How was it for you? – the people and events that defined the profession over 25 years of Legal Business

25 years ago Legal Business was launched to chronicle a rapidly changing profession in the wake of Big Bang. We look back to identify 25 defining figures, events and trends that shaped a world-beating profession.

The curious nature of the legal industry means that as radically as things seem to change, they stay the same. In January 1990 the City was still being defined by the Big Bang de-regulation of London’s financial services market, even though boom was rapidly turning to bust. Leading City law firms were still basically domestic practices built around English practices with limited branch networks. An elite City law firm would not have generated much more than £100m in a good year. That scale and internationalisation would change in the coming decade – for all the talk of supposedly radical upheaval in the modern legal industry – the shake-up in the profession seen in the 1990s at the very least matches and probably outdoes anything that has happened since the turn of the millennium.

In many ways, looking at the forces currently shaping the profession: globalisation, frenetic law-making and more intrusive regulation, non-law firm competition, experiments and pressure on business models – there is much at the end of 2014 that is familiar with those early issues of Legal Business, however much the fashions have mercifully changed.

To mark the 25th anniversary of Legal Business, we decided to highlight 25 defining events, people and trends that have shaped the profession since 1990. In addition, we canvassed a large cross-section of significant players from the last quarter of a century to discover what mattered in the law game and how what has gone will inform the profession in the years to come.

1. The Birth of Clifford Chance – it all started here

Undoubtedly one of the most important landmarks for law firm globalisation and setting the tone for much of Legal Business’ coverage over the last 25 years has been the creation and subsequent evolution of Clifford Chance (CC). It started with City law’s own big bang – the 1987 merger of Coward Chance and Clifford Turner two years before we launched.

It wasn’t just that deal – though it is probably the single most significant legal merger of the post-War era in terms of global influence – CC from 1987 to 2000 was the definitive global law firm, re-writing the rules of the game. It was iconoclastic, ambitious, imaginative and widely copied in its drive to remake the law firm in a global context. During the period, CC was without question the most influential law firm globally by a long shot. This was evident not just in its scale and ambition but also its unabashed commercialism.

With the tie-up of two leading City banking practices propelling this upstart into the UK elite, CC then stole the initiative in the globalisation stakes as the expansive 1990s drew to a close. In a highly ambitious move, it went live in 2000 with the boldest of three-way mergers: with Germany’s Pünder, Volhard, Weber & Axster and, in a bid to finally solve the transatlantic conundrum, a merger with New York-based Rogers & Wells.

The US tie-up was undermined, partly because of a mismatch that saw Rogers & Wells lacking the credibility to offer a successful Manhattan transactional practice. The union leveraged CC’s antitrust and litigation capabilities but attempts to integrate Rogers & Wells’ eat-what-you-kill remuneration system into CC’s traditional lockstep ultimately proved disastrous.

Amid all that came a failed push by CC to expand on the West Coast of the US, taking a team from Brobeck, Phleger & Harrison in California led by the charismatic but controversial figure of Tower Snow, which contributed ultimately to the dissolution of the US firm and a rash of bloody lawsuits. The whole episode was largely an exercise in hubris and CC wound its West Coast practice down two years later. The sustained problems in the US did CC huge damage and drained much of its once-unstoppable momentum.

The years that followed saw the firm hit hard by the financial crisis as it was clear that it had become overly reliant on financial services work – the firm subsequently reduced the partnership by 15% – a move voted upon by the partners themselves.

Suffering flat financials post-Lehman and in need of a jolt, the firm underwent a highly publicised election process in 2013 that saw the popular corporate heavyweight Matthew Layton take on the leadership.

There have been some signs of revival with CC unveiling its best-ever revenues this year of £1.36bn but CC faces fresh challenges, not least that it is up against so many rivals that stole its playbook. The question is whether there is enough of the magic that made the firm so distinctive still in there.

2. Sir Max Williams and Geoffrey Howe – the architects of global law

Nearly three decades have passed and the market still cites the 1987 union of Coward Chance and Clifford Turner as the watershed moment in the evolution of global law. Its architects, Sir Max Williams and Geoffrey Howe, win numerous plaudits for how effectively they executed the deal, leapfrogging the competition to become the largest UK law firm.

The task of making it work and developing the international strategy was given to Howe, who was elected managing partner 18 months into the deal. It would be ten years later that Howe reflected on the cultural and logistical problems faced and, addressing an audience at a conference called ‘Merger Most Foul’, he identified a feeling among partners that the old culture, and traditional ways of doing things, were being destroyed. In any event Howe, who now serves as a non-executive chairman at City-based insurance brokers JLT Group and chairman at Nationwide Building Society, always pushed for a fresh approach to operating a law firm.

‘It was a brilliantly executed merger,’ says Linklaters senior partner Robert Elliott. ‘The two firms complemented each other very well, integrated very well and very quickly, and before you knew it you had a big international competitor. Sir Max Williams and his team did a very impressive deal.’

CC’s current managing partner Matthew Layton agrees, and comments: ‘Geoffrey Howe was a visionary in terms of making it in some ways the most successful law firm merger to take place, and using that platform to drive the development of a leading international global firm.’

It wasn’t just the personal contribution of these two figures – considerable as it was. CC under their leadership became a breeding ground for imaginative thinkers in management roles and fashioned a golden generation of brilliantly commercial partners who have continued to excel in the City across a range of firms. Many years on, that legacy is undiminished.

3. Andersen and Wilde Sapte – the most significant merger that never happened

It could have been so different: the ultimately failed takeover talks between Big Five accountancy giant Arthur Andersen and drifting but respected finance shop Wilde Sapte in 1998 could have created something memorable.

Andersen led the way for the accountants in pushing its legal services capabilities in the 1990s, but largely struggled to gain traction with its mid-tier national law firm Garretts. However, its tie-ups with Dundas & Wilson and Garrigues showed it had the wherewithal to attract quality outfits and it had even flirted with Simmons & Simmons.

