Understanding US law firms in the UK

[ALYH]

Hi TCLA!

I am trying to understand how US law firms operate in the UK. Take Reed Smith as an example, Reed Smith is not a Swiss Verein law firm so my understanding is that it Reed Smith has one global profit (Reed Smith UK shares its profit with other Reed Smith entities). My questions are:

1. How does Reed Smith UK bill its clients? Would they bill its clients in US$ or £?
2. In terms of expenses, do you know if they are done in US$ or £?
3. Do they pay their lawyers in the UK in ££ or US$?
4. How do you think the surge in US$ is affecting US law firms operating in the UK? In particular, the tech industry. I was thinking that in relation to M&A, it would be cheaper for US companies to invest in the UK which would increase M&A deals but it would weaken UK's tech industry in that there would be less UK tech companies in the market as they would essentially be owned by US companies. It seems that this would be beneficial for US law firms in the US but not US law firms. Am I right to think that? Additionally, how do you think the surge in $$ would affect UK tech industry?
5. Additionally, I believe that impact of the strong $$ on the tech industry and therefore the legal profession can be discussed alongside interest rates that have recently been increased in the US and the UK. What do you think?

Thank you for your help on this!

 

[RANDOTRON]

Hi TCLA!

I am trying to understand how US law firms operate in the UK. Take Reed Smith as an example, Reed Smith is not a Swiss Verein law firm so my understanding is that it Reed Smith has one global profit (Reed Smith UK shares its profit with other Reed Smith entities). My questions are:

1. How does Reed Smith UK bill its clients? Would they bill its clients in US$ or £?
2. In terms of expenses, do you know if they are done in US$ or £?
3. Do they pay their lawyers in the UK in ££ or US$?
4. How do you think the surge in US$ is affecting US law firms operating in the UK? In particular, the tech industry. I was thinking that in relation to M&A, it would be cheaper for US companies to invest in the UK which would increase M&A deals but it would weaken UK's tech industry in that there would be less UK tech companies in the market as they would essentially be owned by US companies. It seems that this would be beneficial for US law firms in the US but not US law firms. Am I right to think that? Additionally, how do you think the surge in $$ would affect UK tech industry?
5. Additionally, I believe that impact of the strong $$ on the tech industry and therefore the legal profession can be discussed alongside interest rates that have recently been increased in the US and the UK. What do you think?

Thank you for your help on this!

This article should answer your questions on billing: https://www.law.com/international-e...n-big-law-378-203061/?slreturn=20221007095908

 

[Romiras]

Hi TCLA!

I am trying to understand how US law firms operate in the UK. Take Reed Smith as an example, Reed Smith is not a Swiss Verein law firm so my understanding is that it Reed Smith has one global profit (Reed Smith UK shares its profit with other Reed Smith entities). My questions are:

1. How does Reed Smith UK bill its clients? Would they bill its clients in US$ or £?
2. In terms of expenses, do you know if they are done in US$ or £?
3. Do they pay their lawyers in the UK in ££ or US$?
4. How do you think the surge in US$ is affecting US law firms operating in the UK? In particular, the tech industry. I was thinking that in relation to M&A, it would be cheaper for US companies to invest in the UK which would increase M&A deals but it would weaken UK's tech industry in that there would be less UK tech companies in the market as they would essentially be owned by US companies. It seems that this would be beneficial for US law firms in the US but not US law firms. Am I right to think that? Additionally, how do you think the surge in $$ would affect UK tech industry?
5. Additionally, I believe that impact of the strong $$ on the tech industry and therefore the legal profession can be discussed alongside interest rates that have recently been increased in the US and the UK. What do you think?

Thank you for your help on this!

1. Depends on the client. If the relationship is a US-centric one, it'll likely be billed in USD. If the client prefers / operates in USD, it'll be billed in USD. Reed Smith likely has it's own European client base and therefore services them and deals in GBP and EUR. They may even get paid more in EUR than GBP.

2. Depends on the expense and the client.

3. £ unless they're originally on a USD contract (e.g. lateral US lawyer to the UK office). Some firms allow for lawyers to be paid on a FX rate based on USD but converted into GBP. In most cases, it'll always be GBP even if the salary is pegged to USD.

4. UK offices of US law firms will now have to pay more if their lawyers are on the FX rate. There will be a concern about the increase in cost base especially against their currency pool (e.g. they may not have much USD lying around).

I'm not going to comment about the tech industry. I think in simple terms, a stronger USD does give more buying power to acquire 'discounted' GBP assets, but you need to think about antitrust, the current recessionary environment, dry powder availability, capacity of investors on an operational level, etc.

 

[ALYH]

1. Depends on the client. If the relationship is a US-centric one, it'll likely be billed in USD. If the client prefers / operates in USD, it'll be billed in USD. Reed Smith likely has it's own European client base and therefore services them and deals in GBP and EUR. They may even get paid more in EUR than GBP.

2. Depends on the expense and the client.

3. £ unless they're originally on a USD contract (e.g. lateral US lawyer to the UK office). Some firms allow for lawyers to be paid on a FX rate based on USD but converted into GBP. In most cases, it'll always be GBP even if the salary is pegged to USD.

4. UK offices of US law firms will now have to pay more if their lawyers are on the FX rate. There will be a concern about the increase in cost base especially against their currency pool (e.g. they may not have much USD lying around).

I'm not going to comment about the tech industry. I think in simple terms, a stronger USD does give more buying power to acquire 'discounted' GBP assets, but you need to think about antitrust, the current recessionary environment, dry powder availability, capacity of investors on an operational level, etc.

Thank you so much, this has provided a lot more clarity!

In relation to the tech industry, I am aware of the other factors but as I have chosen to use 'the surge of USD' as my current issue affecting the legal profession with a focus on the tech industry, how deep do you think I should go in my answer? I'm worried that 300 words is not enough so perhaps I should just mention that there are other factors affecting it.

Keen to know your thoughts on this!