While Legal Business is not the type of publication to force a tenuous link in order to make a feature topical, isn’t it timely that our Global 100 analysis on law firms structured as Swiss Vereins – ‘Capture the flag’ – coincides with the football World Cup of FIFA (also a Verein)?
Joking aside, this deep dive into the six firms which have adopted the model – CMS, Baker McKenzie, Dentons, Squire Patton Boggs, Norton Rose Fulbright and DLA Piper – is nevertheless pertinent, coming as it does a full decade after the first firms implemented the structure in earnest.
Market perceptions are often slow to change and, in that vein, it is interesting to note that some of the same criticisms from single partnership law firm leaders are still being levelled at Team Verein ten years on. The most obvious – and perhaps laziest – of these accusations is that a Verein does not constitute a ‘proper merger’. This may be a valid point, given its common perception among industry worthies as a work-around for gaining all the international clout of a global expansion strategy without doing the hard yards of full financial integration, shared profit pools, aligned culture and uniformity of work.
Cutting through the noise of the naysayers for a moment though, crunching the numbers of the Verein firms’ performance since 2012 makes for compelling reading.
If we were to view the figures generated by these firms in isolation of their Global 100 peers, the Verein model would clearly speak for itself as a measure of success.
In the last ten years, revenues at Dentons, arguably the expansionist firm that springs to mind first when discussing Vereins, have surged 313% in the last decade. CMS’ revenues have grown 89%, DLA’s are up 62% while NRF’s have increased 59%. Less pacey but still none too shabby, SPB’s turnover has grown 54% and Bakers’ has increased 46% in the same timeframe.
We also view Eversheds Sutherland through a slightly different lens of ‘Verein-like’ (the 2017 merger sees it operate under a looser association, a company limited by guarantee). Nevertheless, the firm’s 152% uptick in turnover on a five-year track to more than $1.5bn, is not to be sniffed at.
Unfortunately for the Verein firms, some of the sheen is taken off through scrutiny of, and comparison with, disruptor single partnership Global 100 peers which have also enjoyed breakneck growth since 2012.
As a ten-year sample, turnover at Latham & Watkins has surged 155% and Kirkland & Ellis’ has soared 245%, a level of growth that has secured its dominant position at the top of the table as the world’s largest law firm by revenue.
Aside from revenue numbers, there is unquestionably a die-hard snobbishness among single partnership managing partners, with this view from one resonating among several interviewed: ‘The model is all well and good until the client actually has to deal with the “top quality” lawyers of that amazing international law firm.’
However, putting these criticisms to one side in the spirit of seasonal good will, and whatever the many drawbacks of the model, none of the Verein firms can in fairness be dismissed as a disaster. And for what these firms have achieved, gaining jurisdictional footholds around the world, arguably validates the structure as a means to an end in itself.