Last week, a poll by The Lawyer hit the headlines citing Kirkland & Ellis as “London’s least liked US firm”. In response to this, our consultant Rachael Fowler highlights some of the positives around US law firms and why they will still continue to thrive in the London market.
In the same poll, in which London law students and associates were asked which London based US law firm they would most and least like to work for, Kirkland came in at third place as the firm they would most like to join. Latham & Watkins topped the poll as the most popular firm but was also fourth for least liked firm, whilst White & Case came in at second place for both categories.
On face value this appears to be contradictory, however the bigger picture emerging from the poll is actually the sheer strength of US firms’ brands and reputations in London. This is illustrated by feedback given by respondents to the poll: “good brand recognition for a US firm”,“top corporate practice” and “genuine commitment to diversity”. US law firms are no longer perceived as the unknown outposts as they once were when many first arrived in London in the 1980s and 1990s.
The growth of US firms in London in terms of numbers has undoubtedly helped their brand recognition. The number of US firms offering training contracts in the City is on the rise and those with programmes already in place are steadily increasing their numbers (e.g. Latham now has a trainee intake of 26 which puts it on par with UK firms such as Taylor Wessing and ahead of RPC and Osborne Clarke). This goes hand in hand with the continuing wave of talent moving in US law firms’ favour in London: it seems as though every week there is another high-profile UK partner moving to join a US law firm, often taking significant client relationships with them. Traditionally these moves have been to bolster the firm’s key practice areas; however, increasingly US firms are sweeping up partners to launch new capabilities, such as more specialist areas like real estate, employment, tax and regulatory.
Despite this, their growth remains steady and for the most part meticulously strategic – in keeping with their business model: high numbers of big fee-earning advisors and relatively few people doing grunt work. This is in stark contrast to a number of UK firms, which operate the exact opposite with a small number of partners doing advisory work and a large number of associates doing the grunt work. Associates are increasingly seeking to move to US firms in order to gain greater levels of responsibility and autonomy, so they no longer feel like a small cog in a large machine at a UK firm.
It is no wonder that the profitability divide between UK and US firms continues to widen. In 2016, the London offices of the top 50 leading US firms in the UK generated $4.6bn, with four firms generating in excess of $200m. For US law firms, the imperative to grow in London is more incursive than defensive. US corporates view London as a strategic access point for exploring investments in underpriced assets in the depressed markets of Europe. European banks have remained far more risk averse than US investment banks and US capital markets have recovered much more quickly, therefore cash-starved European corporates increasingly turn to both of these as sources of funding. This is compounded by the strength of the US dollar, together with UK firms being more exposed to the Euro. This has played a big part in enabling US firms to offer such impressive salaries which, particularly with the ‘Cravath salary war’ last year, has raised their profile further.
Culture will always remain a contentious point for all law firms, however the stereotype of a US law firm being a satellite ‘sweat-shop’ where associates work both London and New York hours has largely dissipated. US law firms are much more ‘UK-centric’ now, with the introduction of trainee programmes (which do not exist in the US), PSLs, paralegals, UK-style appraisal systems and even their increasing focus on Europe (e.g. Goodwin launched offices in France and Germany in 2016). The sheer number of both associates and partners making the move across also speaks volumes: it can’t really be that different, can it? And all of this, together with the US pay packet – associates at US law firms really are getting a good deal.
Whatever the conflicting messages of The Lawyer poll last week, one thing is clear, not only are US law firms in London here to stay, they are also attracting talent at all levels of seniority away from UK firms for all the right reasons: a more profitable business model, top of the market salaries, greater levels of responsibility and autonomy, improved career prospects, increasingly the same opportunities and resources available at UK firms.
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