The Lawyer (UK) is out with its Global
100 for 2004 and their gloss on the raw statistics, understandable
given their perspective, highlights the different approaches to globalization
taken by UK and US firms.
One strategy to adopt vis-a-vis globalization is: Just
say no. If you are exceptionally strong in New York, where
"the business eco-climate is such that firms can bill in a way unheard
of elsewhere on the planet," this can make sense. Just
ask Wachtell, Cravath, Davis-Polk, Paul-Weiss, or Simpson-Thacher.
If you do embrace having global reach, however, you
still need to know why you’re doing it; as one amusingly dyspeptic
New York partner puts it, "Sticking flags in the ground is
not a strategy." This remark reveals to me why the leading
UK firms’ penetration of the US has been either very small-scale
(Lovells, Allen & Overy, Freshfields) or still, shall we say, a work
in progress (Clifford Chance). Simply put, it seems unclear
why they’re here. Conversely, when US firms launch in London
or, more currently, on the Continent, they typically do so in pursuit
of specifically identified practice specialties such as project finance
or—if one has strong ties to an international investment bank,
as, say, Sullivan & Cromwell has with Goldman-Sachs—branching
out in service to that client. With a strong New York profit
base and a targeted reason for being "on the ground" in Europe, opening
up there can make sense.
However, international expansion comes at a cost: This
may not be revelatory or even surprising, but the article quantifies
just how expensive it has been, at least for the elite UK firms. It
details how Allen & Overy, Clifford Chance, Freshfields, and Linklaters
have each invested in globalization since 1999-2000 (primarily through
mergers) and shows starkly that while bigger certainly means more
revenue and more lawyers, in no case did those firms
raise profits per partner over the last five years, and indeed only
Freshfields managed to keep it level.
Finally, the article displays a chart whose beauty
is entirely in the eye of the beholder—and not, I hasten to
add, in the interpretive gloss the author of the article puts on
it:
According to the author, this chart "is an endorsement
of the UK model." Huh? If the yardstick is PEP—which
they chose (note it’s in ££ not $$)—then
all five UK firms reporting for duty here are in the shallow
end of the pool vis-a-vis their peers. Rather, the interesting
message this delivers for me is two-fold: First, if you have
a strong New York (or London–cf. Slaughter & May) base with a sophisticated
financial practice, you are in the chips. And second, don’t
much that up: If you expand globally, don’t do so promiscuously,
opening offices helter-skelter, but concentrate on where the high-value
work is: London,
Frankfurt, Paris, Hong Kong.
As a native Manhattanite, I’ve long believed in New
York exceptionalism: That it truly is different here. Graphic
proof, above.
