‘Thirty years ago, the legal press didn’t exist,’ says Pinsent Masons managing partner John Cleland. ‘Deals were sometimes reported and occasionally they would find their way into the newspaper – but very rarely would the law firm’s name be mentioned. Now firms and the legal press have a very active dialogue on things, ranging from analysis to commentary on trends. We never had that thirty years ago.’
Indeed, much has changed in the 30 years since Legal Business first asked firms to cough up their financial results. And calling it the LB100 then would have been wildly inaccurate, what with the first report only including some 35 firms. It was not until the following year that the report graduated into a truer reflection of the business of law.
Topped and tailed by economic downturns, the decade from 1992 to 2002 was characterised by a London legal community exposed to an increasingly connected international landscape. The domestic market had crystallised in the preceding years and with it the top players were inducted into the Magic Circle by the legal press. Still largely recognisable as the same beasts today, it was these firms which would pioneer as City institutions started to outgrow the Square Mile and went in search of international acclaim.
Here comes the hotstepper
‘Casting my mind back to when I was applying for jobs 30 years ago, a number of the firm names would be the same. Some of the Magic Circle and Travers Smith were obviously in there – but there are a whole load of names that have just kind of disappeared,’ says Edmund Reed, managing partner of Travers Smith. Certainly, a number of once prominent names have been consigned to the annals of history, with Frere Cholmeley Bischoff, Turner Kenneth Brown, DJ Freeman and Wilde Sapte just a few examples.
That said, a glance at the original list of top firms by revenue yields many familiar faces. Members of the Magic Circle occupy five of the top six positions, accompanied by Lovell White Durrant (now Hogan Lovells). Now LB100 stalwarts, Simmons & Simmons, Herbert Smith (now Herbert Smith Freehills) and Norton Rose (now Norton Rose Fulbright) also reside in the top ten.
Conversely, Cameron Markaby Hewitt and McKenna & Co are notable absentees from the modern-day list, having respectively held 12th and 13th positions in 1992. The two merged in 1997 to form Cameron McKenna, which in turn acquired Nabarro Nathanson in 2017 and assumed its current moniker of CMS.
Simon Beddow, European leader in corporate and finance transactions at Bryan Cave Leighton Paisner and a partner at Ashurst for much of the period in question, recalls: ‘In 1992, Clifford Chance would have easily been the biggest law firm. When Coward Chance and Clifford Turner merged in 1987, everyone was incredulous that there was going to be a firm with 100 partners.’
The stats back up Beddow’s point. Our inaugural table had CC way out in front, with 1,168 lawyers and £245m in revenue. Linklaters (then Linklaters & Paines) is a distant second, with 718 lawyers and £154m in turnover. For context, both firms now have revenues approaching £2bn.
The next ten years saw the City’s leading firms expand their horizons. The establishment of the European Single Market at the start of 1993 opened the door to a whole new world of opportunities, and in time, some would establish themselves as pioneers of European expansion.
Beddow explains: ‘The mid-nineties was the Linklaters Alliance era – the firm had a more formal alliance with lots of leading European law firms as they tried to create a one-stop-shop for their clients. By the late 90s, many of the heritage firms had adopted the name Linklaters. The firm started to build a presence in Paris and Germany and showed serious intent to build scalable credibility in mainland Europe. Freshfields had also started to grow at that point, because by the late 90s, Freshfields had merged with Bruckhaus and with Deringer.’
Allen & Overy also underwent a seismic strategic shift. In 1992, the firm sat in sixth place in our table with a top line of £112m, chasing the rest of the Magic Circle and Lovell White Durrant. Ten years later, the firm would be nudging £600m in revenue, largely due to a European expansion strategy – the highlight of which was the 2000 merger with Benelux firm Loeff Claeys Verbeke – which added significant firepower in Belgium and Luxembourg.
The union brought a young Wim Dejonghe, A&O’s senior partner since 2016, into the merged firm’s fold. ‘I was a managing partner in Benelux in 1996!’ he laughs, on hearing the birth year of one LB reporter.
‘When I joined RPC, we had a bunch of disconnected terminals, and still had typewriters. You could also still smoke in the office – we had enormous ashtrays everywhere!’
James Miller, RPC
Fast forward a few years and it was becoming clear that the globetrotting appetites of leading players would not be satisfied by Europe alone, with 1999 marking the beginning of the transatlantic merger phenomenon. Clifford Chance’s tie-up with Rogers & Wells would be followed by numerous similar moves in the coming years.
Living in the matrix
Working practices have also changed beyond recognition in the last 30 years, as RPC managing partner James Miller notes: ‘When I joined RPC in 1995, we had a bunch of disconnected terminals, and we still had typewriters. You could also still smoke in the office – we had enormous ashtrays everywhere!’