Wilde Sapte, meanwhile, was ripe for a takeover. Having successfully carved out a niche for itself in asset and leveraged finance in the 1980s, it became a victim of its own success in the 1990s as the Magic Circle grew wise to the attractions of these practice areas and began to lure Wilde Sapte’s best players across, including David Ereira to Freshfields and Graham Smith to Allen & Overy (A&O). Top of equity slumped from £275,000 in 1990 to £175,000 by 1995.

With both sides voting in favour after six months of discussions, the gamble looked set to go ahead. But news of the departure of Smith and asset finance partner Mario Jacovides to A&O in spring 1998 preceded Andersen telling Wilde Sapte that the deal was off in June, amid claims of concerns that the law firm would be unable to deliver a complete partnership to the accountants. Wilde Sapte senior partner Mark Andrews reportedly told staff: ‘Andersens have made a grave error of judgement.’

Two years later and an increasingly desperate Wilde Sapte fell into the arms of Denton Hall. In retrospect, Andersen did those remaining Wilde Sapte partners a huge favour, as it collapsed spectacularly in 2002.

However, the true significance of the episode is that it was the first reverse in the seemingly unstoppable momentum of the accountants, who were in the mid-to-late 1990s looking a hugely potent threat. Instead, the moment passed as galvanised City law firms raised their game. Will it be different this time?

4. Lord Thomas Bingham – the outstanding jurist

The late Lord Thomas Bingham held an impressively long list of titles – Master of the Rolls, Lord Chief Justice, Knight of the Garter, and senior Law Lord to name a few. An iconic figure in the profession who presided over the House of Lords between 2000 and 2008, Bingham is viewed by many advocates and academics alike as leading the golden generation of the UK’s finest post-War judicial line-up.

Blackstone Chambers’ Lord Woolf says Bingham in particular ‘elevated the importance of the rule of law’, while Freshfields Bruckhaus Deringer’s disputes heavyweight Christopher Pugh cites the outspoken jurist as the person who exemplified London’s position as a centre for dispute resolution.

Alan Paterson’s book Final Judgment quotes a counsel on the conversational style that enveloped the Lords of the 2000s following Bingham’s appointment: ‘The atmosphere that Lord Bingham… imposed through sheer force of personality… was [one] which you had a very informed dialogue with the bench without… any of the sort of acrimony that one used to have.’

Born in London and the son of two doctors, Bingham’s wider influence was to grow thanks to his 2010 celebrated book The Rule of Law, which examines its historical origins and establishes eight principles that outline its meaning in western democracies.

A guiding force behind judicial decisions that challenged the politically charged executive on issues of counter-terrorism and public-order policing, Bingham presided over two fundamental human rights cases: A and Others v Secretary of State for the Home Department (1) and (2). The first held the indefinite detention of foreign prisoners without trial was incompatible with human rights while the second rejected the use of evidence obtained by torture in British courts. In essence, Bingham and his bench advanced the rights of all individuals and rejected the Attorney General’s argument that the judiciary owed the government deference. Other controversial moves by Bingham include pushing Home Secretary Jack Straw for the abolition of mandatory life sentences for murder and publicly arguing that Attorney General Lord Goldsmith’s advice on the Iraq invasion was flawed.

5. Rise of the GCs – in competition with your client

There was no single moment or individual to identify, but there is no question that one of the most fundamental changes to the profession since Legal Business launched has been the dramatic expansion in size, sophistication and influence of in-house legal teams.

The particular nature of high-risk litigation and its more prominent position in public life in the US had for decades given in-house counsel a more central position in American boardrooms. In this regard, figures like Thomas Sager at DuPont and GE’s Ben Heineman and Brackett Denniston have had a huge influence on articulating the wider role of the in-house legal department in improved governance and more efficient procurement and provision of legal services.

By the late 1990s, there were a group of pioneering figures taking up the challenge in the UK, among them Robert Webb QC (British Airways), Steve Williams (Unilever), Rupert Bondy (GlaxoSmithKline), Philip Bramwell (BT); Howard Trust (Barclays); Peter Bevan (BP); Miller McLean (The Royal Bank of Scotland); Elizabeth Lee (GE) and Rosemary Martin (Reuters).

The 2000s saw dramatic expansion in the in-house profession in England and Wales. By 2012, the number of in-house employed solicitors was over 23,000 – increasing 137% between 2001 and 2011, massively ahead of growth in private practice.

The result has been seismic: bluechips increasingly aim to handle much operational legal work themselves, often pushing external advisers to two extremes: high-end, one-off assignments at one end and commoditised volume work at the other. The power dynamic between firm and client has materially shifted in an environment in which firms’ largest clients are their biggest competitors, sweeping out the last vestiges of deference to private practice.

There are some signs that in-house growth has plateaued in the UK but continued aggressive regulation and law-making globally strongly suggest that the vogue for the full-bodied in-house legal team is a fashion rapidly going global. Law firms beware.

6. Robert Dell – making Latham a global leader

If CC was the most era-defining law firm creation of the last quarter century, the most significant US-bred player since 1990 to many is Latham & Watkins. Bob Dell is unquestionably the figurehead of a success story that has run largely unfettered since the 1990s to establish what is now the third-highest ranked firm in the Global 100 in revenue terms.

Dell took the reins at Latham in 1994 aged 42. At that time, its revenues were $260m while partner profits stood at $550,000; two decades on and these figures stand at $2.29bn and $2.49m respectively. Dell recognised the growing transparency of relationships between clients and their law firms and believed that if a firm’s offering was strong enough, these relationships could be penetrated.

Latham became the first out-of-towner to crack New York and then London under Dell’s leadership, and used its market-leading high-yield practice as a base to reshape the takeover market. When the firm’s finance-heavy practice was badly hit during the post banking crisis, which led to more than 400 job cuts globally, the firm responded by diversifying its practice, notably into energy, and quickly regrouped.

