & McKenzie Skadden, Arps, Slate, Meagher & Flom Clifford Chance Linklaters Latham & Watkins Freshfields Bruckhaus Deringer Allen & Overy Kirkland & Ellis White & Case
At the moment though few can match CC’s focus on the region. The largest UK practice now has 12% of its global lawyer headcount in Asia. Despite being 500 lawyers slimmer since management started to aggressively reduce headcount in 2009, the proportion of lawyers in Asia has increased by 3% since 2008. CC now has 340 of its 2,912 lawyers on the continent compared to 287 out of 3,582 in 2008. In this
English qualified 467 119 1,111 1,132 220 859 1,037 80 531
US qualified 888 1,703 316 205 1,645 254 308 1,305 669
year’s partner promotions round it also made its intentions clear with 12 making the grade in Asia, including ten across China and Hong Kong. Although Greater China remains the key strategic focus for most international firms, Singapore has recovered from a brief period in the wilderness to return as a major force. (For more u information, see ‘On the rebound’, page 92.)
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THE LB GLOBAL 100: GLOBAL EXPANSION
What do you call a top law firm that’s located i n som e of t h e m o st b e au t i fu l p l ace s on e a rth ? A top law firm.
BERMUDA
BRITISH VIRGIN ISLANDS
C AY M A N I S L A N D S
DUBAI
HONG KONG
LO N D O N
MAURITIUS
MOSCOW
S Ã O PA U LO
SINGAPORE
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THE LB GLOBAL 100: GLOBAL EXPANSION
REVENUE GENERATION
74 (+15) Minter Ellison Australia, 221 equity ptnrs, 63 non-equity ptnrs, 1,081 total lawyers
77 (-3) Mallesons Stephen Jaques Australia, 98 equity ptnrs, 86 non-equity ptnrs, 1,004 total lawyers
80 (+10) Freehills Australia, 199 equity ptnrs, 0 non-equity ptnrs, 987 total lawyers
85 (n/a) Allens Arthur Robinson Australia, 169 equity ptnrs, 7 non-equity ptnrs, 883 total lawyers
86 (+1) Clayton Utz Australia, 169 equity ptnrs, 40 non-equity ptnrs, 880 total lawyers
u Attracted by Singapore’s position as a hub for work going into Indonesia and increasing popularity as an international arbitration centre for India, several firms are in growth mode in the city. Local law licences, which have been granted to half a dozen firms – A&O, CC, Herbert Smith, Latham & Watkins, Norton Rose and White & Case – have also helped fuel growth. Norton Rose, for instance, has doubled its headcount in the city state over the past five years. The rapidly expanding UK firm has also added an Indonesia alliance to its South-East Asian network and group chief executive Peter Martyr has ambitious plans for the firm’s Singapore and Hong Kong
Firm
1 Minter Ellison 2 Baker & McKenzie 3 Mallesons Stephen Jaques 4 Freehills 5 Allens Arthur Robinson 6 Clayton Utz 7 Norton Rose 8 Mayer Brown 9 Clifford Chance 10 Allen & Overy 11 Linklaters 12 Herbert Smith 13 Hogan Lovells 14 Freshfields Bruckhaus Deringer 15 DLA Piper 16 Morrison & Foerster 17 White & Case 18 Reed Smith 19 Sidley Austin 20 O’Melveny & Myers *These numbers include lawyers based in Australia
$1.6m
$1.2m
$1m
PEP 2011
(change from 2010)
CAGR* (06-11)
$441.5m
(14%)
7%
34%
$408k - $270k
= $138,000
$680,000 (11%)
n/a
$433.9m
(-1%)
n/a
39%
$432k - $264k
= $168,000
$1,721,000 (7%)
n/a
$416.6m
(8%)
n/a
40%
$422k - $253k
= $169,000
$838,000 (8%)
n/a
$389.7m
(19%)
n/a
37%
$441k - $278k
= $163,000
$854,000 (21%)
n/a
$388.6m
(0%)
7%
42%
$442k - $256k
= $186,000
$964,000 (-2%)
7%
outposts. ‘I’d like to turn those two offices [Singapore and Hong Kong] into full-service London replicas and that way, they’ll fit better with Australia,’ he says. Even the more esoteric corners of Asia are on the agenda for global law firms. In Mongolia, Hogan Lovells shares an alliance with Ulaanbaatar firm GTs Advocates. The Central Asian country is rich in natural resources work and has also been targeted by DLA Piper, which formed an alliance with C&G Partners in March this year. Covington & Burling, whose approach to international expansion has always erred on
GLOBAL 100 ASIA HEADCOUNT Rank
Cost = Profit per lawyer per lawyer
$800k
PROFIT MARGIN
$600k
CAGR* (06-11)
$400k
(change from 2010)
$200k
HQ; headcounts
TURNOVER 2011
$0
Rank (change on 2010); firm
Revenue per lawyer
$1.4m
Australian firms
No. of lawyers in region* 1,075 1,018 995 987 883 880 735 444 340 335 305 238 201 191 177 166 159 124 119 102
% of lawyers in region 99% 27% 99% 100% 100% 100% 42% 23% 12% 13% 12% 18% 8% 9% 5% 16% 8% 8% 8% 12%
the cautious side, opened in Beijing in 2008. The firm only has 19 lawyers in the office but firm chair Tim Hester sees it as an exceptional platform. ‘Our clients increasingly see China, and Asia more broadly, as essential areas of opportunity and growth in their markets. At the same time, operating in China is demanding and raises many complex legal and cultural challenges for our client base. Our capabilities in operating at the intersection of law, public policy and regulation are seen by many clients as particularly important to their matters in China. Hester says that the firm sees an evolving trend where its China expertise is relevant to clients outside the US and Europe. ‘For example,’ he continues. ‘We now have clients in India, the Middle East and Latin America asking if we can help them address issues in China. These interconnections between Asia and other markets outside the US and Europe reflect the new world order, and law firms have to adapt accordingly.’ Baker & McKenzie is still, by some margin, the largest international firm in Asia, with offices in Taipei, Kuala Lumpur and Hanoi. u
‘It makes no sense to me that the US economic power will diminish.’ Ted Burke, Freshfields Bruckhaus Deringer
