Long live the Verein. The overwhelming majority of firms in this year’s Global 100 report are still single-partnerships, but with seven of the top 100 firms in the world now comprising multiple partnerships, it’s clear that the mantra of ‘one partnership, one firm’ is being challenged.
Staunch supporters of the single-partnership model will doubtless decry the amalgamated financials of a Swiss Verein or a European Economic Interest Grouping (EEIG) as not being a real firm. All the arguments against such structures are well documented and will not be revisited here. But the inescapable fact is that Baker & McKenzie was first off the blocks and the baton has been passed on with gusto.
This year sees two Swiss Vereins publish combined figures for the first time: SNR Denton and Squire Sanders, while the CMS group, which uses the EEIG structure favoured by PwC, has combined financials for the first time this year.
But while these structures allow different partnerships to operate under one brand, it is clear that these groupings are not particularly profitable. Profit margins at Swiss Verein firms are lower on average than across the Global 100, with a 30% profit margin on average compared to 38% for the Global 100 as a whole. Remarkably, profit per lawyer at Global 100 super-performer Quinn Emanuel Urquhart & Sullivan (which jumped another 16 places in the table this year) is $781,000 – more than SNR Denton’s PEP, which stands this year at $737,000. Proof, if it were needed, that some firms within the 100 really are poles apart.
Practice-wise, while the Global Elite still dominates legal services worldwide, there are signs that those firms are still feeling the pinch as markets remain stagnant. Average revenue growth across the Global Elite is 4%. Compare this with litigation specialist Quinn (31% growth) and regulatory and antitrust firm Arnold & Porter (15%), and it’s clear that other practice areas take centre stage.
There’s been talk of a new world order in legal services for some time. In terms of structure, geographic focus and practice focus it appears as if we’re finally beginning to see it.