Dell is able to back the claim of having a unified partnership with one goal. He recognised the importance of long-term investment and movement in one direction, and managed to convince the firm to back ambitious global expansion plans. He kept open communication and egalitarianism core to the firm’s practice and culture – associates are able to veto promotions to partnership, and business cards do not state whether the holder is a partner or a lawyer.

As Dell prepares to retire from his 20-year stint at the end of 2014, he leaves a huge legacy behind as arguably the outstanding US law firm leader of his generation. But he maintains that the success is born of collegiality rather than leadership: ‘I said at the time that even if there was the minutest minority of partners that weren’t going to get behind our strategy then we would fail. It requires a long-term investment and movement in one direction which has to be done together.’

7. Freshfields merges with Bruckhaus – the definitive merger of equals

2000 was a watershed year for law firm mergers, but the union of City blueblood Freshfields with German leaders Deringer Tessin Herrmann & Sedemund and Bruckhaus Westrick Heller Löber truly a milestone for a globalising legal industry. While CC’s tripartite merger with Germany’s Pünder, Volhard, Weber & Axster and New York-based Rogers & Wells was more ambitious, Freshfields’ attempt ultimately proved to be more fruitful. It remains the most significant legal merger across borders in Europe without question and itself redefined the region’s legal industry.

Issues such as the name of the new firm, management, partner compensation and practice area configuration, were all addressed and concluded before the combination. Remarkably, the Bruckhaus partners were even placed into lockstep prior to voting.

‘The Freshfields/Bruckhaus merger was different from the rest at that time because they had the foresight to understand that to be successful, sharing some power would be important and they have proved that,’ reflects Latham & Watkins’ Bob Dell.

The firm appointed joint senior partners Anthony Salz and the late Christian Wilde, a partner from Bruckhaus’ Hamburg office, to reflect that the union was a true merger of equals. The result was a total of 30 offices in 19 countries and over 1,850 lawyers. Fifteen years on, the firm houses over 2,360 lawyers and has revenues of £1.2bn.

Salz recalls: ‘My initial reaction was why on earth would we want to do that? But we knew we had to do something to get high-quality in Germany. We wanted a single partnership. The focus should be on that side, rather than having the concern of a smaller firm being culturally subsumed. We had to assure Bruckhaus it wasn’t going to be taken over. Obviously there are concerns at the time – will the joint senior partners get on well enough? – but we had a good understanding from the start. We would have faced more challenges in terms of firm culture had there been just one senior partner.’

8. The collapse of Enron – so many ripples

On one level the 2001 fall of controversial energy group Enron Corporation was not directly a legal industry issue at all, despite its scale and prominence. In reality, the ripples from that event had an impact that continues to be felt across the global profession to this day.

The most direct impact on the legal market was immediately clear: Enron’s bankruptcy and surrounding scandal led to the indictment and collapse of its auditor, Big Five accounting group Arthur Andersen and in a matter of weeks claimed Andersen Legal, the most advanced of the accountancy-tied legal networks. After a number of mis-steps during the 1990s that had hampered the once-potent threat of accounting firms sizing up law, Enron saw the other accountants either end or dramatically scale back their mainstream legal ambitions, anticipating a crackdown on auditor regulation and cross-selling. The seemingly unstoppable march of the accountants was halted, for a decade at least.

But the impact on law was much more pervasive than that. The US Sarbanes-Oxley Act, introduced after Enron to crack down on auditors and the wave of securities scandals seen in the excesses of the late 1990s boom, made tapping the US capital markets more expensive and burdensome, underwriting a fresh boom in London as it cemented its position over New York as the world’s global finance centre.

Sarbanes-Oxley also pointed the way towards a sustained period of policy-makers targeting corporate excess and helped set the narrative for the current environment in which companies face far more aggressive regulation. The age of the global investigations practice, and the rebalancing of legal business away from transactional work in favour of contentious areas was underway. That trend has not stopped.

9. Limited liability partnerships – more modern, more open

The introduction of LLPs came at a time when global trust in professional advisers was at a low ebb. The new partnership model started to take hold for law firms in the UK in 2001, and coincided with the bankruptcy of Enron.

The chief differentiation from the traditional unlimited partnership under the Partnership Act of 1890, in which each partner had joint and several liability, is that one partner would not be liable for the misconduct or negligence of another.

A more ambiguous change for firms was that the LLP meant more financial transparency, and obligated firms to prepare and file accounts with Companies House, as well as have its accounts checked by registered auditors. Since then, the release of law firm LLPs is widely monitored and financial results are published by the legal press on an annual basis. The upside was that it made firms more attractive to newly qualified lawyers and potential laterals who were now able to assess the firm’s finances before joining.

Withers was the first major UK firm to make the change, and others soon followed suit. Slaughter and May, largely because its all-equity partnership remains manageable and partly because it simply thrives on being different, is the only top-50 firm not to convert to LLP status.

Probably the biggest impact of the quiet LLP revolution was cementing the idea of the UK legal profession as a modern, sophisticated and transparent industry, operating on a difficult level to most other global legal markets. The act was also to stand up well to being tested in a number of law firm insolvencies. As legislation it may have been unsung, but it proved more productive than many statutes.

10. David Clementi – shaking things up

Sir David Clementi left his indelible stamp on the legal services industry when his eponymous report was published in 2004. The former deputy chair of the Bank of England was tasked with reviewing the regulation of legal services in England and Wales in 2003, his findings were released a year later and largely passed into law in 2007 via the Legal Services Act (LSA).

Though Clementi, who went on to chair the Prudential, had few further dealings with the law and regarded the industry’s attempts to resist reform with disdain, his recommendations became largely known by his name and have had a seismic impact on the profession still being felt today.

Chiefly, his report criticised the governance arrangements of the Law Society, proposing a Legal Services Board (LSB) be created with non-lawyer chairman and chief executive members for regulatory oversight, which officially came into play in 2010.

The LSA has created much controversy since its arrival and there have been continual disputes between the LSB, the Law Society and the Bar Council. In June this year, Lord Chancellor Chris Grayling outlined plans for the LSB to wind itself down as part of efforts to streamline an over-regulated profession.