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THE LB GLOBAL 100: GLOBAL EXPANSION
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THE LB GLOBAL 100: GLOBAL EXPANSION
GLOBAL 100 LONDON HEADCOUNT Rank
Firm
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Allen & Overy Linklaters Clifford Chance Herbert Smith Freshfields Bruckhaus Deringer Hogan Lovells Slaughter and May Berwin Leighton Paisner CMS Cameron McKenna Ashurst Norton Rose DLA Piper Simmons & Simmons Baker & McKenzie White & Case Mayer Brown Reed Smith Eversheds Latham & Watkins Jones Day
No. of lawyers in region
u The firm’s chair, Eduardo Leite, cautions that international firms in Asia may begin to find increasing levels of competition from local firms. ‘Other international firms are adding lawyers, narrowing our size advantage in the region,’ he says. ‘But the domestic firms, including some from China and India, may be the ones to watch, as they have leverage and ambition.’ But the next big thing for European firms could well be South Korea. CC has already signalled its intent to open there and the majority of firms spoken to for this piece admit they are looking at their options. For now at least, Asia looks to be the sort of popular hunting ground for international firms that Western Europe was 15 years ago. As long as China continues to invest overseas into places likes Australia, Brazil, Africa and India, and the remainder of Asia continues to stabilise, work will flow and firms will leverage significant growth from the region.
AUSTRALIA’S ADVANCE Arguably, one of the defining trends in the global legal market of the past three years has been the growing interest of foreign firms in Australia. For years, overseas representation on the ground was limited to Baker & McKenzie and small outposts for the likes of Sullivan & Cromwell and Skadden, Arps, Slate, Meagher & Flom. Last year Norton Rose and A&O made their plays, followed this year by CC and DLA Piper.
1,001 979 926 843 743 688 663 633 568 539 538 411 402 357 334 305 283 249 192 178
WHERE IN THE WORLD % of lawyers in region 40% 39% 32% 63% 33% 26% 91% 86% 49% 59% 31% 11% 49% 10% 17% 15% 19% 20% 10% 7%
Australia’s huge wealth of natural resources and investment links with China continue to turn the heads of many managing partners. The news in February that CC was to launch in Australia hardly sent a shockwave through the global legal market. The Magic Circle practice had long been linked to a merger with Mallesons Stephen Jaques, but finally moved in earlier this year through mergers with Sydneybased Chang, Pistilli & Simmons and Cochrane Lishman Carson Luscombe in Perth. The deal, which went live in May, added 14 partners to CC’s global headcount. Also in May this year, DLA Piper fully integrated with its Australian ally, Phillips Fox. The deal went live on 1 May. The firm’s joint chief executive and managing partner Sir Nigel Knowles has identified the region as an area for ‘enormous potential’ for growth. A&O muscled its way into Australia one year before CC did. The firm made its move after acquiring a team of 17 partners from local giants Clayton Utz and Freehills. ‘Australia has already contributed to the top line and has had a bigger impact on our Asia practice as a whole,’ notes the firm’s managing partner Wim Dejonghe, who declines to provide precise numbers for the firm’s financial performance in the region. For Norton Rose, the firm that kick-started this foreign influx, its move in Australia is already paying dividends. The firm has landed a u number of roles on key Chinese-Australian
Look at a map of the world and Africa remains the one region largely bereft of Global 100 firms. Some have opted for small outposts in Johannesburg while more have sought alliances with local firms across the continent but Africa remains largely untouched. Dewey & LeBoeuf is one of the firms with a presence in Johannesburg. Its chairman Steven Davis says that the firm has seen a steady increase in business in the region since the start of 2011. ‘It’s very resource driven,’ he notes. ‘We have a very strong and active renewables practice and it’s mostly in sub-Saharan Africa.’ The firm has had a small office in South Africa since 1996, using it as a base to secure large mandates throughout the region. It has worked for the likes of mining company Anglo American on projects in South Africa and AES Corporation on its bid to develop two coal-fired power plants in Mozambique. White & Case also has a South African outpost having opened its three-partner office in Johannesburg in 1995. However, most firms have based their African teams out of Paris and London and not exactly missed out on major mandates. Herbert Smith, for instance, doesn’t have an African office, but has still won a number of high-profile deals in the region. Most recently, it acted for Rio Tinto on its $10bn Simandou iron ore project in Guinea, thought to be the largest of its kind. The firm’s Paris office advised Rio Tinto on its negotiations with the government of Guinea. Earlier in the year, Allen & Overy and Skadden, Arps, Slate, Meagher & Flom were each brought in to advise on the $1bn sale of parts of Shell’s African business. A&O advised Shell on the deal, while Skadden came in for the acquirers, Vitol and Helios Investment Partners. While social and political demonstrations in countries like Libya, Egypt and Tunisia may have suppressed the appetite of investors in the North, the reality is that investment interest in Africa is expected to grow over the next five years. Perhaps then it will figure a little more prominently on the Global 100 radar.
