Our Chief Executive, Nick Shilton, has been quoted in The Brief today in response to a recent article highlighting the end of headhunters in the London legal market. His article argues that legal profession headhunters are here to stay. The Brief, the daily legal news update of The Times, compiles the most important and influential news in the legal industry.
Yesterday’s Brief reported the latest tribulations of the London office of King & Wood Mallesons, once the proud SJ Berwin. The firm has been haemorrhaging partners in Europe recently and has now added a failed recapitalisation to its recent track record. The usually irreverent Roll On Friday website’s exhortation to the UK legal market to offer new homes to KWM’s employees prompted Brief to muse “Perhaps this signals the end of headhunters in the London legal market.”
This is about as likely as the demise of commercial lawyers in the London legal market. Legal recruiters have existed in various different guises for several decades. However over the past 20 years they have proliferated in the City as well as internationally.
While historically the movement of qualified solicitors may have been primarily limited to associates swapping one law firm for another or escaping private practice for the in-house market, the 1990s heralded the lateral partner market in London. This was galvanised in no small part by an increasing number US law firms launching in London or expanding existing practices. Since 2000 the pace of lateral partner movement has only increased. This is hardly surprising given that there are now ca. 100 US law firms in London. Other major US firms are considering entering the City (yes, even post Brexit), while many of those already here harbour significant growth ambitions.
There are myriad reasons why partners move from one law firm to another. Some seek a more appropriate professional home, which may involve inter alia deeper strength in a particular area of practice, a closer sector fit, a more or less extensive geographic footprint etc. Others seek a different culture or management style. And of course, some partners are simply seeking more money and/or a new challenge.
But crucially there are two common themes why London sees so much lateral partner movement: Firstly many partners, albeit to very variable degrees, have portable practices: clients who represent mobile books of (theoretically) recurring revenue, which they may be able to transport to a new firm. Some firms have been far more successful in institutionalising client relationships than others, which means extracting as much revenue from the clients concerned, while mitigating the risk of key partners departing for pastures new.
Secondly there is simply so much choice for these partners in such a fragmented market. For example, there are 100 UK law firms with annual revenues exceeding £20m, while the bottom of the American Lawyer 100 revenue league table is annual fees of US$330 million. This represents an extraordinary contrast with, for example, the Big 4 accountancy practices who have such huge market share.
Until such time as there is enormous consolidation in the legal services market, London legal headhunters will continue to thrive.
For more information about the partner market in London or around the world please contact us.