Big British law firms are on a global roll, looking for growth in the new, emerging markets. But, taking a leaf from the Dewey & Leboeuf book, the firms are doing so with caution, as The Economist reports.
Consider London’s top five law firms, known as the “magic circle”. Allen & Overy and Clifford Chance released results early this week, and Freshfields Bruckhaus Deringer and Linklaters were expected to do so later. (Slaughter and May does not release public results.) Allen & Overy had a good year, with its revenues growing by 6% and its profits by 7%. Clifford Chance, the biggest, did even better, with revenues up by 7% and profits up by 13%.
Emerging markets are where the growth is. Allen & Overy now gets 22% of its revenue from such places, up from 15% a few years ago. It opened an office in Vietnam a month ago and another in Jakarta 17 months previously. As for China, so many Western firms have piled in that they have competed each other’s fees down, but Wim Dejonghe, Allen & Overy’s (Belgian) boss, is still optimistic: the centre of gravity has moved from Shanghai to Beijing, he says, as the focus has shifted from inbound mergers and investment to Chinese money flowing out.
David Childs, the boss of Clifford Chance, is also bullish on China. His firm cut partners during the recession, but not in Asia, the Middle East or Brazil. As for downward pressure on fees, Mr Childs says, slowly, “They are very careful buyers…in Asia,” before insisting that his firm has no trouble with pricing there.
The firm’s revenues grew by 28% in Asia this year, thanks in part to a push into Australia. Next year will be tougher: though bank regulatory work and dispute resolution are providing steady fees, “I’d much rather have healthy transaction flows.”