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Legal_
THE LB GLOBAL 100: GLOBAL EXPANSION
u
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THE LB GLOBAL 100: GLOBAL EXPANSION
u cross-border deals, including acting for the Industrial and Commercial Bank of China (ICBC) on the provision of an $8bn financing to an Australian iron ore producer. It also acted for the Bank of China as lead arranger on the financing for the AUS$3.3bn takeover of Felix Resources by Yanzhou Coal Mining Company. ‘I am confident that we’ve outperformed the market in Australia,’ says Martyr. In the face of this foreign onslaught, the locals are typically defensive. ‘The new entrants haven’t brought new capability into the market but have soaked up the existing talent. They’ve basically just brought their credible brands across,’ comments Minter Ellison chief executive John Weber. ‘We will see more foreign firms coming to Australia,’ he predicts.
HOME FIRES With all the brouhaha over emerging markets it’s easy to ignore just what a lucrative market the US is. It is still, by far, the most profitable legal market in the world. Of the 20 largest US firms in the Global 100 by revenue, 12 firms increased their top line in 2010 compared to just four the year before. Kirkland & Ellis outperformed its peers with a revenue increase of 14% to $1.6bn, while Cleary grew income by 9% and Gibson, Dunn & Crutcher boosted its fee income by 7%. Baker & McKenzie, Skadden and Dewey & LeBoeuf stayed flat. ‘It makes no sense to me that the US economic power will diminish,’ says Freshfields managing partner Ted Burke. For several US firms, therefore, expansion in their domestic market is back on the agenda. Over the past two years, 16 new offices opened. In line with global deal trends the Texas energy market has attracted a number of firms, including Cadwalader, Wickersham & Taft, Latham, Simpson Thacher and Winston & Strawn all making a play in Houston in the past 18 months. The sorts of deals coming to market include BHP Billiton’s $4.75bn acquisition of Chesapeake Energy Corporation’s Fayetteville shale business in February this year. The deal saw Morgan, Lewis & Bockius advise BHP, while Wachtell, Lipton, Rosen & Katz and Wilmer Cutler Pickering Hale and Dorr advised Chesapeake. ‘Over the last 30 years the [Texas] market has run in cycles with firms coming in and then most of them leaving because they don’t understand the Houston market or how energy works,’ reckons Rick Burdick, head of the international corporate transactions practice at Akin Gump Strauss Hauer & Feld. ‘Weil, Gotshal
GLOBAL 100 US HEADCOUNT Rank
Firm
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Greenberg Traurig Skadden, Arps, Slate, Meagher & Flom K&L Gates Latham & Watkins Sidley Austin Kirkland & Ellis Morgan, Lewis & Bockius DLA Piper Reed Smith Gibson, Dunn & Crutcher Bingham McCutchen Holland & Knight Mayer Brown Ropes & Gray Foley & Lardner Weil, Gotshal & Manges Hogan Lovells McDermott Will & Emery Bryan Cave Alston & Bird
No. of lawyers in region
‘The current US interest in Asia looks like it’s going to be permanent. The war for talent will become intense.’ Simon Davies, Linklaters
1,618 1,613 1,476 1,349 1,312 1,269 1,197 1,178 1,023 977 931 931 921 887 887 873 866 859 856 822
% of lawyers in region 94% 83% 84% 69% 83% 91% 93% 33% 68% 90% 89% 99% 47% 96% 99% 70% 33% 87% 93% 100%
& Manges, Skadden and Dewey have all gone on in at various points but their offices are not large and they’re not significant players in the market. They overestimate the number of clients willing to pay New York rates.’ Energy aside, a wave of technology deals has seen a renewed interest in the Silicon Valley. Sidley Austin and Vinson & Elkins both opened their doors in Palo Alto in the course of 2010. Moves like that are set against a tech community that is in consolidation mode. Deals like the $8.5bn sale of Skype to Microsoft, which handed key roles to the likes of Covington & Burling, Simpson Thacher, Cadwalader and Sullivan & Cromwell, have sparked fears that another tech bubble could be on the way. However, the UK firms’ wavering attempts to break America go on. CC’s New York and Washington DC offices continue to struggle; fee-earner numbers have fallen from 399 in 2008 to 242 this year. Freshfields deserves plaudits for its litigation and arbitration practice that is now 12 partners strong in New York and Washington DC. Despite these hires, however, total fee-earner numbers now stand at 126, modestly up from 100 in 2008. While the Magic Circle tries to grow organically, one firm not ruling out a US merger is Bakers. The firm has been in the lateral market recruiting Washington and Chicago tax and IP lawyers this year. ‘It’s not easy, but our
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THE LB GLOBAL 100: GLOBAL EXPANSION
GLOBAL 100 DISTRIBUTION OF LAWYERS BY REGION
South America 1,411
United States 49,461
Asia
(exc. Middle East) 10,776
10,000
Europe
(inc. Russia, exc. UK) 17,572
United Kingdom
Middle East 1,283
12,429
0
prospects are improving as some firms in the US and other regions struggle with international expansion,’ says Leite. ‘We are open to a merger in the US, but the cultural and practice fit, along with the age-old issue of client conflicts, makes a large-scale merger a highly complex proposition.’
UNTAPPED RESOURCES With their home market continuing to drive growth, the US firms also have a natural advantage in Latin America. The influx of US firms into Brazil in recent years has included Gibson Dunn, Milbank and Simpson Thacher.