The Act also promoted competition in the legal industry and gave rise to the establishment of legal disciplinary practices (LDP) and alternative business structures (ABS). The true effects of Clementi’s legacy have only really started to become apparent in the last two years, with ABS being readily adopted by the insurance and accountancy industries in particular. Since then, there has been increased interest in business models where certain services and legal services could be offered under one roof.

With over 200 ABS licences being so far handed out, the most radical aspects of Clementi’s reforms have so far been more relevant to volume and retail legal services. However, there is no doubt that the reforms – and the prospect of bluechips and outside investors entering the sector – have supported the idea that radical upheaval is possible in UK legal market at all levels. The LSA also leaves the UK as by far the most liberal legal sector in the world and a global testing ground for innovation. That dynamic will be playing out for decades to come.

11. Sir Nigel Knowles – from Yorkshire terrier to legal giant

Around the time Legal Business first hit desks, a 32-year old Dibb Lupton Broomhead corporate partner called Nigel Knowles was in a car telling his long-time friend Andrew Darwin he wanted to be managing partner. It is unthinkable that at that stage Knowles envisaged leading the Yorkshire-bred upstart to becoming the largest law firm by revenue in 2013, with 4,000 lawyers and $2.5bn turnover. But he had a vision. Knowles has always had a vision.

After becoming managing partner in 1995 and leading the firm through a key UK merger with Alsop Wilkinson a year later, Knowles and DLA then followed that with a European alliance in 1999 with ambitions of becoming a European law firm. Knowles then had a meeting of minds with the management of US firms Piper Rudnick and Gray Cary in 2003, negotiating the formation of DLA Piper in 2004. When Coudert Brothers fell over in 2006, DLA was then one of the main beneficiaries of its Asia practice. More recently, Australia and Africa have followed.

Throughout this period, Knowles and DLA have ruffled feathers among the City establishment, earning grudging then open respect along the way, with Knowles ultimately knighted for services to the legal profession in 2009.

The particular Knowles’ mix of charisma, flair, ambition with that challenger instinct was potent and unusual in the legal profession at the time. By 2014 the challenger has become part of the establishment – Knowles was cited by more senior figures as an outstanding individual than any other. Some would argue that time dulled the magic somewhat in terms of leading DLA in recent years but the legacy is nevertheless truly remarkable.

With Knowles completing 20 years in charge in 2015 and a new guard led by Simon Levine looking to take the firm to the next stage of its development, it is still hard to distinguish DLA from Knowles.

‘DLA was an improbable story of ambitious mergers and vision that has created something you wouldn’t have believed was possible,’ says Charles Martin, senior partner of Macfarlanes, while Hogan Lovells’ chair Nicholas Cheffings notes: ‘Nigel Knowles changed the model of law firm management. Whether or not it was the style others would have adopted themselves, it made a lot of people think there were different ways of managing partnerships.’

12. The right stuff – defining law firm leaders

Alongside Howe, Angel, Knowles and Co – these figures stand out:

• David Morley – Allen & Overy. Progressive, down-to-earth, imaginative – the consummate modern law firm leader.
• John Crabtree – Wragge & Co. The vision, ambition and judgement to drive the dramatic rise of Wragge & Co to become the strongest UK brand outside the capital in the 1990s. A class act.
• Bill Tudor John – Allen & Overy. Ambitious, robust and driven – the perfect law firm leader for the flux and opportunity of the 1990s.
• Christine Lagarde – Baker & McKenzie. Respected as Baker & McKenzie’s leader, a French finance minister and head of the International Monetary Fund. Forget gender, Lagarde is probably the most prominent commercial lawyer in the world.
• Michael Payton – Clyde & Co. Assured and long-term. Payton’s track record of building by far the world’s dominant insurance player speaks for itself.
• Neville Eisenberg – Berwin Leighton Paisner. The firm has something to prove after stumbling in 2012/13 but Eisenberg’s long-term success in reinventing the two mid-tiers to dramatic effect is unquestionable.
• Peter Martyr – Norton Rose Fulbright. Too single-minded? Maybe. But also astute, thoughtful and one of the most influential law firm leaders of the last decade.
• David Harrel – SJ Berwin. The law firm leader as an amused but deft politician. A student of partnership and human nature but also an effective head.
• Lesley MacDonagh – Lovells. A trailblazer as the first female leader of a major City law firm but MacDonagh’s term was primarily defined by ambition, sense and energy, rather than gender.
• Kevin Gold – Mishcon de Reya. The spiritual successor to David Harrel? Gold helped forge one of the most distinctive and potent firms in the City over the last five years.
• David Ansbro – Eversheds. With scars on his back, Ansbro managed the hard task of turning the Eversheds’ vision into practice. An under-rated figure.

13. Tony Angel – technocrat as force for transformation

His legacy remains controversial but there is no doubt that Tony Angel was a key figure for the global legal market in demonstrating and selling the notion of the technocratic leader as a powerful agent of change, rather than a bureaucrat hampering fee-earners. Angel, of course, made headlines in 2011 when he became still the only ‘chief executive’ to transfer from one major law firm (albeit after several years outside the law) to another when he joined DLA Piper.

But his reputation and wider impact rests undoubtedly on his eight-year term as managing partner of Linklaters, a role he assumed in 1999 amid what would soon be a difficult period as Linklaters fought to bed down a series of troubled European mergers amid the dotcom bust.

Angel ushered in at the time unheard-of financial rigour, backed by detailed performance metrics and a laser eye on profitability. He also – with the Clear Blue Water strategy – assimilated and improved on Clifford Chance’s much-copied 1990s’ globalisation agenda.

It is not an unblemished record – Angel arguably didn’t have the political skills of some c-suite peers – a factor that made it harder to galvanize the firm behind him. The axe-man tag hung unhappily around Angel, even though he agonised when wielding the blade – more ruthless figures were to follow at Silk Street and peers.

