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Message: <blockquote data-quote="Jaysen" data-source="post: 1974" data-attributes="member: 1">Some thoughts:It was/is arguably easier to crack the London market than crack the US (NY) market. When US law firms first came to London, it was because their clients were expanding internationally. They used these existing relationships – with US corporations and Wall Street banks – to anchor their practice in London. These firms concentrated on a small number of practice areas, catering to their US clients, which justified the huge costs and challenges of entering a competitive financial market.Meanwhile, the magic circle law firms are trying to build a presence in the world's most competitive market for legal services. US law firms will be first pick for inbound deals or for overseas clients requiring US expertise and US law (e.g. leveraged finance). The magic circle have struggled to dent these longstanding relationships or differentiate their practices from US law firms when it comes to high ticket deals. Some have done better in niche areas, such as Clyde & Co's insurance practice, but in corporate and finance the New York elite reigns.US law firms also have the benefit of the world’s most litigious market. For many law firms, litigation contributes as much as 50% to total revenue. Kirkland & Ellis, for example, has not only stormed the London market in private equity, but it also happens to be the world's biggest litigation firm. The global financial crisis also led to a boom in regulatory and investigations work, which meant huge increases in revenue for many US law firms. UK law firms don't have this opportunity. Litigation-derived revenue is far smaller. Although, some law firms, like Freshfields, have tried to enter the US market by focusing on regulatory and investigations work.The remuneration system for UK law firms is another big challenge. Most operate on a lockstep model, where partners are paid according to their seniority at the law firm. This limits their ability to adjust their pay and therefore attract high performing partners in US. And, even if they tweak their lockstep system, which they have been trying to do, they risk unsettling their existing partners. The top UK law firms also generate far less profits per equity partner (PEP) compared to the New York elite. PEP is a metric that matters when you are looking to attract star partners.</blockquote>

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