Cleary has also announced its plan to launch later this year. With the exception of Linklaters, which has been in Brazil since its 2001 alliance agreement with Lefosse Advogados, and Clifford Chance, which has been in the country since 1998 but does not have a local alliance, the Brazilian market is becoming dominated by US firms. Of those not on the ground, Dewey & LeBoeuf’s chairman Steven Davis says the firm is looking at its strategy in the Brazilian market. Of the expansionist UK firms Norton Rose’s Martyr insists the firm has no current plans to open there but adds: ‘We are seeing reasonable
amounts of work, in fact, just enough to justify us being there. We haven’t worked out how we’re going to do it but we know that we have to be in South America.’ For Milbank’s Mel Immergut his firm’s strategy is predicated on a world where in 25 years China, the US, India, Brazil and Mexico are the world’s leading economies. ‘We want to be established in the world’s money centres,’ he says. Many would echo his expectations for the world’s emerging markets. The difference being how firms try to carve up the world. LB emma.sadowski@legalease.co.uk jeremy.hodges@legalease.co.uk
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THE LB GLOBAL 100: GLOBAL ELITE
THE TOP TABLE A strong economic downturn means that the stars of global law are shining ever brighter. Time to reassess just who makes the grade JEREMY HODGES The world has changed and the Global Elite needs to reflect that. To butcher a phrase: the gap between the haves and the have-a-bits is widening. By almost every measure this elite group of firms is moving ahead. The average net income at a Global Elite firm is $545.5m compared to $291.6m for the whole Global 100 – the gap in profit per equity partner (PEP) is no less marked, with the Global 100 average PEP sitting at $1.4m compared to $2.3m for the Elite firms. Now in its ninth year, the Global Elite was set up to identify the key players on the world stage in terms of practice quality, client quality, profitability and coverage. Last year it became clear that the changing market meant the bar had to be raised even higher to merit inclusion in the exclusive club. A reassessment of all the firms’ qualities led to the removal of Sidley Austin. This year two firms are out – White & Case and Shearman & Sterling – taking the Global Elite to 15, the same size it was when LB originally formed the groupings in 2003. There has also been a reshuffling of the group to reflect the differing strengths of the domestic elite firms such as Slaughter and May and Cravath, Swaine & Moore and the slightly more internationally focused Sullivan & Cromwell. The Global Elite has never, and will never, be set in stone; it evolves as firms do. ‘The elite law firms are those that provide u unparalleled client service across key
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Illustration MAX SCHINDLER
27/6/11 10:03:49
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THE LB GLOBAL 100: GLOBAL ELITE
REVENUE GENERATION Revenue -
29 (+2) Davis Polk & Wardwell New York, 161 equity ptnrs, 0 non-equity ptnrs, 786 total lawyers
41 (0) Slaughter and May London, 123 equity ptnrs, 4 non-equity ptnrs, 728 total lawyers
51 (+2) Cravath, Swaine & Moore New York, 87 equity ptnrs, 0 non-equity ptnrs, 495 total lawyers
53 (-3) Wachtell, Lipton, Rosen & Katz New York, 84 equity ptnrs, 0 non-equity ptnrs, 253 total lawyers
$870m
(3%)
7%
41%
$1,107k
$687m
(2%)
5%
49%
$944k
$591m
(4%)
3%
47%
$580m
(-1%)
6%
$1,185m
(-4%)
$1,079m
per lawyer per lawyer
-
PEP 2011
$1.6m
$1m
$800k
$600k
PROFIT MARGIN
$400k
CAGR* (06-11)
$200k
The PRUDENT
TURNOVER 2011
Cost = Profit
per lawyer
$0
HQ; headcounts
(change from 2010)
$1.2m
Rank (change on 2010); firm
$1.4m
Global Elite
$648k = $459,000
(change from 2010)
CAGR* (06-11)
$2,236,000 (6%)
2%
= $462,000
$2,737,000 (7%)
6%
$1,194k - $637k
= $557,000
$3,170,000 (17%)
4%
63%
$2,292k - $850k
= $1,442,000
$4,345,000 (8%)
3%
3%
37%
$946k
$596k
= $350,000
$2,260,000 (-2%)
4%
(8%)
4%
50%
$1,437k
$718k
= $719,000
$3,250,000 (11%)
7%
$1,050m
(9%)
7%
47%
$926k
$487k
= $439,000
$2,586,000 (11%)
7%
$923.7m
(6%)
5%
51%
$1,140k
$563k = $577,000
$2,640,000 (9%)
2%
$726.2m
(3%)
6%
25%
$539k - $405k
= $134,000
$1,375,000 (2%)
-2%
$2,100m
(0%)
5%
48%
$1,083k
$569k = $514,000
$2,242,000 (9%)
3%
$1,929m
(6%)
6%
47%
$985k
= $459,000
$1,993,000 (5%)
4%
$1,886m
(0%)
0%
30%
$648k - $454k
= $194,000
$1,488,000 (6%)
0%
$1,873.5m (1%)
2%
43%
$743k - $425k
= $318,000
$1,819,000 (1%)
2%
(0%)
2%
48%
$797k -
= $380,000
$2,042,000 (-7%)
6%
$1,748.6m (6%)
6%
39%
$691k - $423k
= $269,000
$1,707,000 (0%)
5%
$1,278m
(-2%)
4%
33%
$652k - $439k
= $213,000
$1,530,000 (7%)
5%
$737m
(-8%)
-2%
39%
$927k
= $362,000
$1,565,000 (-8%)
4%
-
$482k
The PATIENT 15 (-2) Weil, Gotshal & Manges New York, 194 equity ptnrs, 101 non-equity ptnrs, 1,253 total lawyers
18 (+1) Sullivan & Cromwell New York, 166 equity ptnrs, 0 non-equity ptnrs, 751 total lawyers
21 (-1) Cleary Gottlieb Steen & Hamilton New York, 192 equity ptnrs, 0 non-equity ptnrs, 1,134 total lawyers
25 (+1) Simpson Thacher & Bartlett New York, 177 equity ptnrs, 0 non-equity ptnrs, 810 total lawyers
38 (0) Herbert Smith London, 132 equity ptnrs, 134 non-equity ptnrs, 1,347 total lawyers
-
The POTENT 2 (0)
Skadden, Arps, Slate, Meagher & Flom
New York, 445 equity ptnrs, 0 non-equity ptnrs, 1,939 total lawyers
4 (+2) Latham & Watkins National (US), 451 equity ptnrs, 145 non-equity ptnrs, 1,959 total lawyers
5 (-1)
Clifford Chance3
London, 379 equity ptnrs, 173 non-equity ptnrs, 2,912 total lawyers
6 (-1)
Linklaters3
London, 442 equity ptnrs, 31 non-equity ptnrs, 2,520 total lawyers
7 (0)
Freshfields Bruckhaus Deringer3
London, 416 equity ptnrs, 29 non-equity ptnrs, 2,232 total lawyers
8 (0)
Allen & Overy3
London, 398 equity ptnrs, 89 non-equity ptnrs, 2,529 total lawyers
$1,779.9m
-
$526k
$417k
REMOVED 13 (-1) White & Case International, 274 equity ptnrs, 119 non-equity ptnrs, 1,959 total lawyers
36 (-2) Shearman & Sterling New York, 184 equity ptnrs, 27 non-equity ptnrs, 795 total lawyers
u practices and geographies,’ argues Eric
Friedman, executive partner at Skadden, Arps, Slate, Meagher & Flom. ‘In addition to excellent legal advice, they are able to demonstrate a true understanding of clients’ business challenges.’
