It’s no secret that Slaughter and May is an anomaly. In the early 2000s, when the rest of the magic circle were busy opening offices and merging with foreign firms, Slaughter and May was pulling out of New York, Singapore and Paris. Over the years, many spectators have criticised the firm’s lack of international expansion and warned that Slaughter and May will fall behind the pack because of its limited overseas presence. If the critics were right, by now we’d expect to see signs that Slaughter and May has fallen from its throne. But we haven’t. In fact, it remains the most profitable firm in the City.
You might be wondering how Slaughter and May wins many of the biggest international mandates when it lacks a substantial international presence. That comes down to Slaughter and May’s best friend network. It goes beyond your standard set of law firm alliances as the firm has cultivated some of the best foreign relationships around the world. For decades, these firms have referred work, shared knowledge and secondments, and operated joint events for lawyers and clients. By partnering with the best firms in each jurisdiction, Slaughter and May doesn’t have to spend millions to win market share from local firms nor worry about the quality of its service after a series of mergers. When there’s a billion-dollar-acquisition, clients just care the best expertise in the market and that’s what you’re getting with Slaughter and May.
Across the Atlantic, Slaughter and May has developed many enviable relationships with elite New York firms including Cravath Swaine & Moore, Paul Weiss and Wachtell, Lipton, Rosen & Katz. In 2016, the firm was shortlisted for the title of Transatlantic Law Firm of the Year by Legal Week – not bad for a firm without its own US presence. In Europe, Slaughter and May works closely with best friend, Hengeller Mueller. The two firms advised Deutsche Bank after its $2.5bn fine from US and UK regulators for manipulating interest rates.
But some of the criticism laid against Slaughter and May is fair. The firm’s international capability depends on the strength of its best friend relationships. Take Davis Polk for example. Data from The Lawyer and Thomson Reuters show that Slaughter and May and Davis Polk were co-counsel on 19 M&A deals between 2008 and 2013. But in 2012, Davis Polk began to develop its own English law capability in London with the hire of a Freshfields capital markets lawyer. Now Davis Polk can do some of its finance work from this side of the pond. And that’s the risk. If the other firms decide to develop their English law capability, Slaughter and May may need to find new friends.
Slaughter and May doesn’t report its financial figures because, well, it doesn’t have to. It’s one of the few firms structured as a general partnership and not a limited liability partnership. We think that’s a good thing. It can worry less about the media’s view of a one year drop in PEP and focus on what matters – clients, not competition.
Slaughter and May is often seen as an old-fashioned or traditional firm. That may be influenced by the fact that most partners are homegrown. The firm has only ever made two lateral hires. The first was to develop a US law capability in Hong Kong after a number of US firms moved into the region. The second was to boost its pensions capability in London.
Lawyers don’t really leave for other firms either. Unlike the rest of the magic circle, US firms haven’t had much luck poaching Slaughter and May partners. According to The Lawyer, of the new partners that started between 2005 and 2015, 95% remain at the firm. Maybe it’s because Slaughter and May has a relatively small and close-knit partnership. According to research from The Lawyer, between 2000 and 2015, Slaughter and May’s partner headcount increased by just 7. Compare that to 282 at Allen & Overy or 269 at Clifford Chance.
If there’s an acquisition on the front page of the FT, chances are that Slaughter and May was involved. The firm is widely regarded as one of the best for high-end UK corporate work and it advises on many of the biggest deals in the market.
Slaughter and May has kicked off 2018 with a bang. In the first quarter, Slaughter and May topped the table for UK M&A deals by value, according to research by Mergermarket. That included advising on the largest deal of the first quarter, acting for GlaxoSmithKline in buying out Novartis from its consumer healthcare joint venture. It has also been advising GKN, first defending engineering giant from Melrose, and now handling the sale in the UK’s biggest hostile takeover in almost a decade.
Over the next few months, Slaughter and May should finish up advising Vodafone India on its $23bn merger with Idea Cellular. The firm’s work advising its longstanding client Vodafone helped it top the Mergermarket’s 2017 league tables in India for M&A deals by value. Back in 2013, Slaughter and May replaced regular Vodafone adviser Linklaters in the world’s third-largest corporate deal. The firm advised Vodafone on the sale of its stake in Verizon for $130bn.
Finally, Slaughter and May advises more UK stock market clients than any other law firm. According to research undertaken by Adviser Rankings, the firm had 115 listed clients in November 2017. That’s 34 more than its nearest magic circle rival Linklaters.