The UK legal landscape has long been admired for its rich tradition of legal expertise and prestigious law firms. However, in recent years, an unmistakable shift has occurred as US law firms have surged into the UK market, triggering intense competition for both clients and talent.
To illustrate that with some numbers, according to ALM Intelligence, by 2021, 88 major US firms had London offices.
A recent publication from Law.com indicates that the largest US law firms in London have outperformed their UK counterparts in terms of revenue per lawyer, making them the highest-generating firms in the country on a per-lawyer basis.
Why have US law firms increasingly set their sights on the UK’s legal market?
The UK boasts one of the largest legal markets in the world. The presence of numerous international corporations, financial institutions, and a diverse array of legal matters makes it an attractive destination for US law firms, offering ample opportunities for expansion and growth.
Globalisation has resulted in an increase in cross-border transactions and complex international legal matters. US law firms recognise the need to be strategically located in key financial and business hubs to serve their clients effectively. The UK, with its strong legal tradition and international influence, serves as a gateway to the European market and a vital hub for global business.
The UK legal market is known for its deep expertise in various legal fields, including finance, corporate law, international arbitration, and intellectual property. US law firms are keen to tap into this specialised knowledge base to better serve their clients’ international legal needs.
Brexit and Regulatory Changes
Brexit has introduced a host of legal complexities and regulatory changes, requiring legal expertise to navigate the new landscape. US law firms have recognised this as an opportunity to provide counsel to clients dealing with the legal ramifications of Brexit, customs, trade, and other regulatory shifts.
US law firms can gain a competitive advantage by establishing a presence in the UK. Having boots on the ground allows them to build relationships with local clients and enhance their understanding of the UK legal system and market dynamics. This proximity provides a significant edge when bidding for international projects and competing with local firms.
The UK is home to a rich pool of legal talent, including experienced solicitors and barristers. US law firms are looking to attract these professionals to enhance their teams and broaden their legal capabilities.
“US firms will continue to invest in London because it’s not just about investing in UK domestic M&A; it’s about English law acting for the world’s largest private equity houses or corporates, and they are continuing to transact under English law, so you need English lawyers to do that,” David Avery-Gee, a corporate partner at Weil Gotshal & Manges, told Financial News.
So, what are the UK law firms doing to fight back?
As US law firms establish themselves in the UK, homegrown firms are having to adapt to remain competitive on a global scale, retaining and attracting the best legal talent. To do so, they have adopted different strategies, including:
Recognising the global nature of modern legal practice, UK law firms are opening offices in key international financial hubs, including the US. This expansion allows them to better serve clients with cross-border legal needs and positions them favourably in the competition for international business.
Mergers and Acquisitions
Strategic mergers and acquisitions have become a common strategy for UK law firms seeking to bolster their capabilities. By combining forces with other firms or acquiring specialised boutique practices, they can enhance their service offerings and provide a broader spectrum of legal solutions. The merger of Allen & Overy and Shearman & Sterling, creating a combined firm of circa 4,000 lawyers and 800 partners across 48 offices, is a recent example.
While the US law firms continue to exercise their hiring power, with several lateral moves across the UK market, UK law firms are also hiring in bulk and often targeting their US counterparts for strategic single and team hires.
To stay competitive, UK law firms are focusing on building expertise in niche areas. By cultivating specialised practices such as international arbitration, technology law, and fintech, they can offer high-value legal services to clients with unique needs. Specialisation not only sets them apart but also enhances their ability to attract clients looking for tailored solutions.
Investment in Technology
US law firms have been at the forefront of embracing legal technology. UK firms are now catching up by investing in innovative tools and platforms to increase efficiency, streamline operations, and improve client service. Adopting advanced legal tech solutions not only enhances their competitiveness but also ensures they meet the evolving needs of clients.
Diversity and Inclusion
To compete effectively on a global scale, UK law firms are recognising the importance of diversity and inclusion. A diverse workforce brings different perspectives and experiences to the table, enhancing creativity and problem-solving. UK firms are making strides in promoting diversity, which not only fosters innovation but also aligns with the expectations of multinational clients.
Work-Life Balance and Flexible Work Arrangements
UK firms often highlight a better work-life balance as a competitive advantage, acknowledging that it’s not just about compensation but also the quality of life for their lawyers. They are also implementing hybrid work models, allowing lawyers to enjoy the benefits of remote and in-office work, aligning with the evolving preferences of legal professionals. This not only produces more motivated employees but helps attract fresh talent.
The surge of US law firms in the UK legal market has ushered in a new era of competition for both clients and talent. The UK firms’ response to this challenge has been marked by a strategic shift towards internationalisation, specialisation, and a focus on work-life balance. As the tug of war between US and UK law firms continues, the legal market in the UK is evolving, promising a dynamic landscape where talent, innovation, and global reach will be the keys to success. It is perhaps not a matter of pulling each other over the central line but of learning from the strengths of the other to create an even more sophisticated legal market where both clients and talent benefit. It remains to be seen how this competition will shape the future of the UK legal profession.