TESTING TIMES When White & Case joined the Elite in 2007 it was praised for the sheer breadth and depth of
-
its global reach. ‘White & Case joins the band in recognition of the quality of lawyering it can bring to bear from Vietnam to the Czech Republic, from project finance and banking to international arbitration and M&A,’ wrote LB at the time. The firm still has impressive reach but something somewhere is not working. In 2007 its PEP stood at $1.44m and its five-year compound annual growth rate
$565k
(CAGR) for net income was at 16% – net income that year stood at $420.6m. These were seen as compelling reasons to include the firm. Its inclusion was based on the expectation that the firm would build on this but the plain fact is White & Case remains in exactly the same place in 2011. The firm’s business has lagged partly because it was left exposed to the effects of the global financial crisis, but also because of
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THE LB GLOBAL 100: GLOBAL ELITE
Cleary’s turnover broke the
THE CRITERIA
$1bn mark for the first time this year
four or five years of internal wrangling that led to a procession of key partner departures across the firm. Although White & Case is now in a better place than it was, at times it feels like a firm that has been cowed by the events of the past few years. In 2010 the firm’s PEP was $1.5m, marking a 7% rise on the year before. This is off the back of a shrinking equity partnership, which fell 12% from 311 in 2009 to 274 last year. Its profit per lawyer (PPL) is just $213,000, putting it below most of its US rivals but just above Clifford Chance and Herbert Smith. The firm’s five-year revenue CAGR is a relatively respectable 4% but that number has been slowing for some time. Put into the mix its net income, at $418.6m, and the firm is straggling behind the average of the potent group of firms, which collectively stands at $786.9m. What puzzles about the firm is that this should be its market – its coverage in emerging markets allied to its strengths in projects and energy and natural resources should play into its hands. The firm’s capital markets prowess, again in Eastern Europe, is arguably one of the strongest of the international firms. The issue for White & Case is that it has lost ground in both New York and London, while it does not boast a market-leading M&A practice on either side of the Atlantic. A year or two more in recovery mode should see the firm improve profitability levels and another four-year term for the current chair Hugh Verrier will keep the firm on an even keel. Management cannot accept the prospect of another year of declining revenues.
GRADUAL DECLINE Shearman’s removal is less clear cut; at market level the sheen has come off its once gleaming
Wall Street M&A practice and its global brand has lost some of its cache. This isn’t the sort of decline that can be picked up from one year to the next. It is rather a more protracted slide away from the top of the market. As one managing partner of a Magic Circle firm told LB: ‘Five years ago they were undoubtedly among the top firms out there. They just aren’t anywhere right now.’ There are obvious areas of excellence – M&A has gained ground in London in part thanks to its leading Abu Dhabi practice and the rainmaking skills of European managing partner, Creighton Condon. The firm’s Germany practice remains a top-drawer outfit with its team of senior corporate partners. However, admittedly against a backdrop of falling M&A values (see box, ‘Corporate kings: 2010 a year of M&A deals for the Global Elite’, page 84) among the entire Global Elite, according to data provided by Bloomberg,
Established eight years ago Legal Business’s Global Elite is an exclusive group. Since its launch only three firms have been ushered into its ranks: Wachtell, Lipton, Rosen & Katz, Weil, Gotshal & Manges and White & Case. This year White & Case left its seat at the top table. To be considered, a firm must meet the following criteria: ● be a market-leader in its home jurisdiction in at least two of the three key practice areas – finance, M&A and litigation; ● boast a disproportionately high number of leading financial institutions and Global 500 clients; ● be considered a leader in either M&A or finance by peers on both sides of the Atlantic; ● have access to the highest quality lawyers worldwide or enjoy close working relationships with leading firms in Europe, North America and Asia; and ● operate at profit levels suitable for attracting and retaining the best partner talent.
