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firms control 59 percent of the revenues of the 12 highest- grossing U.K. firms. Moreover, the latter three, plus the smaller

but elite firm Slaughter & May, occupy the other four of the top 25 slots when the Global 100 are ranked by PPEP. Table 1 (see Page 3) shows a list of the 25 most profitable Global 100 firms in 2009 (currency adjusted) and 2008.

The Global 100 data also indicate that non-U.S. firms pared their lawyer ranks more severely than the U.S. firms, which

helped them achieve small profit gains in spite of revenue declines. Table 4 (see Page 4) shows the details. The 79 U.S. firms in the Global 100 reduced lawyer ranks by 1.9 percent, while all of the non-U.S. firms combined reduced lawyers by 3.9 percent, with the U.K. firms paring down by 5.7 percent. U.S. firms grew their equity partner ranks by 2 percent, while non-U.S. firms decreased partner headcount

by 2.7 percent. This suggests that the non-U.S. firms would have been harder hit in PPEP than the U.S. firms if they had not reduced lawyer ranks more drastically, perhaps because they do not enjoy the counter-cyclicality provided by the robust litigation practices that many of the top-performing U.S. firms enjoy.


The relative strength of the dollar versus the GBP presents what may be a short-lived opportunity for U.S. firms with the right client base and platform to jump-start or significantly grow their presence in the United Kingdom, Europe, and Asia by combining with a British firm. Many more Am Law 100 firms shopping for a cross-pond merger now find that they are within what deal-makers like to call “spitting distance” of a potential British merger partner. The opportunity is not just to capture London or even British market share. All but two of the 12 U.K. firms in the Global 100 in 2010 are defined as “international” by The American Lawyer because more than 40 percent of their lawyers are located outside of their home country. For example, Simmons & Simmons, the smallest British firm in the Global 100, ranked 88th, has 12 offices outside the United Kingdom±four in Asia±and 68 percent of its lawyers are in offices outside of the United Kingdom.

We see advantages in these combinations for U.K. firms as well. In short, a combination with a U.S. firm provides entrée to the most important legal market in the world. With the United States generating three-quarters of the GR, and U.S. litigation comprising a greater share of the GR than the entire gross revenue of the non-U.S. litigation market, we posit that it is implausible for any firm, over the long haul, to be among the preeminent global law firms without having a robust U.S. litigation practice and breadth and depth in at least two or three strategic U.S. geographic markets.

We further posit that it is equally implausible that any non- U.S. firm possesses the resources, much less an attractive enough platform, to build a robust U.S. litigation practice by

recruiting laterals one or two at a time or even in groups, especially in a global legal market with rapidly escalating competition. With economists predicting another year or more of slow growth for the global economy (except Asia),

these combinations represent an opportunity for firms to grow and strengthen in an otherwise slow growth period and to marshal their resources for penetrating the increasingly important Asian market. The golden age of double-digit law firm profit growth may be over for the time being, but all indications are that this may be the start of a run of trans- Atlantic mergers.


1 All 2009 figures in this ZG Alert are adjusted for fluctuations in exchange rates


except in Table 2, where both adjusted and non-adjusted figures are provided. Currency-adjusted numbers were calculated using figures published by The American Lawyer in 2009 and 2010, and by converting the non-U.S. 2009 results into dollars using the average exchange rate for 2008.


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