In some regards, Angel was Linklaters’ Margaret Thatcher, the revolutionary force that the institution still cannot quite reconcile itself to. His time at DLA Piper has not been without some success but by consensus it has been harder to influence a firm with a very different history.

Nevertheless, Angel remains a defining figure in the global legal market for having the conviction to see the transformative power of management in law and to pursue that conviction in the face of considerable opposition.

As Cass Business School professor Laura Empson comments: ‘Tony Angel had a vision which singled him out from the crowd. He was dedicated to good management practice at a time when that wasn’t a credible way of spending your time. He understood the difference good management skills could make on the firm’s underlying profitability.’

Angel himself concludes: ‘There’s no one right strategy. There are many ways to be successful – you have to be thoughtful about what works for you. The strategy isn’t a challenge, it’s implementing it and bringing people with you.’

14. Sir Anthony Salz – the complete package

Most commonly remembered for his role in navigating the game-changing merger that created Freshfields Bruckhaus Deringer, corporate lawyer-turned-City-grandee Anthony Salz had the edge and vision to take the English firm out of its City comfort zone and enter Europe, changing the legal arena thereafter.

Salz had two terms as senior partner at Freshfields from 1996, but first sparked attention back in 1986 when he advised Guinness on its controversial £2.6bn merger with United Distillers, and faced accusations of negligence in a deal that eventually saw Guinness’ former chairman Ernest Saunders, along with two others, jailed for their part in a share-support scandal surrounding the bid. Freshfields corporate partner and former London head Mark Rawlinson says: ‘At the time, it was uncertain which path Anthony’s legal career would take. It was very unsettling for the whole team but particularly for him. However, in time Anthony emerged with his reputation intact. The whole experience mellowed and broadened him, making him a stronger lawyer and leader.’

Salz was to establish himself alongside Slaughter and May’s Nigel Boardman and David Cheyne at Linklaters as among the leading corporate practitioners in the City. He was also a major force in re-inventing Freshfields in the wake of London’s Big Bang as a full-blooded M&A player.

Salz headed the corporate practice between 1994 and 1996, before taking on the role of senior partner from 1996 up until the Bruckhaus merger in 2000 and then joint senior partner after that. He left Freshfields after 31 years in 2006 to join Rothschild and became its executive vice-chairman and director. In 2012, he was appointed to head an independent review into Barclays’ culture and business practices after it was fined £290m by UK and US regulators for manipulating Libor. In short he followed a remarkable career in law with probably the most sucessful post-legal career achieved by a former City lawyer.

15. The collapse of Lehman – the world turned upside down

There’s little debate over which single event had the most profound effect on global law in the last 25 years – intensely cited and vividly fresh in the mind is the largest bankruptcy filing in US history – the collapse of Lehman Brothers in September 2008. For many firms, this and the banking crisis redefined their businesses and for some practitioners working on the subsequent restructuring has been a career highlight.

The corporate downfall plunged the global financial markets into turmoil and played a significant role in the failure of key businesses, including law firms, a decline in consumer wealth, a slowdown in economic activity, caused wrenching dislocations in financial markets and contributed to the European sovereign-debt crisis.

The event simply divided the world into two clear distinct eras: before Lehman and after Lehman. The financial year 2008/09 was transformative for the global legal services market, which went from seeing double-digit revenue growth for five years running to flat revenues and plummeting profits.

The subsequent downturn changed how firms structured their practices and businesses forever and continues to redefine firms today. It set the tone for de-emphasising the dominance of transactional practices, a return in focus on disputes, and led to the ever-increasing demand on regulatory and compliance lawyers, on the back of rising pressures from European regulatory bodies.

Although the fall of Lehman and other banks such as Bear Stearns wiped millions of dollars of business off the books of Global 100 firms at a stroke, as a single source of work for Big Law, the resulting administration has proved to be a very large meal ticket. It became the most expensive bankruptcy ever when it topped an estimated $757m three-year liquidation of Enron, and generated around $2bn in legal fees by the end of 2012.

‘The administration of Lehman Brothers Europe is the biggest matter we have ever handled. The biggest bank failure ever and likely to remain the biggest because banks will never be allowed to be that big again,’ says Linklaters senior partner Robert Elliott.

Linklaters’ banking specialist David Ereira, who represented PwC as the administrators of Lehman Brothers International Europe, recalls: ‘To begin with, there were a dozen of us on the case. By the end of the day there were 60, and within two days there were 300, and between 350-380 lawyers by the end.’

16. Consolidators – defining law firm mergers

Aside from the big bets at Clifford Chance, Freshfields Bruckhaus Deringer and Hogan Lovells, these combinations meant something:

• Dibb Lupton Broomhead and Alsop Wilkinson, 1996. The first sign of what was to come at DLA as the national model became reality.
• Berwin Leighton and Paisner & Co, 2001. The playbook deal to reposition drifting City law firms.
• Jones Day and Gouldens, 2002. The troubled union of US giant and pacy City firm. Alongside Mayer Brown’s takeover of Rowe & Maw – a reminder that cultural issues always dog Anglo-American tie-ups.
• King & Wood and Mallesons Stephen Jaques, 2011. The jury remains out but the creation of the Asia-Pacific giant was powerfully symbolic and created the global legal market’s biggest remaining wildcard.
• Pinsent Masons and McGrigors, 2012. The end of the McGrigors brand was a landmark for the Scots legal profession.

17. The Bribery Act – less about deals, more about risk

The legal market impact of the 2010 Bribery Act was less about directly-related work and more about setting the tone for corporate behaviour, plc attitudes to risk and what companies call on their lawyers to do.

The act was mired in (largely unfounded) controversy before its implementation in 2011 and was the subject of a marketing assault by law firms. Direct work generated has so far been limited, though far greater and hard-to-quantify costs have been accumulated in complying with the legislation. More significantly, the act was a focal point for a wider shift globally in favour of more aggressive regulation of companies and attempts to crack down on corporate wrongdoing.