Shearman advised on deals with an aggregate value of $130.6bn in 2010, marking a 40% drop year on year. The firm did at least increase volume by 17% to 155 deals for the year. Shearman’s case is also not helped by its u financial performance. Net income has
Over
66% of Clifford Chance’s lawyers are based outside of the UK
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THE LB GLOBAL 100: GLOBAL ELITE
Shearman has grown its revenue on average by just
2% a year over the past ten years, compared to the Global Elite average of 6%
u grown by just $47m since 2003 and now
stands at $288m, which is some way behind the average of the patient group of firms, and shows the lack of absolute growth in headcount terms. In 2003 the firm-wide headcount was 1,089 but the latest figures have it at 795. The average PEP of its peers in the patient group sits at $2.4m while Shearman languishes at $1.6m. By no means the lowest but compared to its Wall Street peers, it is behind the curve. Added to that, the firm’s revenue dropped by 8% to $737m in 2010, marginally ahead of its 2003 revenues of $700m. Its five-year CAGR is at -2%, meaning the writing has been on the wall for a while. Further investment is needed in Asia and Europe to maintain its global standing let alone grow. Management seems to recognise this and recent plays in Brussels and a foray into Hong Kong law bear this out. Shearman’s senior partner Rohan Weerasinghe expects revenue growth to return in 2011 and maintains that: ‘Giving clients an integrated global model is a distinction for us and only a handful of firms can really do it well enough.’
DECREASING CIRCLES If the Global Elite was selected on profitability alone then neither Herbert Smith nor Clifford Chance would make the list. The former in particular looks slightly out of place in the patient group now that Shearman has gone. Herbert Smith’s net income is $181m – by some way the lowest of the group, while its PPL is at $134,000, quite some distance behind the newly merged Hogan Lovells ($221,000).
CORPORATE KINGS: 2010 A YEAR OF M&A DEALS FOR THE GLOBAL ELITE* Aggregate (change No. of (change Average (change value from 2009) deals from 2009) deal size from 2009)
The PRUDENT Wachtell, Lipton, Rosen & Katz Davis Polk & Wardwell Cravath, Swaine & Moore Slaughter and May
$134.68bn $113.69bn $76.68bn $61.69bn
-16% -38% -67% 17%
53 103 55 68
39% 11% 0% 5%
$2.54bn $1.1bn $1.39bn $0.91bn
-40% -44% -67% 12%
$231.61bn $219.18bn $160.55bn $131.43bn $69.83bn
-6% -10% -1% -31% -3%
151 168 119 154 84
59% 47% 34% 41% 6%
$1.53bn $1.31bn $1.35bn $0.85bn $0.83bn
-41% -39% -26% -51% -9%
$259.92bn $206.69bn $204.21bn $136.5bn $107.94bn $83.84bn
-18% 19% 59% -21% -14% -57%
227 271 279 225 198 167
23% 36% 71% 12% 29% -10%
$1.15bn $0.76bn $0.73bn $0.61bn $0.55bn $0.5bn
-33% -12% -7% -29% -33% -52%
The PATIENT Sullivan & Cromwell Simpson Thacher & Bartlett Cleary Gottlieb Steen & Hamilton Weil, Gotshal & Manges Herbert Smith/Gleiss Lutz/Stibbe**
The POTENT Skadden, Arps, Slate, Meagher & Flom Freshfields Bruckhaus Deringer Latham & Watkins Linklaters Allen & Overy Clifford Chance
*comprises advice as principal adviser on completed or pending transactions **Bloomberg figures are for alliance firms combined
Source: Bloomberg
Global M&A activity returned to a semblance of normality in 2010. Volume increased across the Global Elite for all but Clifford Chance. And while values are down, almost universally there is much more optimism. At the top in volume terms sit Latham & Watkins, Freshfields Bruckhaus Deringer, Skadden, Arps, Slate, Meagher & Flom, and Linklaters. Latham’s deal count soared by 71% in 2010. The firm reigned supreme during the calendar year after it advised on 279 deals worth $204bn. This is up on 2009 when it landed roles on 163 transactions worth $128bn. Marginally behind the large US firm is Freshfields, which notched up roles on 271 deals during 2010, totalling $207bn. Even though this marks just a 36% rise on 2009 (the firm was instructed on 200 deals worth $173bn), it’s still an impressive performance by the Magic Circle firm. Below that sit Skadden and Linklaters, which both saw modest increases in the number of deals they advised on. Skadden acted on 227 deals worth $260bn, while Linklaters secured roles on 225 deals worth $136bn. Clifford Chance stands out as the only firm in the Global Elite to have experienced a fall off in the number of instructions it landed in 2010. Volume for the Magic Circle firm fell by 10% after it won roles on just 167 deals valued at $84bn. This is down from 2009 when it advised on 186 deals worth $194.8bn. While the rise in deal volume – collectively the Global Elite counted 2,322 transactions on their respective deal sheets compared to just 1,822 in 2009 – average deal sizes waned this year. Some of the biggest deals in 2009 were significantly larger than those in 2010. It’s also worth noting that 2010 saw a dearth of mega-deals in the western hemisphere. There was the ultimately aborted $41.9bn takeover of Canada’s Potash Corporation of Saskatchewan by mining giant BHP Billiton. Likewise, Prudential abandoned its $35.5bn play for American International Group’s Asian arm, AIA after the UK insurer failed to win the hearts of shareholders.
