From an intensely competitive market in Asia to renewed fears of states breaking from the EU, law firm leaders give us the global perspective.
Done deals
‘It is encouraging that the factors contributing to a high level of dealmaking over the past year remain in place, and we are optimistic that these conditions will sustain robust M&A activity, particularly in the telecoms/media and energy sectors, and consolidating industries, such as pharma and healthcare. We may see increased interest in inbound M&A into Europe as its economic recovery continues.’
Eric Friedman, executive partner, Skadden, Arps, Slate, Meagher & Flom
Asia struggle
‘Most people underestimate how competitive it is in Asia to win work against UK and US firms. Clients are very selective and it’s very price competitive, even for the complex cross-border work. Everyone is competing hard to get to know the client.’
Stuart Fuller, global managing partner, King & Wood Mallesons
Beware inertia
‘The Magic Circle firms are anxious about US firms plundering their partner pipeline – but how do they motivate their young stars? Partnership opportunities are very thin now, something like a quarter of what it used to be. They’re like sharks that have to keep swimming to survive, but at some point you’re looking at a dead shark if you can’t keep up the momentum.’
James Roome, London senior partner, Akin Gump Strauss Hauer & Feld
Think local
‘Law is a very local commodity. We have 50 states where everyone has their own lawyer network in the US. While it’s important to be big you can’t overlook that law is local.’
Tom Fitzgerald, managing partner, Winston & Strawn
‘It’s the British firms that should be more worried about the implications of a Brexit because they have been riding on the strength of the London financial markets for the last two decades. If the UK exits the EU, the case for continental Europe becomes stronger again. I’ll be a lawyer for another ten years and personally I don’t think I’ll see it happen. We don’t have a working group to plan for that.’
Georg Seyfarth, co-managing partner, Hengeler Mueller
Looking ahead
‘We had some very large matters wind down in late 2013 and our pipeline began to fill more rapidly towards the end of 2014. We picked up considerable momentum towards the end of last year, and now almost six months into 2015, we have seen a significant uptick. We don’t value growth for growth’s sake above all other things, we focus on the long-term fundamentals: we have no debt, a very strong capital structure, and great institutional clients with whom we are deepening our partnerships.’
Bradley Butwin, chair, O’Melveny & Myers
In demand
‘I could list ten firms right now looking for private equity partners. Our currency is at the highest it’s been. These last few years have been the most challenging and the most rewarding. That’s due to a combination of increased competition for less work and deflation and unemployment having affected consumer confidence. The only constant – and thank heaven for Mark Carney – is the interest rates which have prevented an already bankrupt country from becoming even worse. It’s hard for law firms to differentiate themselves to steal market share in an overly competitive and contracting market.’
Perry Yam, head of private equity EMEA, Reed Smith
Currency swings
‘I take comfort in the fact we’re up in sterling terms as if exchange rates stay as they are, then we’re going to be looking to build off our growth this year so that we continue to rise in sterling. If we were sitting here looking at negative growth at a sterling level, then you’d be more concerned. There isn’t a lot you can do about currency, but if you look at the strength of the underlying business, it’s 5% up in revenue and 5% up in profits. That’s what one should focus on in determining whether the firm is performing well or not.’
Simon Davies, global managing partner, Linklaters
Not over yet
‘Lawyers have a tendency to think everything is task orientated. That’s not the way business works. Our targets are all ongoing and never ever finish. There are markets in America where we have room to add lots of people because what we offer on a worldwide basis is compelling, so we have the opportunity to take market share. That’s what you’ll see us doing over the next few years.’
Jay Rains, global co-chief executive, DLA Piper
Taking medicine
‘Two years ago we took the difficult steps of reducing the size of the firm to reposition us for continued future success. I explained at the time that restructuring and litigation work relating to the 2008 financial crisis was winding down and transaction activity was at a lower level. While these decisions were very difficult on a personal level, they have proven to be the right business decisions for the firm, as evidenced by our significant increases in profitability and productivity.’
Barry Wolf, executive partner, Weil, Gotshal & Manges
Options open
‘The London private equity market is challenging. We are coming in on one of the most competitive markets at a very competitive time. We have a realistic frame. We are harnessing relationships from the US, but to do private equity properly we need a leverage finance bench. We would be idiots not to look at disputes for London – such as litigation, and technology and life sciences – because these are big parts of the US practice. We can’t just sit in London and be a two-trick pony.’
David Evans, London chair, Goodwin Procter
Overheated
‘Some sectors in Asia are overlawyered. Commoditised work is being chased by a lot of lawyers. The higher end work such as fund formation, debt restructuring (which there will be more of as [China’s] economy cools a little bit) and capital markets typically requires multijurisdictional capability, so leading firms with strong US, English and local law capability will still thrive.’
George Petrow, European managing partner, Sidley Austin
‘The one clear legacy of the global financial crisis is the increased appetite for regulation and this is not confined to banking. It has spread to other sectors – competition, telecommunications, privacy and cyber security, and the ability of a law firm to help clients navigate through this environment is very important in today’s market.’
Stephen Immelt, chief executive, Hogan Lovells
Structural efficiency
‘Our primary motivation in being the first global law firm to adopt a verein structure in 2004 was operational flexibility given the complexity that inevitably grows with scale. This structure also supports liability protection and regulatory compliance. For the vast majority of our clients, and this is backed up by survey data, it is irrelevant how we are organised. Over the last decade our profit per equity parter has grown by nearly 90% and our revenues have grown by 100%. Both figures are bettered by only one of our competitors.’
Eduardo Leite, chairman, Baker & McKenzie
Bigger picture
‘We have worked hard to be consistent in our progress, which encourages our partners to look at success over three to five years. Rather than disparaging metrics and numbers, it’s better to put them in the proper context of what they represent and never to look at one of those metrics as the Holy Grail. They should be seen as a whole. That helps partners think strategically and makes sure they don’t get drunk on their own whisky, which people can tend to do.’
Robert Hays, chairman, King & Spalding
Tough Asia market
‘Asia is a tough market. With very few exceptions, people are having a very hard time there. We do very well in Singapore and we’re doing better in Tokyo, but we trimmed down in Hong Kong and Beijing, getting out of the Hong Kong law business because that was not succeeding and we decided to just deal with it. There was too much competition and low rates with not enough work. My predecessor used to say his strategy was to lose less money than his competitors. My strategy is to lose less money than my predecessor.’
Scott Edelman, chair, Milbank, Tweed, Hadley & McCloy