London Legal Services Market Increasingly International
In a recent blog post, we wrote about the growth of UK law firms at the top end of the US market, especially in New York. It was once said that the US and the UK are two nations divided by a common language, but when it comes to legal services, they seem to be very much on the same page.
Research conducted by The Lawyer and published as part of its report on the Top 200 UK law firms tells the story of the impact US firms are having on the market for legal services within the UK. The second tier of law firms in the UK, numbering 21-40 in The Lawyer’s ranking system, is dominated by international firms for the first time. This group is led by Baker & McKenzie, the US firm of the longest standing, at 22 in the list. Other firms making the cut include international giants White & Case, Latham & Watkins, King & Wood Mallesons and Slater & Gordon, the latter two being headquartered in the Asia-Pacific region.
The rise of these international firms can be explained by several factors. The ranking system used by The Lawyer is based on fee income generated by the firms (or their London offices). US firms tend to charge-out at a higher rate than an equivalent sized UK firm, contributing towards higher fee income. They also tend to pay their lawyers a higher salary, helping to attract star talent. Finally, lawyers are typically targeted at a higher number of billable hours than their UK counterparts, incentivising more billable hours per day.
The trend also points towards the increasingly international work that is carried out in the London legal services market. This is supported by statistics published this September by the Law Gazette, which show that 81% of cases heard by the Commercial Court in London involve a foreign party, and that in 48% of cases all parties are based outside the UK.
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