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THE LB GLOBAL 100: GLOBAL ELITE
The large City firm also runs the lowest profit margin of any firm in the Elite at 25%. Herbies’ management, first under senior partner David Gold and now his successor Jonathan Scott, has publicly stated that it wants to improve profitability but on this evidence little has been achieved. Why keep the firm in? In the corporate arena, it is one of the most improved City practices of the past five years, helped a great deal by an exposure to the emerging markets that few can match. Last year’s deal sheet alone includes significant matters for Bharti Airtel, BSkyB, Harrods Group, Arriva and EDF Group. Its relationships with the financial institutions have come on dramatically in the last five years. The past year saw the firm act for the banks on Prudential’s dual primary listing on the Hong Kong Stock Exchange and secondary listing on the Singapore Stock Exchange. The firm also landed a role on National Grid’s £3.3bn rights issue. Its litigation practice may not enjoy the same edge over rivals that it once did but it’s still a formidable contentious group, and the firm has a genuine balance between transactional and disputes, which is rare outside of the US. The firm’s most pressing strategic concern remains its alliance with Gleiss Lutz and Stibbe – if all three firms were to come under one name this would turn Herbert Smith into a truly Global Elite force. However, unless profitability improves, Herbert Smith’s position among this rarefied group will surely come into question. Elsewhere in the Global Elite there have been some other significant changes. To reflect
‘The elite law firms are those that provide unparalleled client service across key practices and geographies.’ Eric Friedman, Skadden a shuffling of the world order, it needs to be recognised that the domestic elite must now stand on its own. Therefore Slaughter and May, Wachtell, Lipton, Rosen & Katz, Davis Polk & Wardwell and Cravath now make up the prudent group. With an average PEP of $3m among the four firms and an average PPL of $709,000, each of these practices are leaders in their respective markets and have chosen to keep the bulk of their lawyers in their home territory. On the US side, all the firms, aside from Wachtell, have a nominal UK presence but none practise local law. The distinction also needs to be made that Sullivan & Cromwell’s and Simpson Thacher & Bartlett’s international presence has grown in recent years. For this reason, they’ve moved from the prudent into the patient group. Both
fit more conveniently into the group in terms of revenue and profitability. Simpson Thacher will never be a firm looking to open a network across Europe. But the addition of former CC heavyweights Adam Signy and Jason Glover, to go with its existing finance team in London, has significantly changed its standing in the City. Add to this the opening of a Hong Kong law practice and an office in São Paulo and Simpson Thacher is demonstrating that, like its stablemates Cleary Gottlieb Steen & Hamilton and Weil, Gotshal & Manges, it has strength, if not depth, in some of the key financial centres around the world. The patient group sits nicely in between the potent and prudent – its average net income is $424m, some way behind the international giants but ahead of the domestic elite. Sullivan u & Cromwell boasts the highest PPL
Since 2000 Weil’s PEP has increased by
128% to $2.26m
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THE LB GLOBAL 100: GLOBAL ELITE
The average non-equity partner at Linklaters was paid
£508k last year, compared to $759,000 at Latham
u within the patient group at $719,000. The
second highest is Simpson Thacher at $577,000. The group’s top performer this year in revenue growth is Cleary, which has had the best year out of all the Elite with a 9% spike in fee income to $1.05bn. With a new Hong Kong law capability, an office due to open in São Paulo and the usual diet of global mandates, including Petrobras’s $70bn share offering, it’s been quite a year for the US outfit. Cleary has in many ways the same international DNA as the global behemoths in the group we like to call potent. Its equity capital markets group, for instance, is one of the most formidable worldwide. Where it doesn’t compare with the potent firms is in terms of scale. The potent firms aren’t judged simply on the number of lawyers they have but we do recognise that they are Elite practices that can provide depth that those in the prudent and patient groups can’t match. With the largest turnover of the Elite, this group’s average net income also dwarfs the other two groups at $783m. But for this group, due to their exposure to every whim of the international markets, top line growth has not been easy to come by. Of the group, only Latham & Watkins and Allen & Overy increased revenues significantly, both by 6%, the former to $1.9bn and the latter to $1.7bn. Linklaters grew revenue by just 1% to $1.87bn. In dollar terms Freshfields’ net income dropped by 8% to $849m, the hardest fall in the Global Elite. The firm’s net income though is still the third largest, with Skadden trumping it at $997.6m and Latham in second with $899m. In profitability terms CC is the weakest of the group, with PPL at $194,000 – only slightly
higher than Herbert Smith – and PEP at $1.5m. The global giant needs to balance its appetite for expansion with profitability. In the first six months of this year, the firm has opened offices in Qatar, entered the Australian market through a double-merger, and now it is looking closely at South Korea. Rumours continue to do the rounds of an imminent Morocco launch. The firm has certainly rediscovered its potent form.
CHANGING FACES While two come out, no firm has been chosen to replace either White & Case or Shearman & Sterling. Kirkland & Ellis could be a strong
Cravath’s number of equity partners has grown by just 5% over the past ten years to
87 equity partners
contender. The Chicago-based firm, which had an outstanding year, saw revenue jump 14% to $1.63bn. Its net income is currently at $861m, while its five-year net income CAGR is 15%. Even PPL stands at an impressive $617,000, hypothetically putting it third in the group. Kirkland’s practice mix of market-leading litigation and restructuring groups, plus its strength in private equity makes its case fairly compelling but the firm still lacks a leading M&A practice in London or New York. Given its willingness to outbid almost all of its rivals in the lateral market that can be remedied. The 2009 hire of senior M&A partner David Fox from Skadden in New York was certainly a statement of clear intent. Paul, Weiss, Rifkind, Wharton & Garrison had another spectacular year in litigation and is now setting its sights on becoming a leading corporate practice. If the firm gets that right, then its offering becomes pretty irresistible. Debevoise & Plimpton and Milbank Tweed Hadley & McCloy also deserve close consideration, particularly for their strengths in US litigation and finance respectively. But looking outside of their home territory, the two firms have not made enough progress in terms of quality or coverage. The Global Elite is moving further away from the rest of the market. Gaining entry into the group is getting tougher as the market moves on from the spectre of the global financial crisis. The door is by no means shut to those who have been removed or to those aiming to make an entrance but the reasons have to be compelling. Can anyone upset the apple cart? LB jeremy.hodges@legalease.co.uk Additional reporting by Emma Sadowski
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THE LB GLOBAL 100: GLOBAL ELITE
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Hong Kong India Japan Malaysia Singapore Sri Lanka Thailand Indonesia N Zealand Taiwan Indonesia S Arabia
*Legal 500 ebooks are free to download for iPhone/iPad from our dedicated site; Amazon purchases incur a 70p charge
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THE LB GLOBAL 100: VITAL STATISTICS
A DIFFERENT WORLD IN THE RED Portuguese bank bailout
$106bn
Top grossing firm of 2010
BAKER & MCKENZIE
$2.1bn Top grossing film of 2010
TOY STORY 3
$1.06bn Total revenues for the Global 100
$76bn
Total hours billed by DLA Piper in 2010
620 years or 5.4 million hours
FLYING HIGH ● Hogan Lovells can fit its entire equity partnership (all 512 of them) into an A380 plane. ● Paul Weiss’ net income of $369m could buy one A380 plane.
