- Date
- 9 November 2022
Business of Law Firms
The Magic Circle and its branding issues
By Jake Rickman |
What do you need to know this week?
This is the 19th article in TCLA’s series on the Business of Law Firms.
Last week, former Slaughter and May senior partner Christopher Saul published an insightful opinion piece on his LinkedIn profile exploring what he believes is an “inflexion point” facing the Magic Circle law firms, which traditionally refers to the five firms of Allen & Overy, Clifford Chance, Freshfields, Linklaters, and Slaughter and May.
The problem
In essence, the Magic Circle firms have failed to match the international growth of their largest US competitors. This is despite implementing growth strategies characterised by global mergers and the launch of international offices in pursuit of “becoming quality global ‘one stop shops’”. While these firms have greatly expanded their international network, they have failed to make headways into the most valuable domestic market in law — the United States.
Simultaneously, certain US firms like Kirkland & Ellis and Weil have undergone tremendous growth, largely due to their private equity offerings. The effect is that the growth differential between the Magic Circle and the US giants has grown by as much as four times in terms of revenue. The sustained devaluation of the pound against the dollar certainly has not helped matters.
The notable exception amongst the Magic Circle in this respect is of course Slaughter and May, which has not embarked on this global strategy pursued by the rest of the Magic Circle.
Mr Saul implies that Slaughters’ business model is fundamentally different that it does not face the same challenges as the other four firms, which is why he calls them “the Big 4” (not to be confused with the Big Four accounting firms: KPMG, PwC, Deloitte, and EY).
The solution
Having laid out the issues, Mr Saul therefore asks how the Magic Circles can avoid becoming “training service for the leading US firms”, referring to the revolving door that shuttles NQs from Magic Circle firms into higher-paying positions in US competitors.
Mr Saul proceeds to evaluate the merits of six potential solutions, some of which he favours over others:
Why is this important for your interviews?
Mr Saul’s musings are invaluable in their own right because it gives us insight into how a highly experienced legal professional evaluates the financial and commercial factors facing law firms.Additionally, Mr Saul’s analysis is in line with what other commenters have observed for some time. Understanding the competitive dynamics at play between the US and UK elite firms makes for valuable interview material, particularly where you are asked to demonstrate your commercial understanding of law firms’ businesses.
How is this topic relevant to law firms?
Mr Saul served as a partner at Slaughter and May for thirty years. He was elected head of the firm’s Corporate Department in 2004 and took on the role of Executive Chair in 2008, which he held until his departure from the firm in 2016.