This was underlined by a dramatic rise in enforcement action under the US Foreign Corrupt Practices Act and international moves to usher in similar reforms. The Bribery Act is also significant in further extending the concept of corporate liability. The view that companies as institutions could rarely be pursued for crimes or penalties rather than their individual workers is increasingly giving way to easier tests to establish wrongdoing or aggressive means of achieving remedies through regulatory settlements.

That wider shift – reflected across regulation in a range of sectors and particularly finance – has been part of a fundamental shift in the risk environment for companies. For corporate law firms it means contentious and regulatory matters are increasingly the work that attracts a premium and attention in the c-suite, edging out the corporate deal-making that once drove such firms.

It also marks a shift that led to a dramatic boom in specialist dispute law firms – with US uber-boutique Quinn Emanuel Urquhart & Sullivan proving a fantastic standard-bearer – and making global investigations one of the most strategically desirable areas for top firms. Increasingly for bluechip law firms, it turns out that crime does pay.

18. Lateral thinking – defining moves as the age of mobile stars refashioned law

• Robert Elliott quits Wilde Sapte for Linklaters, 1990. A highly symbolic move for how top City firms would recruit talented deal lawyers from mid-tier rivals and part of the strategic development of Linklaters’ banking practice. Significantly, Elliott would go on to become the senior partner of one of the oldest and most celebrated City firms.
• Michael Hatchard quits Theodore Goddard for Skadden, Arps, Slate, Meagher & Flom, 1994. One of the earlier and certainly most successful transfers from a City practice to a top US firm. Demonstrated what a talented professional at a US platform could do.
• Maurice Allen quits Clifford Chance (CC) for Weil, Gotshal & Manges, 1995. Arguably the most discussed single partner hire in the City market of the last 20 years, Allen’s move was the start of a pioneering shift of mainstream transactional lawyers to US firms.
• Cadwalader, Wickersham & Taft hires CC partner Andrew Wilkinson, 1998. The former CC partner became one of the most productive UK partners at a US firm and helped to shape a new market in bondholder restructuring work in the City. Very significant.
• Daniel Cunningham quits Cravath, Swaine & Moore for Allen & Overy, 2001. In many ways an unhappy experience for City firms trying to break into New York but still a defining moment.
• Robert MacGregor quits CC for Berwin Leighton Paisner, 2004. Three years later, Herbert Smith partner Chris de Pury joins him. An illustration of the changing dynamic in real estate and what ambitious mid-tiers can achieve. Also two of the most successful laterals ever in London.
• Eleven-partner TMT team quits Denton Wilde Sapte for DLA Piper, 2005. One of the largest team hires ever in the City, a powerful statement of changing fortunes and a move that transferred DLA Piper’s incoming co-chief executive, Simon Levine.
• Graham White and Raymond McKeeve quit Linklaters for Kirkland & Ellis, 2006. There were more successful transfers in the buyout market but this dual hire more than any other demonstrated the conviction with which US advisers would target private equity.
• Richard East quits Kirkland & Ellis to launch a new City arm for Quinn Emanuel Urquhart & Sullivan, 2008. The move that heralded the US disputes leader’s highly influential move into the City.
• Adam Signy quits CC for Simpson Thacher & Bartlett, 2009. A top-class M&A all-rounder quits a leading City firm for one of Wall Street’s finest. Symbolic and there have still been very few of these moves.
• Twelve finance partners quit White & Case in Europe and the Middle East for Latham & Watkins, 2010. An ambitious team hire all the more significant for being at a conservative firm with a highly potent global brand.

19. Halliwells collapses – lessons from Europe’s largest legal failure

The cohesive nature of partnership in England and Wales, backed by covenants and client account programmes, means that sizeable UK law firms rarely collapse, despite the legal industry often being criticised for poor financial management. As such, it was nearly two years after the banking crisis was in full flow that the UK saw its first major collapse in the shape of thrusting Manchester practice Halliwells. Despite the criticism subsequently heaped on the firm, Halliwells got a lot right, sustaining a position as one of the most-upwardly mobile LB100 practices through the 2000s, driving revenues to a high of £86.2m, a near ten-fold increase in 12 years. Eventually, a toxic mix of a £20m payout to equity partners linked to a property deal, coinciding with the 2008 global recession and a major increase in rental costs, felled the firm. The payout weakened the firm’s finances but most damagingly divided the partnership between the junior and newer equity partners that had not received the money and those that had.

In two years, Halliwells went from star performer to humiliating collapse – broken up in a fire sale to four firms. Litigation to recover the multi-million liabilities against former partners still rumbles on.

Other firms would fail as independent concerns, with the 2013 administration of fellow Manchester player Cobbetts the closest comparison. Firms to either wind up or agree effective rescue deals in the last three years include Manches and Tods Murray, while larger firms like Lawrence Graham, McGrigors and Dundas & Wilson were taken over amid signs of stress.

However, while such episodes illustrate weaknesses that can bring down law firms, six years on from the banking crisis, such incidents remain more exception than rule. Despite frequent claims that law faces a ‘perfect storm’ post-Lehman, the profession has so far confounded the pundits. It may be that structural changes prove a far greater threat – but in terms of the savagely cyclical, UK firms are doing something right.

20. Hogan Lovells launches – a new kind of global firm

While the pairing of top-tier Washington DC practice Hogan & Hartson with Lovells in 2010 came much later to the party than that of Jones Day/Gouldens or Reed Smith/Richards Butler, it has represented a new kind of union on the global stage.

Lovells had been gearing up for meaningful international expansion for some time. In 2000 it merged with Germany’s Boesebeck Droste, followed by Netherlands-based Ekelmans Den Hollander and French firm Simeon & Associés, and built up operations across Italy, Spain and Eastern Europe. But a US merger was always the main prize, and Hogan & Hartson gave Lovells a shot at credible international status.

After the fanfare came a challenging beginning. The new 2,500-lawyer firm struggled for growth in its infancy, posting flat financials for three years while cultural issues contributed to grumbling over its merit-driven pay and dual governance model. Morale had clearly faltered.

