Twenty years and a few months ago (apologies for missing the actual anniversary), the merger of Clifford Turner and Coward Chance was announced, which changed the landscape of our industry forever. Not just in the City of London, but across the globe.
It’s worth a moment’s reflection on how that happened and what its repercussions have been.
This is how the Times (UK) reports it in retrospect:
"This revolution did not go unnoticed. The Times reported under the headline ‘Solicitors’ merger creates City giant’ that ‘two of the City’s biggest firms of solicitors are to merge to create the country’s first ‘mega’ law firm which will have a turnover of several million pounds’.
"The use of ‘mega’ was key. With one bound the two constituent firms had overleapt to double the size of what had previously been the biggest firm, Linklaters & Paines. The natural order of things had been changed dramatically."
The change in the way the profession would come to operate can scarcely be overestimated. Again:
"Above all, it helped to usher in a new kind of lawyer – multicultural, multilingual and multinational in outlook of a type you will now also find also at Linklaters, Allen & Overy, Freshfields and Herbert Smith. In other words, as different as possible, says Chris Perrin (now the firm’s general counsel), from the stereotype of the stuffy, conservative, cautious, uninspired solicitor that had prevailed hitherto."
And of course there were skeptics at the time. A common jibe was that combining two second-rate firms wouldn’t make them first-rate. And while that may have carried a sting because it carried a grain of truth, the fact was that the marketplace—the international financial and business community—was beginning to demand a firm with international presence and scale, and the Clifford Chance merger, ideally conceived, was a response to that demand.
"’I recall an American saying to me that whichever law firm could produce the first cross-border legal product to an international standard would instantly create a following,’ says [Jeremy] Sandelson [today Clifford Chance’s London Managing Partner]. ‘We did it and that’s exactly what happened.’"
Following the merger came of course the challenge of managing the enterprise. Geoffrey Howe, managing partner starting in the early 1990’s, saw the need for, and acted fairly decisively to bring about, a more business-like approach, bringing in professionals other than lawyers to oversee certain critical functions, introducing systems and processes and carefully monitoring and evaluating the effectiveness of individuals.
"The trick we had to pull off," he says, "was to introduce a decision-making structure that produced results without killing off the ethos of partnership."
Today the expectation that major firms will by definition be global is scarcely challenged, which is one reason the Clifford Chance merger deserves a moment’s reflection. The certitudes we take for granted today were not always so.
This should be humbling for starters—if we think we’re so smart today, how could we have been so blind then?
But I’d like to suggest it should also be inspiring, and encourage us to question received wisdom. What elements of what we take for granted today will look archaic twenty years hence?
Not to leave you hanging, I’ll venture a few nominations for assumptions that will change dramatically before our careers are over:
- That a top-drawer US/UK merger will never happen.
- That there are inherent limits—managerial, structural, in terms of conflicts, etc.—to the size of global law firms.
- That lawyers have nothing to learn about handling their practice and their relations with clients from non-lawyers.
- That law firms have no need or use for capital beyond what can be readily raised directly from partner contributions.
Care to nominate some of your own? If not, you can just read Tony Williams’ "Ten trends that will shape the legal market," which include:
- Erosion of profitability at mid-tier firms
- Technology enabling projects to become "unbundled."
- Clients’ driving fundamental change in how law firms operate.
- An increasing segmentation between basic information and advice, available online or for fixed (and low) fees, and those who can truly deliver exceptional value.
Why listen to Tony? He was formerly managing partner of Clifford Chance.
