The social function of myth is to bolster a value system in which a person or organisation has a meaningful place. Unsurprisingly, the legal sector has plenty of these myths, but rather than taking account of the sheer messiness of the global legal market, too much strategy discussion is based on erroneous beliefs rather than hard evidence.
Prime among these is the prediction that there will be a small club of firms that ends up dominating the global legal market. The number of firms of the elect varies from eight to 12 to 15 but, like intellectual knotweed, the prediction persists. I’m going to say it one more time: there is no evidence for this assertion whatsoever. Indeed, next time you’re sitting through a presentation that peddles this myth you’ll know it’s safe to scroll through your emails.
Our research for the latest The Lawyer Global 200 report bears this out. The number of firms that gross more than $1bn is now 34, only one down from 35 the previous year because of the departure of KWM from the top grouping. Given that most of the 34 firms are already cross-jurisdictional organisations, are the small-club salesmen seriously suggesting there will be consolidation among that group? In the meantime the verein – or, more modishly, the company limited by guarantee (CLG) adopted by Gowling WLG, Eversheds Sutherland and, most recently, by Womble Bond will allow smaller firms to hoist themselves into a bigger arena, but there’s not an obvious breakaway group at the top. The revenue range has remained constant. The top firm (this year, Latham) grossed 14 times as much as the 200th firm (this year, Torys) – exactly the same ratio as the previous year.
There is some consolidation but this is mostly domestic and defensive. The Arnold & Porter/Kaye Scholer deal – a merger between firms with faltering financials – is a good example of what is going on in the US. On that level, the CMS bulk-buy, met largely with bafflement by its London peers, is coherent.
By contrast, in less mature legal economies there is room for dramatic growth via organic expansion. The number of Chinese firms in the Global 200 has trebled to six in just one year (for more details see our Asia Pacific 100 report, which we also excerpt in this issue).
Which brings us to Simmons & Simmons and Dentons, whose contrast in global strategies and leadership styles is so marked as to be comical. One is conservative; the other a carnival coalition.
There’s a fair amount of affection for Simmons in the London market but also justified criticism of the firm’s willed stasis. First, its inconsistent performance has led to a slide down comparative revenue tables. Second, patchy investment in an overseas offering is not compensated for by a shiny Bristol office, however exciting that might be for talent retention. The biggest stumbling block for Simmons is its insistence that any deal be a full financial merger, though the belief in its own culture is no bad thing, given the question marks over Dentons’ cultural coherence.
For what it’s worth, I think Simmons will eventually wind up with a US deal. But it won’t be the love match it yearns for.
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