Linklaters works on the biggest UK and European M&A deals and regularly competes with rival Freshfields for first place on the league tables. The firm advised on 196 deals worth $235.2bn in 2016-17 and was crowned ‘M&A Team of the Year’ at the British Legal Awards 2017.
But Linklaters isn’t just a corporate heavyweight. In the 90s and early 2000s, the firm built up its restructuring and leveraged finance practices to challenge the dominance of Allen & Overy and Clifford Chance. Therefore Linklaters can boast a well-rounded corporate and finance practice compared to its magic circle rivals.
In the late 90s, when many City law firms had begun their international expansion, Linklaters formed an alliance with many leading European law firms, and later merged with three. Under the helm of legendary managing partner, Tony Angel, Linklaters pursued rapid global expansion, which saw the percentage of UK-based partners half from 80 to 40 between 2001 and 2004.
During this time, Angels came under fire for the firm’s stagnating profitability and profits per equity partners (PEP) at £674,000, which had fallen below Freshfields and counterparts in the US. But in 2004, Angel unveiled his ‘Clear Blue Water’ strategy to put Linklaters at the forefront of the global law firms.
Not only did Linklaters’ revenue grow to topple Clifford Chance, then the largest law firm in the world, but this was matched by a remarkable growth in profitability. By 2007, profitability had doubled and profits per equity partner stood at £1.294m. Linklaters’ had cemented its position as the City’s most formidable law firm. Angel’s ‘Clear Blue Water’ strategy would go on to become a case-study at Harvard Law School and a blueprint which many firms followed.
Linklaters wasted little time expanding into Asia. In 2004, the firm hired two senior Japanese lawyers together with 20 associates. A year later, it completed Japan’s first international merger, absorbing Mitsui Yasuda Wani & Maeda, Japan’s sixth-largest law firm at the time. This has led to some lucrative deals including advising Softbank on the launch of its Vision Fund: the world’s largest-ever technology investment fund in 2017.
In 2012 this was affirmed by an exclusive alliance with Australian firm Allens. The partnership provided access to lawyers and client referrals across the other side of the globe without the typical costs associated with a partnership. This is an approach it has also mirrored in South Africa in its alliance with Webber Wentzel. In 2017 the firm reviewed five years with alliance partner Allens and plans have been made for more secondments and training between the two firms.
Meanwhile, Linklaters celebrated 25 years in Singapore in 2017. Like Allen & Overy and Clifford Chance, the firm can hire Singaporean lawyers and practice local law thanks to its Qualifying Foreign Law Practice licence. Though the firms will be aware that the Singapore Ministry of Law recently announced its decision to review licences in 2020.
Linklaters has also made great strides to offer local law capability in China. Its ‘Project Trident’ began as a search for a merger partner in the country, but the firm later changed course and adopted the ‘greenfield’ option, which saw three partners and 16 associates leave Linklaters to set up a new firm, Zhao Sheng. This move was made possible thanks to the Shanghai Free Trade-Zone regime, which allows tie-ups between international and domestic firms, provided the domestic firm has been independent for at least three years. For now, Linklaters has formed a best-friends relationship with the domestic firm, with plans to establish a joint venture in two to three years. This capability will complement its existing M&A, project finance and capital markets practice in the region, offering an integrated service for its clients, and could make it the first in the magic circle to practice Chinese law.
After an extensive consultation exercise, Linklaters has rolled out a number of progressive initiatives under its ‘Strategy Refresh’ announced in 2017. Partners are now given regular feedback on a range of factors, including team-based metrics and innovation. This is a bid to encourage entrepreneurship and a united team, but slightly contrasts with the style adopted by Tony Angels who pioneered extensive financial metrics for partners.
Like the rest of the magic circle, Linklaters has also amended partner remuneration by giving the firm flexibility to reward star partners. The lockstep has been raised to 12 years, with a gate at eight years and a review of partners at the top every five years. These reforms remain conservative compared to the likes of Freshfields and Clifford Chance, who have radically reformed their lockstep models to attract and retain star partners away from US firms.
The firm’s reverse mentoring scheme, whereby younger lawyers mentor senior partners, opened in 2017. ‘YourLink’ rolled out in Germany, offering associates the opportunity to sign up for 40 hour weeks for reduced pay. The firm also posted an impressive trainee retention rate of 84%, above Freshfields 66%, but just under A&O’s 85%.
Linklaters has seen strong growth from its New York and Washington DC offices. The firm recently hired a new global head of its US practice and has been clear about its efforts to expand in the US.
Whilst in the past, Linklaters has struggled to challenge Freshfields leading German practice, it’s invested in Germany at a time when the rest of the magic circle have pulled out, securing Clifford Chance’s Germany private equity head and a Frankfurt finance partner from A&O.
Speaking of lateral hires, Linklaters recently secured Latham’s co-head of investment funds, Tom Alabaster. Alabaster previously worked at the private equity firm, Carlyle, and reflects Linklaters’ broader strategy to build its relationships with financial sponsors (borrowers). The firm has traditionally had a weaker US fund practice than its rivals and reflects Linklaters’ plans to compete with the likes of Freshfields and Clifford Chance.
Linklaters also maintains a relatively small disputes team compared to its corporate and finance practice. With around 55 partners, it makes just over 10% of the partnership at Linklaters and it only broke off as a separate practice area in 2014. But with recent lateral hires in Russia and Washington DC, disputes head, Michael Bennet has spoken of his mandate to grow disputes across London, Continental Europe, the US and Asia.
Linklaters launched its own technology software, LinkRFI, in response to ringfencing reforms. The system helps banks classify their clients by quickly searching through 16 regulatory registers and processing thousands of names in a matter of hours – much faster than the 12 minutes it would take a junior lawyer to search for one, according to Linklaters. It’s now being used by Lloyds and Royal Bank of Scotland and led to the award of Legal Technology Team of the Year at the Legal Business Awards 2017.
Linklaters is developing its own AI platform, Nakhoda, through its AI working group, which will be used for a number of tasks including due diligence. The firm has also trialled a number of third-party AI software, including RAVN and Kira Systems, which help with contract review.
The firm uses project managers across 25 jurisdictions to assist in large mandates, and it has a client committee, which oversees work done for the biggest clients, and identifies relevant opportunities such as secondments. The commmitee has a mandate to improve areas of client service within Linklaters, including implementing greater collaboration within teams and offices.
Meanwhile, its investment in low-cost centres includes its longstanding Colchester office; its business services centre in Poland, which recently relocated to larger premises; and in 2017, a centre in Leece, to support its offering in Milan.