Hogan Lovells will be five years old in 2015 and the mood is changing. It unveiled its highest post-merger global financial results this year while the thorny issue of dual management was resolved and co-chief executives David Harris and Warren Gorrell stepped down from leadership in June 2014 to make way for legacy Hogan & Hartson partner Steve Immelt – a disputes lawyer who is very popular within the partnership.

Meanwhile, City rival Norton Rose – which approached Lovells for merger talks in the early 2000s – has since made good on its own plans for strategic global expansion. Longstanding chief executive Peter Martyr has overseen its entry into multiple overseas markets in recent years – Deacons Australia in 2010; its Canadian tie-ups with Ogilvy Renault and Macleod Dixon in 2011 and 2012 respectively; and Deneys Reitz in South Africa in 2011 – ultimately leading up to its own American dream – its combination with Texan law firm Fulbright & Jaworski in June 2013.

In retrospect, the Hogan Lovells union and Deacons takeover were hugely significant in their multi-profit centre model – paving the wave for an unprecedented wave of global consolidation and a controversy over governance that simmers on. Nevertheless, the era of the multi-partner global giant is here to stay.

21. Faces and cases – those who changed litigation

A champion of human rights, Lord Harry Woolf, the former Master of the Rolls and Lord Chief Justice of England and Wales, is commonly cited among peers as having made fundamental changes to the legal market. Now a member of Blackstone Chambers, his 1999 reforms on the rules of civil procedure have had ‘a significant influence and affected the commercial viability of the commercial court as an international tribunal,’ according to Norton Rose Fulbright chief executive Peter Martyr.

Enhancing Woolf’s work and also noted by interviewees is his contemporary, Lord Rupert Jackson, whose review of civil litigation costs to promote greater access to justice constituted one of the most significant areas of judicial reform in recent years.

While London’s commercial Bar doesn’t lack leading names, Brick Court Chambers’ Sir Sydney Kentridge QC was frequently named by barristers and solicitors alike as setting the standard for excellence at the commercial Bar. One Essex Court’s Lord Grabiner QC, a life peer in the House of Lords, is also highlighted and, with a 40-year career in commercial litigation behind him, this year led the Bank of England’s independent investigation into the foreign exchange manipulation scandal.

Lord Jonathan Sumption, elected to the Supreme Court bench in 2011, has been described as instrumental in driving forward careful analysis of the law in a way that has been very significant. One Essex Court’s Laurence Rabinowitz QC describes the Human Rights Act as ‘without doubt the most significant legislation’ to come to the fore in the last 25 years. His views on iconic case law during this period unsurprisingly include one of his own; the notorious £3bn Russian oligarch battle, a contract dispute, between Boris Berezovsky and Chelsea Football Club owner Roman Abramovich, ‘captured the imagination of the world media – a drama in a court of London with incredibly interesting subject matter and larger than life characters’ – as reflected in our feature ‘Battle royale’ in 2012. Others are less theatrical but equally significant; the Sempra Metals v HMRC litigation in 2006; a case dealing with the award of interest which Rabinowitz says ‘showed the brilliance and beauty of common law and how it develops to keep pace with society’.

Equitable Life Assurance Society v Ernst & Young litigation was a long-running £2.6bn negligence claim against the Big Four giant. Rabinowitz says: ‘That affected huge numbers of people in this country – people who never thought they would be affected by litigation – and the consequent negligence lynch mob which followed in the media.’

Disputes veteran Lord David Gold cites the high-profile London Borough of Hammersmith and Fulham’s landmark loan-swaps litigation of the early 1990s, a case that defined how local authorities could raise or borrow money.

22. Belfast as an offshoring centre – getting used to the New Normal

The post-Lehman era has seen a fundamental shift in law firm thinking towards greater efficiency in legal services, as clients become increasingly demanding and the will to demonstrate innovation becomes a key feature of firm strategy.

Those that helped convince the profession on the viability of offshoring were A&O and Herbert Smith Freehills, who both launched ventures in Belfast in 2011. A&O’s creation of a new support services centre aimed to deliver certain core internal business support processes, as well as a legal services centre delivering some routine elements of legal work. Herbert Smith’s offering focuses on the large-scale, document-intensive aspects of litigation, arbitration and regulatory investigations, and expanded to include corporate due diligence services and real estate support.

Though not the first to create such an initiative – Baker & McKenzie has operated a captive centre in the Philippines for a number of years – the move by both City firms, which is often backed by regional investment grants, has rapidly become the preferred option rather than offshoring in lower-cost countries like India or large-scale outsourcing – two options that were most touted three years ago – and evidenced by CC’s India service centre, and CMS Cameron McKenna’s mammoth £600m deal with outsourcing provider Integreon.

What A&O and Herbert Smith Freehills did was pave the way for firms to establish a feasible working model. Firms including Ashurst, Berwin Leighton Paisner and Hogan Lovells went on to mark their own territory with low-cost operations across Glasgow, Manchester and Birmingham respectively in the years that followed.

The move marked the effective appropriation of techniques used by legal process outsourcing inside a law firm model and a symbolic shift in services provision in tune with the New Normal in which clients expect advisers to rethink their services. This approach, marking more innovative thinking by law firms, is certain to be built upon in the years to come.

23. Dewey & LeBoeuf implodes – something rotten in Denmark amid the world’s largest legal collapse

The US had seen a long line of law firm collapses in the preceding ten years – among them Brobeck, Phleger & Harrison in 2003, Howrey (2011) and Heller Ehrman (2008). But nothing compared to the failure of New York’s Dewey & LeBoeuf in May 2012 since the spectacular implosion of Finley, Kumble, Wagner, Underberg, Manley, Myerson & Casey way back in 1987.

The governance and financial problems at Dewey would prove startling in their depth and paint a terrible picture of the modern legal profession. As the marriage of an upwardly mobile and successful insurance and energy player LeBoeuf, Lamb, Greene & MacRae with the fading New York royalty of Dewey Ballantine, the firm at its peak had been one of the top 20 firms in the world, with apparent revenues of over $1bn, employing over 1,300 lawyers.

