A few years ago – during what in retrospect turned out to be a boom – you knew where you stood with City law. The market kept growing and, while the man in the street associated lawyers with courts and disputes, those in the industry knew success came from the other side of the equation. In short, you made the real money from deal-doing and associated disciplines, not the contentious side of practice.
Indeed, ten years ago litigation was on the verge of being relegated to a backwater in some City firms. It certainly wasn’t like the US, where major firms often generate half their income from contentious work and view areas of litigation as key strategic product lines.
Culturally, it has become a huge wrench to put disputes back in a central role.
Sure, there was still decent money in UK disputes, but it wasn’t growing like corporate and, worse, litigation just didn’t fit into the playbook City firms were using. Litigators were viewed as hard-to-manage prima donnas, conflicting you out or irritating your prized corporate clients. And litigation was plagued with lumpy, hard-to-predict revenue streams. How would you even fit these guys into that client relationship management programme you spent so long creating? No wonder litigators were so rarely in positions of power in City firms.
Except that it hasn’t really panned out like that in recent years, a theme that recurs in this month’s issue. That market shift is most obvious in our assessment of the startling rise of über-boutique Quinn Emanuel Urquhart & Sullivan. The firm’s disputes-only model broke all the rules of global law and yet has driven the firm to the kind of hierarchy-disrupting ascent that was starting to look impossible in the consolidated legal industry of the early 21st century. Iconoclastic tendencies aside, Quinn Emanuel’s rise has become hugely symbolic of the rising importance of the global disputes market since the credit crunch hit in 2007.
This dynamic is reflected elsewhere – including in our wider Global London special, which shows US firms as a whole successfully pushing into disputes (usually with far better ROI than in corporate and banking). And this trend may be about to get booster rockets attached with the upcoming implementation of the Jackson reforms, which will allow lawyers to take up to 50% of damages under new fee models. While a lot of the detail is unclear, if the rules prove workable it will provide big incentives for litigators to take on cases in search of potentially huge windfalls. Accommodating such models will be a strain for UK law firms, but boutiques and US advisers may do better.
Are City firms as a whole responding to such forces? Not really. They’ve refashioned their businesses so heavily around transactional work since the Big Bang that, culturally, it has become a huge wrench to put disputes back in a central role. No wonder there has been a run of boutique launches, freeing frustrated litigators from the dead hand of corporate law.
Still, law firm leaders would do well to bring their litigators back into the heart of their firms. Firstly, because it’s good business. But more importantly, in an increasingly fluid disputes market, this is strategic ground City leaders just can’t afford to give up.