The heralding of the internet, as well as the proliferation of mobile phones and laptops, means that lawyers need no longer be chained to their desks into the small hours. ‘There’s a much better environment now for people in how you create connectivity to the workplace and enable those people to work effectively, wherever they may be. There just wasn’t the same regard to that in the 90s because the technological tools weren’t available,’ notes Shane Gleghorn, Taylor Wessing’s managing partner.
More connectivity seems good news on paper, but the result is that the old approach of leaving work at work has increasingly fallen by the wayside. Miller adds: ‘People have 24/7 availability now. As a firm, we monitor when partners are working too many hours for too long, but pressure from clients and remote working means that the danger is always there.’
Part of the reason for a more balanced employer/employee relationship is arguably due to lawyers holding more power, as a saturated market forces firms to scrap for the best talent. The exponential increase in newly qualified salaries is testament to this, but it is true for more senior lawyers too.
Penny Angell, Hogan Lovells’ UK managing partner, explains: ‘Twenty-nine years ago when I joined Hogan Lovells, you joined a firm with the idea that you’re probably there for your whole career with aspirations to be a partner. There weren’t many in-house roles, and those were, wrongly so, looked down on by some. That has changed an awful lot. Once we saw some of those first big moves it was never an expectation that most people joining law would stay at the same firm. Therefore, firms now have to be much better at defining who they are and what their proposition is for upcoming talent.’
And it’s not just lawyers that are more willing to jump ship, says Angell: ‘Clients are less loyal. They are under cost pressures and it’s more regular now to be put through competitive processes, for panel appointments, but also for individual mandates. Lawyers have all had to learn to be better salespeople. Being able to go out and bring in the work rather than just relying on institutional relationships with clients who would always instruct you.’
American Pie
Then there is the oft-cited development of US firms pricing rivals out of the market. ‘There were very few, if any, US firms in London 30 years ago and obviously that is a trend that has changed. The legal landscape of firms in the City has really shifted over that time,’ notes Reed.
Nevertheless, the foundations had started to be laid. ‘A number of people will feed back that the arrival of the US firms is a recent development, but looking at the data, lots were in London already, many for decades. If you wanted an awful lot of money, you went to a US law firm, but too often that meant a compromise in culture,’ notes Jonny Myers, CC’s head of private equity and a partner at Lovells for much of the decade in question.
Indeed, Cleary (1971), Skadden (1988), Simpson Thacher (1978), Latham & Watkins (1990), Kirkland & Ellis (1994) and Weil Gotshal & Manges (1996) were all established in the capital by the mid-90s.
‘Firms now have to be much better at defining who they are and what their proposition is for upcoming talent.’
Penny Angell, Hogan Lovells
However, the impact US firms would have on the market could scarcely have been imagined then. ‘In 1998 I used to visit a friend at Latham and they had about 14 lawyers,’ recalls Beddow. For reference, Latham’s London office now boasts nearly 500.
The types of work most coveted has also changed in the intervening years. Leaf through the financial press today and you will invariably be confronted by a multitude of private equity deals involving high profile companies and eye-watering numbers, often led by New York-headquartered outfits.
That wasn’t always the case, as Myers explains: ‘The scale of private equity today is massive compared to what it was then. The sophistication has been transformed. Through the dotcom burst, the public markets were down around 40%, while private equity was only down 7% in value. So private equity evolved, being seen as a more credible longer-term investor.’
Beddow agrees: ‘In the mid-90s Ashurst and Clifford Chance were the two biggest private equity firms in the UK market. To be honest, we always felt that other firms regarded private equity as slightly unexciting. It was terribly intensive in terms of people – the deal sizes weren’t huge compared to big, listed company and takeover work. It was slightly unglamorous stuff. Towards the end of the 90s, we started to see the £100m, £250m, £500m deals. By the early 2000s, there were multibillion-pound buyouts and suddenly everybody else started to get really interested.’
Infinity and beyond
Ultimately, the decade following 1992 saw law firms massively increase in complexity as well as geographical scope. The initial European expansion would pave the wave for global developments seen in the following years, while the importance of the London market on the international stage would spur increasing numbers of US firms to cross the Atlantic. The movement towards the mature industry we see now had started in earnest.
Julian Howard, managing partner of Macfarlanes from 2010-2022, having joined as a trainee in 1984, sums up: ‘Law firms are proper businesses now. When I joined, we were just having that debate as to whether we were a profession or a business. We are quite clearly businesses where we’re all properly managed. Everyone has benefited from this shift. Clients get a significantly better, more valuable, service and firms are significantly better as providing that service.’ LB