However, having agreed the deal at the peak of the market in 2008, Dewey was soon crippled with falling revenues, huge debt and expensive guarantees handed out to dozens of supposedly big billers and star laterals, creating a notorious ‘barbell’ compensation system.

Having announced a series of redundancies in early 2012, Dewey was dead in the water in March when a large insurance team quit for Willkie Farr & Gallagher and it emerged the firm had provided misleading figures externally that overstated its financial strength by over $100m. With partners peeling off rapidly and huge internal strife, it was plain the firm would fail long before it filed for Chapter 11 on 28 May 2012.

By far the largest legal collapse in the world, Dewey shone a light on the shocking extent to which some US firms have banked on hiring mobile stars, increasingly offering $5m-plus packages to secure the biggest names. While Dewey was far more extreme than any peer in its excesses – it was a shocking indictment of the culture and governance standards that still exists at some major firms in the world’s largest legal market and one that has done little to provoke much soul-searching. As Legal Business goes to press, Bingham McCutchen has begun the process of winding up, with the bulk of its partners being hired by Morgan, Lewis & Bockius – only the latest in a long line of US failures since 2000.

24. King & Wood merges with Mallesons Stephen Jaques – years of the dragon

Even with the last 15 years marking the emergence of China as an economic superpower and the wider rise of Asia at the expense of struggling Western economies since 2008, it has been a remarkable evolution for China’s leading law firms. They have grown at staggering speed on the back of consolidation and soaring demand for domestic legal advice. How sustainable such growth is, given the youth of China’s legal profession – most of its major law firms launched only in the late 1980s or early 1990s – remains open to debate. But the most striking sign of the Chinese profession’s rise was the highly ambitious union between King & Wood, generally regarded as China’s most progressive and top commercial law firm, and Mallesons Stephen Jaques, likewise probably Australia’s top commercial law firm. The 2011 deal created a 2,000-lawyer Asia-Pacific giant with revenues of around $700m under the name King & Wood Mallesons (KWM) – a firm with a unique footprint. The tie-up, touted as the first in a series of international mergers, was expanded by the merger with SJ Berwin in 2013, though the bigger issue remains what happens in the US.

Questions also remain regarding the evolution of China’s legal market, which is not only walled off from foreign advisers for local law work, but is persistently hard to make money in for international advisers.

KWM itself remains a uniquely divisive brand in the global market, where some see a global elite firm for the 21st century, others see an operational nightmare with huge challenges thanks to the problems of walling off its IT systems for client confidentiality and the verein model which maintains separate profit pools. Nevertheless, the deal remains the clearest indication of the shift towards emerging economies and the broader rise in influence towards the Asia economy, a trend underlined by major Australian mergers for Herbert Smith and Ashurst, respectively with Freehills and Blake Dawson. Right now, KWM is a potential world-beater, a potential mess but definitely one to watch.

25. The outsiders – shaping Big Law from the sidelines

While their potency increased on the back of the boom in Big Law since the turn of the 1990s, there is no doubt that in their own way, three distinct groups of professionals have played a key role in helping to shape the modern legal market during the last 25 years: recruiters, law firm consultants and the press. Collectively the group brought mobility, transparency, a clearer ability to benchmark performance and test strategy, though such innovations sometimes came at a price in terms of the impact on the profession.

As the lateral hiring market took off in earnest in the early 1990s, so did the need for larger-than-life brokers of those deals. Chief among the early pioneers were Dominique Graham of Graham Gill; Gareth Quarry of Quarry Dougall (now Shilton Sharpe Quarry); and Joe Macrae of ZMB (now Macrae Roxburgh Appleby). In those early days, the established recruiters had the ears of senior partners all over the City and were also instrumental in brokering law firm tie-ups; by the 2000s, this position had been eroded somewhat by the dotcom bubble bursting and sharp practices emerging at the lower end of the market during the M&A boom. These days, many of the same names remain at the top of their trade but the premium that comes with big-name lateral hires by US firms in particular means the game is more high-stakes than ever.

While some of the more established management consultants like McKinsey have done very well over the years in law, a new breed of specialist consultants emerged with specific law firm experience, often helping firms get strategic initiatives over the line and helping aspiring law firms meet like minds in the market. For example, Alan Hodgart, now of Hodgart Associates, was most significantly involved in the Freshfields/Bruckhaus/Deringer merger and had a hand in Eversheds’ takeover of Frere Cholmeley Bischoff, while Brad Hildebrandt has an impressive list of law firm combinations to his name.

Other advisers cut their teeth in the upper echelons of law firm management, such as Julia Chain, director of Huron Legal, who was managing partner of Andersen Legal’s national firm Garretts and also general counsel at T-Mobile, and Jomati Consultants’ founder Tony Williams, who was managing partner of Clifford Chance before going on to be worldwide managing partner of Andersen Legal.

The early pioneer of legal industry media came on the other side of the pond with The American Lawyer, set up in 1979 by journalist-cum-entrepreneur Steven Brill, then still in his 20s. Under the hard-nosed Brill, AmLaw would send a jolt through the legal profession, with journalists reporting on law firms as businesses, as the title quickly established itself through the 1980s. Legal Business’ parent company Legalease would be a pioneer in the UK with the launch of The Legal 500 research business. The baton was also picked up with the launch of The Lawyer in 1987; Legal Business in 1990 became the first title to focus on the commercial sector; and Legal Week launched in 1999, all of which developed a strong sense of competition between the titles while growing in tandem with the rapidly internationalising English law firms. The late 1990s and the turn of the millennium saw the birth of two online and more irreverent challengers on either side of the Atlantic – Above the Law in the US (2006) and RollOnFriday in the UK (2000).

Communication and reporting is increasingly moving into new fields of social media and various electronic formats alongside print. News moves faster, the profession is still catching up. LB

sarah.downey@legalease.co.uk, jaishree.kalia@legalease.co.uk, alex.novarese@legalease.co.uk, mark.mcateer@legalease.co.uk