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ALL THE RICHES Wachtell’s PEP of $4.34m (the Global 100’s highest) can buy you:
12%
One Persian rug from the Safavid dynasty or
1,320,668 Big Macs
of the Global 100 is comprised of UK firms
0.9% of the world’s population is made up of UK citizens
Clifford Chance with a revenue of £1.2bn would rank 53rd on The Sunday Times Rich List, tying with Viscount Portman SNIP SNIP Cuts to UK legal aid set out by the coalition government
£350m £355m Eversheds total revenue
Skadden with a revenue of $2.1bn is equivalent to
#564 on the Forbes
billionaires list
Baker & McKenzie could seat all
3,738 of its lawyers at Wimbledon’s Court 2 (capacity 4,000) to watch the tennis July/August 2011 Legal Business 89
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THE LB GLOBAL 100: METHODOLOGY
METHODOLOGY AND NOTES THE LB GLOBAL 100 FIRMS The firms that appear in the 2011 LB Global 100 are the largest 100 firms in the world ranked by revenue.
FINANCIAL YEAR-ENDS Financial years differ – most end in December in the US, and in April in the UK. We use the most recent year’s figures. For Baker & McKenzie, the figures included here apply to the year ending 30 June 2010 and are therefore six months behind most of the US firms and nine months behind the UK firms.
only full equity partners in our profits per equity partner (PEP) calculations. LB defines PEP as the division of net income to be distributed to full-time equivalent average number of equity partners at a firm over the course of a financial year. It is an average figure used to benchmark the profitability of firms. Non-equity partners, be they fixed-share, salaried, or laterals on probationary periods, are those that are not full participants in the firm’s profits, though they may have voting rights, and are excluded from our PEP calculations.
LB takes the compilation of the LB Global 100 very seriously. We make every effort to ensure that the figures we publish are accurate and precise. The overwhelming majority of firms co-operate fully with us in this regard by providing us with the required information. Some firms choose not to co-operate officially with our data collection process and in these circumstances we rely on figures given to us by trusted but anonymous sources.
TURNOVER Revenue figures do not include VAT, disbursements, interest or anything other than the worldwide fees generated by lawyers for their work during the last financial year.
HEADCOUNTS Full equity partner, non-equity partner and lawyer numbers are requested as full-time equivalent averages over the firm’s most recently completed financial year, and rounded to the nearest integer. Total lawyer numbers include partners, associates, assistants and trainees, but do not include paralegals.
Compound annual growth rate (CAGR) is a tool for measuring the performance of a business over time. It does not express economic reality but is a geometric average: it shows the rate at which a business would have grown annually over a defined period to reach its current position if it had grown at a uniform rate. In our tables, we have applied the CAGR to both PEP and revenue over five years, with results from the LB Global 100 2006 comprising the base year.
FOOTNOTES EXCHANGE RATES
SOURCES
CAGR
We have used an exchange rate of £1 equals $1.56128 – an average for the year 1 May 2010 to 30 April 2011. This is a slight fall from last year, when £1 equalled $1.56593. For the other exchange rates we used an average for the financial year. So, €1 equals $1.32433; for the Australian firms we use AUS$1 equals $0.8777; and for the sole Canadian practice CAN$1 equals $0.9705.
1. Sonnenschein Nath & Rosenthal and Denton Wilde Sapte have merged to form SNR Denton. Squire, Sanders & Dempsey and Hammonds have merged to form Squire Sanders Hammonds. The numbers printed here are for the legacy US firms. 2. K&L Gates. The figure shown for CAGR is based on the historical figures for the legacy Kirkpatrick & Lockhart part of the firm only before its 2007 merger with Preston Gates & Ellis. 3. Clifford Chance, Linklaters, Freshfields Bruckhaus Deringer, Allen & Overy, Norton Rose, Ashurst and Simmons & Simmons. At the time of going to press, these firms had not finalised and audited their LLP accounts and therefore these figures are an estimate. See the LB100 in September for the precise figures. Percentage changes on 2010 for UK firm figures are based on the final, signed-off figures that appeared in the LB100 2010 (LB207).
REVENUE PER LAWYER Revenue per lawyer (RPL), cost per lawyer and profits per lawyer are rounded to the nearest $1,000.
PROFIT MARGIN The profit margin is net income (revenue minus all operating costs and overheads) as a percentage of turnover.
NON-EQUITY PARTNERS AND PEP We recognise that firms have developed a variety of partnership structures and levels. We count
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